TMI Blog2020 (7) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... r was to obtain certain approvals at the cost of the appellant on payment as per the agreements. Buyer incurred such cost and debited the account of the appellant as payment of sale consideration. The appellant also accepted the same and credited the account of the buyer. Just because the payer has deducted tax at source, it cannot become the income of recipient automatically. It is undisputed that total c sales consideration received/ receivable is offered for taxation in immediately preceding year. In view of this, merely because the assessee did not furnish confirmation and more so even when each and every expenditure is part of the agreement, this addition cannot be made so it cannot be sustained. In view of this, we direct the ld AO to delete the addition. Disallowance of depreciation - HELD THAT:- Assessee has earned gross revenue of ₹ 81,50,271/- such as miscellaneous income and lease rent income etc. These incomes is offered by the assessee as business income and accepted by the ld AO in the assessment. The assessee has been allowed several business expenditure during the year. Further, the assets on which depreciation is claimed by the assessee are also ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowing the expenditure, otherwise normally eligible for deduction. It is not the case of the revenue that the assessee towards the business of the assessee did not incur these expenses. In view of this, we direct the ld AO to delete the above disallowance. - ITA No. 8475/Del/2019 - - - Dated:- 13-7-2020 - Shri Sudhanshu Srivastava, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Assessee : Shri Rohit Tiwari, Adv For the Revenue : Shri Saras Kumar, Sr. DR ORDER PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the assessee against the order of the ld CIT (A)-24, New Delhi dated 19.08.2019 for the Assessment Year 2014-15. 2. The assessee has raised the following relevant effective grounds of appeal:- 2. That on the facts and circumstances of the case the Ld. AO / Ld. CIT(A) has erred on the facts and in law in making an addition of INR 4,07,12,068 to the total income of the appellant under the provisions of the Act. 3. That on the facts and in the circumstances of the case and in law, the Ld. AO / Ld. CIT(A) is not justified in making an addition of INR 2,10,73,800 to the returned income of the appellant co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of architectural consultancy expenses, liaisoncharges, and charges for authority, charges for approval and drawing, document preparation, and several charges of similar nature. The ld AO noted that the assessee has incurred the above expenditure of similar nature. The ld AO noted that the assessee has incurred the above expenditure in relation to its project Global Technology Park, Bangalore. The Global Technology Park project of the assessee was sold to M/s. Adamass Builders Pvt. Ltd during the Financial Year 2012-13 relating to assessment year 2013-14. The ld AO noted that as per the noting policy the assessee recognizes accounts and accounts for income and expenditure on accrual basis. Therefore, he did not allow the assessee to claim the above expenditure in the main assessment year as this was related to FY 2012-13. The ld AO further invoked the matching concept and held that the assessee has claimed the expenses of prior period and it is not allowable as assessee follows mercantile system of accounting. Thus, the legal and professional fees of ₹ 1,89,08,562/- was disallowed. b. Ld AO disallowed the depreciation of ₹ 7,29,706/- holding that during the year the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of outstanding receivable from M/s. Adamass Builder to whom assessee sold one project last year . Assessee submitted the copy of account of Adamass Builders from the books of account of the Assessee along with agreements and submitted that Assessee received the total sum from that party of ₹ 3,14,58,417/- , out of which three receipts are taken in the profit and loss account as income . It was further stated that the sum of ₹ 2,10,73,800/- was received from that party towards outstanding sale consideration receivable from that party for project sold in the earlier year. Still a sum of ₹ 2,20,00,681/- as at 31/03/2013 is receivable from the above party towards the sale of the project in the earlier year. It supported the above argument with the copies of the account of the party. The Assessee also submitted that above buyer has deducted the tax at source u/s 194J of above the sum paid and therefore, it is reflected in Form No. 26AS. It was further stated that the Assessee has already paid tax on the above sum of ₹ 2,10,73,800/- when the project was sold , So it amounts to double addition. Therefore, no addition can be made in the hands of the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crores to M/s. Adamass Builders Pvt. Ltd. This transaction was concluded in AY 2013-14 and the Assessee offered above sale consideration and profit arising therein as its income in that year.Profit and loss account of the assessee clearly depicts the same and there is no dispute on it. However, buyer did not pay the full amount to the assessee because of certain pending obligation on part of assesse, as per agreement for sale of above property. Assessee was to obtain necessary approval from the Govt Authorities such as Airport Authority of India, Water Supply and Sewerage Board, Electricity Supply company, Fire and Emergency Services, Pollution Control Board and State Industrial Development Board. Admass Builders Private Limited, [ Buyer] as and when obtained such approvals, sanctions, debited the expenses to the account of the appellant in its books and also deducted tax at sources u/s 194 J of the act. Thus, expenses incurred by Adamass Builders were adjusted from the above sale consideration payable to the appellant. This was part of the agreement and lease deed entered into between the parties. Account of the Adamass Builders Pvt. Ltd clearly shows above sums were adjusted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the agreement before them.There were details of each and every expenditure incurred by Admass Builder pursuant to above agreement. The agreement itself shows various stages of payment and various obligations of the parties. The buyer was to obtain certain approvals at the cost of the appellant on payment as per the agreements. Buyer incurred such cost and debited the account of the appellant as payment of sale consideration. The appellant also accepted the same and credited the account of the buyer. Just because the payer has deducted tax at source, it cannot become the income of recipient automatically. It is undisputed that total c sales consideration received/ receivable is offered for taxation in immediately preceding year. In view of this, merely because the assessee did not furnish confirmation and more so even when each and every expenditure is part of the agreement, this addition cannot be made so it cannot be sustained. In view of this, we direct the ld AO to delete the addition of ₹ 21073800/- accordingly Ground No. 3 of the appeal is allowed. 12. Ground No. 4 of the appeal is with respect to disallowance of depreciation of ₹ 729706/-. The ld AO disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... head legal and professional charges. The ld AO disallowed the same holding that these were related to Global Technology Park, Bangalore, which was sold in earlier year i.e. previous year and therefore, the expenditure claimed by the assessee in this year is not allowable on the matching concept as well as those are prior period expenses. The ld CIT (A) confirmed the same. 17. The ld AR submitted that all these expenditure are related to the Global Technology Park, which was sold in earlier years however, the expenditure relating to that project was incurred during the year as respective expenditure such as billsetc.were received/ approved during the year. He submitted that when the allowability for payment of the above expenditure is incurred on receipt and approval of the bills, expenditure is said to have been incurred or accrued. He further submitted that the assessee is a company following mercantile system of accounting maintaining its books of account on accrual method and therefore, this expenditure should be allowed to the assessee during this year. The assessee also submitted the copy of the invoices and payment receipts of different parties from page No. 181 to page No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price of the contract; (c) costs that relate to satisfied performance obligations (or partially satisfied performance obligations) in the contract (ie costs that relate to past performance); and (d) costs for which an entity cannot distinguish whether the costs relate to unsatisfied performance obligations or to satisfied performance obligations (or partially satisfied performance obligations). Assessee was to record and recognize expenses when they are incurred in case those expenses relate to past performances. The sale took place last year, full sales consideration was offered for taxation by assessee. Some of the expenses of such a large project are bound to spill over to next year. It was a continuous process to incur expenditure when such a large project was soldand to account for in the books of account. Therefore, even though they were treated technically as prior period expenses, it related to a continuous flow of expenditure. Therefore, there was no justification in disallowing the expenditure, otherwise normally eligible for deduction.[Union Bank of India v. ACIT (2011) 49 SOT 32 (ITAT Mumbai), Bank of India v. DCIT (2012) 139 ITD 493 (ITAT Mumbai)]. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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