Tribunal affirms CIT(A)'s decisions on evidence, charges, and disallowance

The Tribunal upheld the CIT(A)'s decisions to admit new evidence, delete compensation and development charges, compounding fees, addition on account of option money, and reduce disallowance towards administrative charges. The Revenue's appeal was dismissed, affirming the CIT(A)'s order.

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Issues Involved:
1. Admission of new evidence and deletion of compensation and development charges.
2. Deletion of addition of compounding fees.
3. Deletion of addition made on account of option money.
4. Deletion of disallowance towards administrative charges.

Issue-wise Detailed Analysis:

1. Admission of New Evidence and Deletion of Compensation and Development Charges:
The CIT(A) admitted new evidence contrary to Rule 46A(3) and deleted the addition of Rs. 7,22,250/- claimed as compensation for delayed project completion and Rs. 55.94 lacs as development charges paid to M/s. R.M. Trust. The AO disallowed the Rs. 7,22,250/- stating the payments were gratuitous. However, CIT(A) found the payments were per the sale agreement clauses, which entitled buyers to compensation for late delivery, thus not gratuitous. Concerning Rs. 55.94 lacs, the AO disallowed it, but CIT(A) found the payments were per agreements for developing a property known as Jade Garden, where R&M Trust carried out specified development works. CIT(A) allowed the development charges, noting they were consistent with previous years and documented in tripartite agreements.

2. Deletion of Addition of Compounding Fees:
The AO disallowed Rs. 1,46,910/- paid to Bangalore Mahanagar Palika (BMP) as it was deemed penal. However, CIT(A) found the payment was towards taxes for a project named "Raheja Regent" and not penal in nature. The payment was made per a letter from BMP, thus CIT(A) deleted the addition.

3. Deletion of Addition Made on Account of Option Money:
The AO added Rs. 19,56,000/- received as option money from five parties, considering it as sale consideration. CIT(A) found the option money was not received during the year but in earlier years and was refundable if the option to purchase was not exercised. Three parties had their deposits refunded, and the remaining two had not exercised their options. CIT(A) deleted the addition, noting no sale agreements were executed or possession given, thus the option money could not be considered income.

4. Deletion of Disallowance Towards Administrative Charges:
The AO disallowed 50% of Rs. 20,19,974/- paid as service charges to sister concerns under section 40A(2)(b). CIT(A) reduced the disallowance to 10%, noting similar expenses were allowed in previous years, and the turnover for the year was higher. CIT(A) found no justification for a 50% disallowance without proper reasoning and upheld a 10% disallowance, consistent with the previous year's treatment.

Conclusion:
The Tribunal upheld CIT(A)'s deletions and found no infirmity in the order. The appeal by the Revenue was dismissed, and the CIT(A)'s decisions were affirmed. The order was pronounced in the open court on 03/03/2015.

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