Tribunal permits tenancy vacancy charges as legitimate expenditures in property sale appeal The Tribunal allowed the appeal, directing the AO to permit the tenancy vacancy charges of Rs. 1,23,40,000 to the assessee. The Tribunal found the charges ...
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Tribunal permits tenancy vacancy charges as legitimate expenditures in property sale appeal
The Tribunal allowed the appeal, directing the AO to permit the tenancy vacancy charges of Rs. 1,23,40,000 to the assessee. The Tribunal found the charges to be legitimate expenditures associated with the sale of the property, as per the agreements obligating the assessee to provide vacant possession to purchasers. It was noted that the AO failed to verify the agreements and disregarded the Tribunal's previous directions, leading to the reversal of the Ld. CIT(A)'s decision.
Issues Involved: The only issue raised in the appeal is against the confirmation of addition of Rs. 1,23,40,000/- by Ld. CIT(A) as made by the AO in the assessment framed u/s 143(3)/254/143(3) of the Act dated 11.03.2015 on account of "Tenancy Vacancy Charges".
Comprehensive Details:
Issue 1: Addition of Tenancy Vacancy Charges In the first round of appeal, the Tribunal directed the AO to verify the agreements entered into by the assessee with the tenants for payment of compensation for vacating the property. The AO disallowed the claim of tenancy vacation charges on the ground that the same were contingent in nature. However, the Tribunal found that the agreements clearly showed that the assessee was obligated to provide vacant possession to the purchasers by a specific date. The Tribunal held that the charges paid or payable in respect of the vacation of the tenants were legitimate expenditures associated with the sale of the property. The Tribunal observed that the AO did not comply with the directions given by the Tribunal in the previous order and made the addition without proper verification. The Tribunal, after examining the agreements and suits filed by the purchaser, reversed the order of Ld. CIT(A) and directed the AO to allow the tenancy vacancy charges to the assessee on accrual basis.
Conclusion: The Tribunal allowed the appeal of the assessee and directed the AO to allow the tenancy vacancy charges of Rs. 1,23,40,000/- to the assessee.
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