TaxTMI 
TaxTMI 
2012 (9) TMI 553
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....st to ground no.1 in the appeal, facts, in brief, as per relevant orders are that return declaring income of Rs.4,18,02,660/- filed on 31.03.2006 by the assessee, a real estate company, after being processed u/s 143(1) of the Income-tax Act,1961[hereinafter referred to as the 'Act'] was selected for scrutiny with the service of a notice u/s 143(2) of the Act. During the course of assessment proceedings, the Assessing Officer (A.O. in short) noticed that the assessee claimed deduction of Rs.36,60,500/- on account of compensation to 7 persons mentioned in para 3 of the assessment order. To a query by the AO, the assessee replied that it used to receive sale consideration in installments. Unless the entire sale consideration, registration charges and other expenses were received, the sale deed in respect of land was not executed in favour of the intended purchaser. Similarly, the assessee allowed possession of the land to the intending purchaser only after payment of full consideration and registration of sale deed. In some cases, since the intending purchaser did not want to buy the land as per mutual agreement and advance received was refunded along with some excess amount as return....
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....ia Promotors Pvt. Ltd., 281 ITR 346 (Del); CIT Vs. Narender Doshi, 254 ITR 606 (SC); Berger Paints India Ltd. Vs. CIT, 266 ITR 99 (SC) and JCIT Vs. Mandideep Eng. & Pkg. Ind. P. Ltd., 292 ITR 1 (SC), the assessee pleaded that their claim may be allowed in the year under consideration also. In the light of these submissions, the ld. CIT(A) allowed the claim in the following terms:- "15. In view of the aforesaid facts and circumstances the Assessing Officer has erred in holding that the said amount paid by the assessee as compensation represents purchase consideration to reacquire the rights in the plots and that the said amount will increase capital work in progress of the assessee. In fact there is noting in the accounts of the assessee which could be termed as capital work in progress. The nature of expense clearly shows that the nature of expense is revenue expenditure incurred wholly and exclusively for the purposes of business and hence is allowable as regular business expenditure. Moreover, according to the consistently followed accounting practice, such expenses are being allowed to the assessee as revenue expenditure. The theory as placed by the Assessing Officer that the....
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....d for it. All they wanted was their flat within a reasonable period, legal opinion also stated that a compensation was not payable as per contract and that opinion was tailor made to suit the assessee. 40. The Tribunal, in view of the above, rejected the claim of the and set aside the orders of the CIT(A) in assessment year 1995-96 and restored the order of the Assessing Officer. The Tribunal also considered that payment was apparently made for extraneous consideration. 41. Learned counsel for the assessee submitted that all the facts were pleaded before the Tribunal but the same have not been properly considered along with the case laws referred to before us. Learned counsel for assessee also argued that the Tribunal was not having any material before it to give finding with regard to extraneous consideration. Learned counsel for the assessee also argued that since the case of the assessee was not properly considered by the Tribunal on facts, and mistake was apparent on record, therefore, miscellaneous application was filed which is pending before the Tribunal as well as appeal is pending in the High Court. Learned counsel for assessee submitted that since the case of the as....
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....nce of plot no.1024 at Bhondsi,area of plot is 1acre 31-3-2005 Greefield International Pvt. Ltd. 1439000 Being the compensation given on the surrender of Plot booked in Vatika Ph.-II 31-3-2005 Earth Movers & builders Pvt. Ltd. 1312000 Being the compensation given on the surrender of Plot booked in Vatika Ph.-II 31-3-2005 SK Vaghal 500000 Being the amount paid as compensation against case filed in MRP as full and final payment 6.1 The aforesaid explanation reveals that amount has been paid to shri Rajinder Kumar, Dinesh Gupta, Sadhna Gupta and Kamlesh Gupta by way of refund of advance paid by them. There is nothing in the impugned order nor the ld. AR submitted any material before us in support of their claim that the amount was paid as compensation for reacquiring the rights in the plots. How the refund of advance paid by the respective buyers could be treated as compensation, has not been explained before us. As regards amount paid to M/s Greenfield International Pvt. Ltd. and M/s Earth Movers & Builders Pvt. Ltd., it is mentioned that compensation was paid for surrender of plot. The basis for working and payment of compensation or the releva....
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....or the assessment year 2002-03 deleting the compensation expenses of Rs.1,00,000/-. But what happened subsequently whether any appeal has been filed or not is not born out, out of the facts before us. We find that CIT(A) has allowed the appeal of the assessee merely relying on the submission of the assessee that the similar amounts have been allowed in the earlier years. No doubt the expenses incurred by the assessee are the revenue expenses and have been incurred for the purposes of the business, as in our opinion, commercial expediency demands that such expenses should be incurred by the assessee while making the refund to the allottees. But the question arise whether these expenses will form part of the stock in trade or not. This in our opinion will depend on the method of the accounting consistently followed by the assessee for the valuation of the closing stock. Whether the assessee is following project completion method or work certified method. These facts have not been brought on record before us from either of the side. We, therefore, in the interest of justice and fair play to both the parties set aside the order of the CIT(A) and restore this issue to the file of the CI....
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....has been read as an integral part of the concept of fair procedure and is an important safeguard to ensure observance of the rule of law. It introduces clarity, checks the introduction of extraneous or irrelevant considerations and minimizes arbitrariness in the decision-making process. Hon'ble jurisdictional High Court in their decision in Vodafone Essar Ltd. Vs. DRP,196 Taxman 423 (Delhi) held that when a quasi judicial authority deals with a lis, it is obligatory on its part to ascribe cogent and germane reasons as the same is the heart and soul of the matter and further, the same also facilitates appreciation when the order is called in question before the superior forum. We may point out that a 'decision' does not merely mean the 'conclusion'. It embraces within its fold the reasons forming basis for the conclusion. [Mukhtiar Singh Vs. State of Punjab, (1995)1SCC 760(SC)]. In view of the foregoing, especially when the ld. CIT(A) have not passed a speaking order nor analysed the nature of amount paid in the year under consideration while the matter in the AY 2001-02 is still pending before him, we consider it fair and appropriate to set aside the order of the ld. CIT(A) and res....
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.... Assessing Officer is directed to allow depreciation as per the provisions of law." 10. The Revenue is now in appeal before us against the aforesaid findings of the ld. CIT(A).The ld.DR relied upon the order of the AO while contending that assessee did not place any evidence before the AO that the amount was incurred on temporary construction in the basement nor any bills or vouchers were submitted. Thus, the learned CIT(A) was not justified in treating the amount as having been incurred on temporary construction, eligible for depreciation @100%,without allowing any opportunity to the AO. The ld. DR, inter alia, relied upon decision in Ramakrishna & Co. vs. CIT, 88 ITR 406 (Mad.) & CIT vs. Lucky Bharat Garage, 174 ITR 526(MP). 11. On the other hand, the ld. AR on behalf of the assessee relied upon the impugned order. To a query by the AO, the ld. AR submitted a copy of ledger account of expenses debited under the head repairs to building. 12. We have heard both the parties and gone through the facts of the case as also the aforesaid decisions relied upon by the ld. DR. Indisputably, the assessee did not produce all the bills and vouchers in relation to expenditure incurred....
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....ould be permitted all repairs, even though the expenditure may be a revenue expenditure, as a permissible deduction under section 10(2)(v). What we have to consider is in what way has the Legislature circumscribed the expression 'repairs' and to what extent has the Legislature limited the right of the assessee to claim deduction in respect of repairs. One or two views are possible of the expression 'current'. It may be said that 'current' is used in contradistinction to heavy and that small petty repairs are the only repairs which can fall within the ambit of section 10(2)(v). The other view is a view more in fitting with the etymological meaning of the expression 'current', and it is that they are such repairs which are attended to when the need for them arises and are not allowed to fall into arrears or to be accumulated. If a building, machinery, plant or furniture needs some repairs and those repairs are attended to as and when the need arises then the repairs are current repairs. But if the assessee, although the need has arisen, does not attend to that need and allows the repairs to get accumulated, then it could not be said that when he is expending money on these r....
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....ctive of whether the assessee is the owner of the assets or has only used them. The expression "current repairs" denotes repairs which are attended to when the need for them arises from the viewpoint of a businessman. The word "repair" involves renewal. However, the words used in section 31(i) are "current repairs". The object behind section 31(i) is to preserve and maintain the asset and not to bring in a new asset. In our view, section 31(i) limits the scope of allowability of expenditure as deduction in respect of repairs made to machinery, plant or furniture by restricting it to the concept of "current repairs". All repairs are not current repairs. Section 37(1) allows claims for expenditure which are not of capital nature. However, even section 37(1) excludes those items of expenditure which expressly fall in sections 30 to 36. The effect is to delimit the scope of allowability of deductions for repairs to the extent provided for in sections 30 to 36. To decide the applicability of section 31(i) the test is not whether the expenditure is revenue or capital in nature, which test has been wrongly applied by the High Court, but whether the expenditure is "current repairs". The ba....