TaxTMI 
TaxTMI 
2014 (5) TMI 347
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....income for AY 2009-10 declaring total income of Rs 10,17,577/-. The case was selected for scrutiny and thereafter the assessment was framed u/s 143(3) vide order dated 23.12.2011 and the total income was determined at Rs 52,99,370/-. Aggrieved by the order of AO, Assessee carried the matter before CIT(A). CIT(A) vide order dated 17.9.2012 granted substantial relief to the assessee. Aggrieved by the order of CIT(A), Revenue is now in appeal before us and has raised the following grounds:- 1. The learned CIT(A) has erred in law and on facts in restricting the addition to Rs. 4,81,600/- out of Rs. 47,57,551/- made on account of disallowance of development expenses. 4. Though Revenue has raised various grounds the only effective ground is....
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....ent expenses claimed in trading account amounting to Rs. 47,57,551/- considering these as capital in nature and pertaining to assets retained by the assessee. The AO has subsequently went on to allow depreciation @ 10% on these expenditures. The undisputed fact is that the appellant has brought up a scheme called Villa Sonata; and has developed / was obliged to develop roads, common plots, club house with gymnasium, swimming pool etc., on which the expenses were claimed as Development Expenses and debited them to the Project account (Trading Account). The appellant was claiming that these expenses were made for the entire project and the undivided rights on these common facilities-and amenities were transferred / transferable to the purc....
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....ed; consequently the entire property which is known as Vila Sonata will be used and utilized by the entire plot holders i. e. bock No. 332, 333, 334, 335, 338 and 339. The brochure in fact clearly spells out all the facilities that would be available to the plot holders of the scheme. The clinching evidence that the ownership of roads and common plots even whose expenses are refused to be allowed, does not wrest with the appellant is clear from the order of the Revenue Department of District Panchayat, Mehsana; which while granting the approval to the development of the scheme in para 17 to 19 of the order approving this scheme stated as under: "17. The ownership of C.O. P./Common Plot/Open Court yard and ownership of the roads shall be ....
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....fore, it is held that the appellant has/is bound to as a part of the project and agreement with the buyers transfer all these rights collectively to them and does not retain them and the expenses are debitable to the trading account as done by the appellant (except borewell and overhead tank, which is discussed later). Now, the issue of cost of borewell and overhead tank is to be taken up. There is no doubt that the appellant retains the ownership and all rights in these as per the agreements. It means that it may use it for supplying water for personal use as well as any other scheme coming up in vicinity also. However, the plot owners of the Sonata Scheme also get right of usage of the facilities and supply of water. Therefore, some....