TaxTMI 
TaxTMI 
2014 (12) TMI 714
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..../- made by the Assessing Officer on account of compensation charges claimed by the assessee holding the same as revenue expenditure and as such allowable as against capital expenditure held by the Assessing Officer." 2. The relevant facts of the case are that the assessee returned an income of Rs. 110,82,11,014/- from the head "business & profession" which was varied to the disadvantage of the assessee by the AO after issuance of notice u/s 143(2)/142(1) etc by an amount of Rs. 1,54,38,601/-finalizing the assessment at an income of Rs. 112,36,50,014/-. The specific reasons for the addition rejecting the assessee's claim of business expenses are set out in para 4 of the assessment order. For the sake of brevity the same is reproduced here....
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....,5438,601/- which consist of the following specific amount:- (i) "Compensation in respect of rights in surrender of plot Pertaining to Vatika farms/Woods/Greens 1,51,38,601/- (ii) Compensation paid on account of area booked by merged Company M/s Vatika Greenfield Pvt. Ltd. 3,00,000/- 1,54,38,601/- 3.1. The breakup of Rs. 1,54,38,601/- it was submitted consisted of the following details:- Name of the Customer Date of agreement of sale Consideration received between the period Date of Revocation agreement Amount Refunded Amount Received Compensation i.e. Advance Refunded Umesh Malhotra 27.04.1988 1988-1989 1989-1990 18.07.2006 1,05,000 25,000 4,70,000 Vinod Kumar 22.02.1990 1989-1990 06.10.2006 1,27,980 43,60,490 ....
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....s been consistently allowed and for the first time disputed in 2001-02 assessment year wherein against the appeal filed by the Revenue challenging the relief granted by the CIT(A), the issue was restored by the ITAT to the AO to consider afresh. The issue it was submitted again arose in 2005-06 and 2006-07 assessment years when the disallowance made by the AO was reversed by the CIT(A) and against this the Revenue is in appeal pending before the ITAT. Reliance was placed upon the principle of consistency on the issue deserves to be followed. It was contended that the same method of the accounting for recording the transactions as "advances" on the receipt of payment for booking space or flat has been followed and only when it could not be h....
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....ready made having cancelled. Such advances were received by the appellant since Financial Year 1988-1989 and were reflected in accounts as advance from customers. The amount of compensation was paid as a measure of business exigency and as a prudent businessman appellant had accepted the request of the intending purchaser to maintain reputation of the appellant and with mutual consent repaid the advance made along with compensation for this period. The decision of Hon'ble Supreme Court in the case of Sasun J.David & Co. Pvt. Ltd. V. CIT reported as 118 ITR 261 speaks of the expression 'wholly & exclusively' and it is held that the expression 'wholly & exclusively' does not mean 'necessarily'. It was held that ord....
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....e appellant in earlier years. As evident from the records of the case, the method of accounting policy followed by the appellant is to claim the expenses in the year when the compensation was paid on the revocation of the agreement entered with the customers. The assessments have been framed u/s 143 (3) of the Income Tax Act, 1961 from the assessment year 1995-1996 to 1998-1999 when such a claim of expense has not been disallowed by the assessing officer and thus the claim stood allowed. In so far assessments year 1999-2000 to 2000-2001 are concerned assessment were not taken up for scrutiny assessment, however the expense had been incurred in those years too. Further in assessment year 2002-2003 and 2004- 2005 the assessing officer did not....
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....n the second round also. Accordingly on the basis of the same it was his submission that the issue is covered in assessee's favour. 6.1. The Ld. AR was required to address the position of 2002-03 & 2006-07 assessment years which as per the submissions was pending before the ITAT. The Ld. AR submitted that in 2002-03 to 2004-05 assessment years the issue did not arise on account of the smallness of the amount claimed and was allowed in both these years and in 2003-04 assessment year no such expense was claimed. In 2005-06 & 2006-07 assessment years it was his submission that the issue is pending before the CIT(A) as the ITAT has restored the issue. 7. The Ld. Sr. DR on the other hand relies upon the assessment order. 8. We have hear....