TaxTMI 
TaxTMI 
2017 (9) TMI 806
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....the property has been offered for taxation the corresponding cost is allowable on principle of matching of cost and revenue. 1.3. The Learned CIT(A) failed to appreciate that deduction in respect of the Collectors liability of Rs. 2,41,15,599/- is allowable u/s. 37(1) of the Act. 2. Re: Disallowance in respect of amount payable to Collector Rs. 2,41,15,599/- u/s. 43B of the LT. Act, 1961 2:1. Without prejudice to Ground No.1 above, and in the alternative, the Learned CIT(A) erred in making disallowance u/s 43B of the LT. Act, 1961 amounting to Rs. 2,41,15,599/- in respect of the Collectors liability. 2.2. The Learned CIT(A) failed to appreciate fact that the Collector's liability is not any sum payable by way of tax, duty, cess or fee under any law. It is a contractual. liability arising pursuant to the development of the property and not a statutory liability. 3. Re: Disallowance u/s 14A of the LT. Act, 1961 amounting to Rs. 5,39,175/- 3.1. The learned CIT (Appeals) has erred in directing the assessing officer to adopt the disallowance u/s 14A at Rs. 5,39,175 when the appellant has incurred direct expenses in form of PMS ch....
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.... It is further observed that the Auditor under Note No.6 of Notes to the Accounts has appended the following Note: "6. The Company had purchased right of reversion for land at 15 Shah Industrial Estate, Off Veera Desai Road, Andheri (W), Mumbai 400 058 from M/s. Mema Engineers And Contractors Pvt. Ltd (Mema) vide Deed of reversion dated 17th February 2000 under the terms and condition stated in Form HH-1 for allotment of land to Mema. The said land was allotted to Mema by the Addl. Collector of Bombay, Bombay Suburban District on the terms and condition stated in Form HH-1 dated 3rd July, 1964 in pursuance to order dated 31st December 1959 of the Addl. Commissioner of Bombay and as modified by the letter dated 28th May 1964 from the under secretary to the Government of Maharashtra, Revenue and Forest Department. The said reversion was made effective by the District Collector Bombay, Bombay Suburban District; vide his order dated 30th August, 2003 with an obligation to make payment of the 50% of unearned income based on market value from future transfer after development of the property, at respective time. The Government of Maharashtra, Revenue and Forest....
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....rned increase based market value from future transfer after development of the property at the respective time. 9. He further contended that Government of Maharashtra, Revenue and Forest Department had vide notification dated May 21, 2006 stated to enforce use of Ready Recknor value for land valuation for use of Government Land on lease or rent and to include the improved methods of valuation of Government Land in respective cases. During the relevant Previous Year, the assessee had completed the development of the commercial building and has offered the profits on sale of commercial units at Shah Industrial Estate. Further, the assessee had claimed deduction of liability to Collector towards 50% of the unearned increase amounting to Rs. 2,41,15,599/-. This liability was computed based on Ready Recknor as per the above referred notification. The assessee did not account this liability in the books of account for the year ended March 31, 2007. A disclosure is made as notes to accounts, inter alia, that in the absence of any specific demand letter from the Collector, the assessee had not provided such liability in their books of accounts. Indeed, the Auditors have qualified the Au....
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....be made for all known liabilities and losses even though the amount cannot be determined with certainty and represents only a best estimate in the light of available information. Thus even the Department allows the assessee to follow the policy of "Prudence". A copy of the said notification was handed over at the time of hearing. On the other hand, the ld. DR relied on the evidence recorded by the lower authorities to the fact that it was the contingent liability which did not accrue nor paid by the assessee either during the year under consideration or even in the subsequent year. Accordingly, the A.O. was justified in adding the provision made by the assessee while computing its taxable income with respect to the account which did not accrue nor paid by the assessee. With regard to Rule 14A disallowance, the contention of the ld. DR was that the A.O. had computed disallowance as per Rule 8D, according to which even in the years falling to A.Y. 2008-09 reasonable disallowance is required to be made in respect of expenditure incurred for earning exempt income. 14. We have considered rival contentions and carefully gone through the orders of the authorities below and deliberated ....