2018 (3) TMI 1567

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....is a capital expenditure. 3. The facts of the issue are that Permit fee of Rs. 14,18,410/- claimed to have been made to Thiruvananthapuram Municipal Corporation for the project started at Vellayambalam was not allowed by the Assessing Officer since no income from the said project was offered for tax and further, the payment was capital in nature and paid for the enduring benefits that would accrue to the appellant over a period of time. The assessee was not in agreement with the Assessing officer and thereby contended that the payment was a statutory payment which is allowable u/s 43B of the Act. The assessee further contended that if it is disallowed for the AY 2007-08 then direction may be issued to the Assessing Officer to consider th....

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....aid as capital expenditure. Accordingly, the CIT(A) held that the permit fee paid is the capital expenditure and upheld the disallowance made by the Assessing Officer. 5. Against this, the assessee is in appeal before us. 6. We have heard the rival submissions and perused the material on record. The main contention of the Ld. DR before us is that the assessee has not offered income relating to Vellayambalam Project. Hence, it cannot be allowed. Admittedly, in this case the assessee is in real estate business and carrying out various construction projects namely, Kumarapuram, Pongumoodu, Vanchiyoor and Vellayambalam. The assessee offered income from Pongumoodu, Kumarapuram and Vanchiyoor. However, there was no income offered from Velam....

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....dy to commence" would not necessarily mean that all the integrated activities are fully carried out and/or wholly completed. This requirement is also complied with in this case where the assessee has already commenced business and it is going on and the impugned expenditure was incurred in connection with Vellayambalam project for getting approval from the Municipal Corporation and it cannot be said that the expenditure was incurred before the commencement of business or it cannot be disallowed on the pretext that the assessee has not offered income from Vellayambalam project in respect of which the expenditure was incurred. The impugned expenditure was incurred by the assessee after setting up of business and it is to be revenue expenditur....

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....he Assessing Officer for verification. It is also not the case of the assessee that the Directors who visited abroad have spent separately for their personal needs which is verifiable even now. The CIT(A) confirmed the disallowance of l/5th of the expenses. The CIT(A) rejected another argument of the assessee that the company had filed Fringe Benefit Tax return and the disallowance made tantamount to duplication as this argument has no relevance to the facts of the case since the details based on which the Fringe Benefit Tax return was filed was not made available for verification. This apart, the CIT(A) observed that Fringe Benefit Tax return was filed for the fringe benefits value of Rs. 4,24,344/- but the disallowance on travelling expen....