AI Drafter 
TaxTMI 
TaxTMI 
2018 (5) TMI 1017
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....the Hon'ble CIT(A) erred in upholding the disallowance made by the learned A.O. regarding license fees of Rs. 2,35,50,100/- in view of provision of section 43B of the Act. The appellant prays that the said expenditure be allowed as a deduction as the provisions of section 43B are not attracted in case of the BMC license fees/ deposits. Ground No.3: On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding the disallowance made by the learned A.O regarding society maintenance charges amounting to Rs. 47,35,028/-. The appellant prays that the society maintenance charges paid by the appellant being builder, before the handling over the building to society should be allowed as expenses. The appellant prays to delete the disallowance made of Rs. 47,35,028/- with respect to the society maintenance charges. Ground No.4: On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding the disallowance made by the learned A.O. regarding legal expenses of Rs. 50,00,000/-.The appellant prays that the said amount should he allowed as a deduction under section 37(1) of th....
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....ovision of section 36(1)(vii) of the Act when written off and may at best be considered at in the hands of the assessee and also observed that in order to allow such deduction u/s 37 or u/s 28 of the Act, the assessee has to prove that such has become irrecoverable during the year and simply cannot be allowed in the year in which written off and thus upheld the decision of the AO. 6. The Ld. A.R., vehemently submitted before us that assessee AOP was formed for a limited purpose of redeveloping the building called Shreepati Arcade and this was the only project in the said AOP and after completion of the said project and selling of the projects, the AOP will cease to exist in the last year which is the current year the assessee found that the advances which were shown in the balance sheet as loans and advances to the tune of Rs. 26,55,000/- to various parties in connection with the business of the assessee and not on capital account but on purely for business purposes were found to be not recoverable and hence were written off. The said advances clearly fall under section 36(1)(vii)/37 of the Act as the advances were made in the ordinary course of business in connection with the b....
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....37 of the Act. Similarly, the money due from sundry debtors which could not realized till the last year has to be allowed under section 36(i)(vii) of the Act. In view of these facts, we are not in agreement with the conclusion reached by the Ld. CIT(A) that sundry balances written off were of capital in nature and could not be allowed. In our considered opinion all these advances/deposits are arising out of business exigencies of the assessee and have to be allowed whether or not routed through the profit and loss account. So far as sundry debtors are concerned, the same are allowable in the year of writing off. In view of these facts, we are inclined to reverse the order of Ld. CIT(A) on this issue and allow the ground raised by the assessee. The AO is directed accordingly. 9. The issue raised in ground No.2 is against the confirmation of disallowance of Rs. 2,35,50,100/- by Ld. CIT(A) as made by the AO on account of non payment of license fee under the provisions of section 43B of the Act. 10. The facts in brief are that the assessee claimed by way of license fee in the P&L Account a sum of Rs. 2,35,50,100/- which was shown as payable to BMC. Upon a query by the AO as to ho....
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....ative plea that the issue be restored to the file of AO to examine and allow the same on a payment basis to Mr. Rajendra R. Chaturvedi, if the assessee does not succeed in this main prayer that same should be treated as expenses on mercantile basis. 13. The Ld. D.R., on the other hand, relied on the order of Ld. CIT(A) and submitted that the amount of deposit is purely a statutory in nature and fall within the purview of section 43B of the Act. Since the amount was not paid before the due date as contemplated by section 139(1) of the Act, the same was rightly disallowed by the AO and affirmed by the ld CIT(A). 14. Having heard the arguments of both the parties, we find that a sum of Rs. 2,35,50,100/- was provided in the books of accounts and charged to the P&L Account on account of provision of non refundable deposits to BMC which is to be compulsorily made in relation to a multi storey construction of a building with basement. The said deposit was not paid till the year end and it was transferred to the capital account of the partner Mr. Rajendra R. Chaturvedi for the payment to the BMC as and when the demand is raised by the BMC. The authorities below treated the same as st....
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....se, since the flats were handed over to buyers or tenants, needless to say that after such handing over of flats, the maintenance charges had to be met by tenants and not by the builder/developer as clearly specif ied in sub clause (k) of clause 46 of the agreement dated 22/12/2004 entered into between appellant (promoter) and buyers/tenants. Fur ther, as per clause 16 of the said agreement, maintenance charges are not to be borne by developer even for unsold flat. Thus, I do not find any infirmity in the order of the AO and he is justified in making disallowance of Rs. 47,35,028/-. This ground of appeal is dismissed." 18. Having heard the rival submissions of both the parties and perused the material on record, we find that assessee charged Society Maintenance Charges of Rs. 47,35,028/- after reducing the interest earned from the bank on corpus fund created for the society formation. The assessee has to look after the management and maintenance of the building as caretaker till the society is formed. Thus, whatever expenditure incurred on the said maintenance of the building were charged to the P&L Account after reducing the interest received from the bank on the corpus fund cr....