TaxTMI 
TaxTMI 
2022 (3) TMI 464
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.... year 2011-12 vide order dated 21.03.2014 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter the 'Act'). 2. The only issue in this appeal of Revenue is as regards to the order of deleting the disallowance of expenditure to the tune of Rs. 3,25,01,491/- considered as capital-work-in-progress by the AO. For this Revenue has raised following effective grounds:- 2.1 The ld. CIT(A) erred in deleting the disallowance of expenditure to the tune of Rs. 3,25,01,491/- [subject to his observation made on the disallowance u/s. 40A(2)(b)], considered as Capital-Work-in-Progress and accordingly capitalized by the Assessing Officer, holding that they are allowable u/s. 37, incurred for the purpose of business. 2.2 The ld. CI....
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....owed the expenses of Rs. 3,25,01,491/-. The AO also applied the provisions of section 40A of the Act. Aggrieved, assessee preferred appeal before CIT(A). The CIT(A) after considering the submissions of the assessee and the details filed before him in regard to expenses incurred by assessee on consultancy charges, legal and professional charges and marketing expenses viz-a-viz services rendered to alleged sister concerns, he noted that the AO has not brought out any basis for applying the provisions of section 40A(2)(b) of the Act and according to him the expenditure incurred by assessee is found not to be reasonable and once this is the position, the AO cannot disallow the same. For this, the CIT(A) recorded his finding in para 5.9 to 5.12 ....
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....ent to holding company. Other than that, I find that there is no scope to invoke Sec. 40A(2)(b) on other payments. It is a fact that appellant has been into the business of infrastructure projects such as taking land on lease and giving it on Sub-lease, construction of flats, etc. As rightly argued by the ld. AR, the expenditures has been incurred for the purpose of business and same had to be allowed u/s 37. 5.11 I agree with the arguments of the ld. AR that appellant has received various services from different persons for which payments were made. During the year, appellant had incurred expenditure on Consultancy Charges, Legal & Professional Charges and Marking Expenses which are meant for business purposes. Moreover, I have al....
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....ce the issue is not raised by the Revenue, the matter stand concluded at this stage only and appeal should be dismissed at the very threshold. 6. Apart from the above, the ld. counsel for the assessee took us through the order of CIT(A) on merits, wherein submissions of the assessee are quoted verbatim. The ld. counsel for the assessee took us through the details of expenses, which are brought by the AO under the purview of section 40A(2)(b) of the Act, from the related parties and ld. counsel for the assessee drew our attention to page 11 & 12 of the CIT(A) order wherein the entire details, payments made, services rendered and relationship with the assessee by that party i.e., 3rd party is given. In view of the above, the ld. counsel fo....
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.... u/s. 40A(2)(b) of the Act, as is clear from the Ground No. 2.1 raised by Revenue. Coming to merits of the case, we noted that the assessee has filed complete details of consultancy charges, legal and professional charges and marketing expenses to the tune of Rs. 3,25,01,491/- and the relevant details reads as under:- A. Consultancy Charges Party Amount - Rs. Services Relationship with the appellant Mr.R.K. Dhawan 17,64,800 Marketing Third Party Service Provider Mr. Shamsuddin 10,46,715 Legal Third Party Service Provider R S Consultancy 1,13,250 Legal Third Party Service Provider P.S. Narayanaswamy 11,36,520 Advisory Third Party Service Provider V Ramabhoopathy 7,67,000 ....
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....e business of infrastructure development and real estate related projects and the assessee prior to launching of real estate project i.e., "Centralis @ ABM Avenue", it is engaged in the business of real estate as it has taken lease of around 81 acres of land from Coromandel Fertilizers Ltd., vide lease dated 27.03.2008, which was notified under SEZ Act, 2005 as Special Economic Zone. This land was sub-leased to Silk Road Sugars Pvt. Ltd., for setting up of sugar refinery. The assessee received lease rental from SEZ and has offered to tax. The assessee has actually incurred an expenditure of Rs. 1,84,63,030/- to third party service providers out of the total expenditure of Rs. 3,25,01,491/-. As regards to the bifurcation of expenditure given....