TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 1949
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....ce of Rs. 2,40,00,000/- on account of plot development expenses while as per MOU signed between the assessee and Ravi (Hansol) NTC the said expenses were paid by Ravi (Hansol) NTC but debited in the books of the assessee. 3) The Ld. CIT(A) has erred in law and on facts in allowing the disallowance of Rs. 30,30,000/- on account of commission/brokerage expenses plot development expenses. 4) It is therefore prayed that the order of the Id. CIT(A) may be set aside and that of the order of the Assessing Officer be restored to the above extent." Brief facts of the case 3. The brief facts of the case are that the assessee is a partnership firm engaged in the activities of purchase of agricultural land in the name of partners. Thereafter, the agricultural land was converted into nonagricultural land. The assessee had entered into a development agreement dated 27.12.2008 with Ravi (Hansol) Non Trading Corporation (in short "RNTC"), as per which RNTC had decided to purchase the land of various Survey numbers of Kundal Village including the land already purchased by the assessee. Further, the assessee was also assigned the work of development of the land. As per the agreement, the sale ....
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....03.2014 at a total income of Rs. 4,54,00,220/-. 4. Aggrieved with the order of the AO, the assessee had filed an appeal before the First Appellate Authority which was decided by the Ld. CIT(A) vide the impugned order and the additions as made by the AO were deleted. Grounds 1 and 2 5. The first two grounds taken by the Revenue pertain to disallowance of Rs. 1,52,90,000/- on account of material expense and disallowance of Rs. 2,40,00,000/- on account of plot development expense. 6. Shri Hargovind Singh, Ld. Sr. DR submitted that as per the MOU dated 27.12.2018 entered into by the assessee with RNTC, the assessee was not obliged to incur these expenses. He submitted that RNTC had claimed expenses in their books of account for common work such as development of common amenities, club house, road construction etc. and that as per the development agreement, the role of the assessee was to execute those work on behalf of RNTC. As the expenses for these works were to be borne by RNTC, the assessee was not correct in claiming the same in its own books of account. The Ld. Sr. DR has taken us through the assessment order and justified the additions as made by the AO on account of materia....
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....ommon expenditure of Rs. 2,23,42,961/- for the development of common facilities such as road, common amenities, garden, clubhouse etc. was borne by RNTC and not by the assessee company. Therefore, the finding as given by the AO in this respect is not found correct. 8.1 The assessee had brought on record supplementary agreement dated 29.01.2009 between the assessee and RNTC which was not considered by the AO. As per the supplementary agreement, certain expenses such as construction including compound wall, land filling and levelling as per the customer requirement of individual plots, was to be incurred by the assessee for which it was entitled to charge Rs. 100/- per sq. meter from the respective plot owners. From the Profit & Loss Account, it is found that apart from sale consideration of Rs. 2,13,78,500/- in respect of sale of land, the assessee had disclosed administrative and development income of Rs. 4,90,18,400/- which was received from the members / plot owners at the rate of Rs. 100/- per sq. yard towards the various expenditures as incurred as per the requirement of the members. The ledger account of the administrative and development income brought on record in the paper....
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.... paid was to be claimed as deduction by RNTC and not by the assessee. Therefore, the Sr. DR strongly supported the order of the AO. 10. Per contra, Shri Mehul Patel, the Ld. AR of the assessee has drawn our attention to Clause 7 of the development agreement as per which the assessee was entitled to incur such expenditure. He submitted that the Ld. CIT(A) had correctly appreciated the facts of the case and allowed relief to the assessee. 11. We have carefully considered the rival submissions. The commission of Rs. 30,30,000/- paid to four parties was capitalised and included in the working of closing stock valuation. Before the AO, the assessee had submitted that the commission can be considered as discount towards purchase of plots in bulk. It was explained that the expense was not commission but discount or reduction in price towards purchase in bulk. A plea was also taken since the commission expense of Rs. 30.30 lakhs was capitalised and the value of closing stock was increased to that extent, the treatment given by the assessee was revenue neutral. It is found that the Ld. CIT(A) had allowed relief to the assessee on the ground that genuineness of commission payment was not u....