TaxTMI 
TaxTMI 
2025 (8) TMI 1165
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...., Circle 1, Bangalore [ld. AO] was partly allowed. 3. The assessee has filed revised Form 36 raising the following 2 effective grounds of appeal: - "2. The Learned Commissioner of Income Tax (Appeals) erred in holding that the expenditure towards crop & tree cut compensation paid to farmers/landowners amounting to Rs. 2,83,27,459 is not an expenditure incurred wholly and exclusively for the purpose of business. 3. The Learned Commissioner of Income Tax (Appeals) erred in holding that the provision for obsolescence amounting to Rs. 1,80,03,210 is a provision unascertained is correctly added to the computation under MAT provisions." 4. The brief facts show that assessee is a power transmission company and filed its return of income on 31.10.2017 at a total income of Rs. 630,23,34,650 which was selected for scrutiny and necessary notices u/s. 143(2) and 142(1) of the Act were issued on 8.8.2018. 5. During assessment proceedings, on perusal of the return, it was found that the assessee has claimed an amount of Rs. Rs. 2,83,27,459 as compensation paid for cutting crop & trees after commissioning of the asset. Assessee was asked to furnish the details. Assessee....
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....r submitted that with respect to 4 major work divisions, the above amount was paid, and he submitted the breakup of the same. On the issue of addition of Rs. 1,80,03,210 with respect to provision for obsolescence, he submitted that it is not only the provision, but it is a write off of the inventories which has been debited to the profit & loss account and is reduced from the assets in the balance sheet. Therefore, it is written off. Accordingly, the same is not required to be added to the book profit. 10. The ld. DR vehemently submitted that now expenditure details of Rs. 2,83,27,459 provided by the assessee at page 9-15 of the PB were not at all submitted before the ld. lower authorities and in absence of such details, the addition has been made. Therefore, there is no infirmity in the order of the ld. lower authorities. With respect to the addition of Rs. Rs. 1,80,03,210 as provision for obsolescence of inventory, he submits that assessee himself has stated before the ld. lower authorities that the above sum is merely a provision and therefore same is required to be added back to the computation of book profit. 11. We have carefully considered the rival contentions and per....
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....ore, in view of the above fats, we restore ground No.2 of the appeal back to the file of ld. AO with a direction to the assessee to provide the complete details of tree cut compensation paid by the assessee to the respective persons and also to produce the copies of the relevant court order to prove the genuineness of the expenditure. Similarly, when the compensation is paid to private parties, the assessee is directed to produce evidence based on which such compensation is derived and how the same is paid. The ld. AO on furnishing this information by the assessee, may examine the same and decide the allowability of such expenditure. Accordingly ground No.2 of the appeal of the assessee is allowed with the above directions. 13. With respect to ground No.3 regarding provision for obsolescence of Rs. Rs. 1,80,03,210 added by the ld. AO to the computation of book profit u/s. 115JB of the Act, it clearly shows that assessee has made addition of Rs. Rs. 1,80,03,210 on account of loss of obsolescence under the normal provisions for computation of income. This sum has not been added back by the assessee while computing book profit u/s. 115JB of the Act. When the assessee was questioned....
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....iled appeal before the ld. CIT(A), who passed order on 23.9.2024. The claim of the assessee is that during the year it has received compensation of Rs. 11,00,24,105 which was wrongly disclosed as capital gain and paid tax thereon @ 20%. This is under mistaken belief as tax deduction of source at Rs. 1,14,50,162 was also made therein. The assessee submitted that the above sum is not chargeable to tax in view of the provisions of section 96 of the relevant Act and the Circular of CBDT. 17. The ld. CIT(A) after considering the explanation of assessee found that nowhere the issue raised in the appeal has been discussed by the AO and therefore the appeal of assessee was found to be invalid and dismissed. 18. The ld. AR filed a paperbook containing 36 pages and submitted with copies of compensation award and claimed that as according to the respective Act, section 96 provides that such compensation is neither chargeable to tax under the Income Tax Act or stamp duty, etc., and for which relevant circulars have been issued and therefore such sum could not have been taxed by the AO. It was found that though the assessee has offered the above sum as income, but later it was found that ....
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.... the assessee, is directed to decide the issue afresh in accordance with the law. 21. Accordingly, the appeal of the assessee, specifically ground Nos. 2 & 3 of the appeal is partly allowed for statistical purposes. 22. ITA No.2221/Bang/2024 is filed by the assessee for AY 2019-20 wherein the only issue raised by assessee is, whether interest paid by assessee to claims for delayed payments under the order of courts to obtain clear title of the land, whether such payments is directly attributable to expenditure for making the asset ready, is revenue expenditure or capital expenditure? 23. The ld. CIT(A) has considered this issue wherein a sum of Rs. 2,64,80,347 paid by assessee as interest on delayed compensation to farmers for acquisition of land as per court orders claimed it to be revenue expenditure, but treated by the ld. AO as capital expenditure and the ld. CIT(A) confirmed that the amount is an expenditure of capital nature. 24. The assessee aggrieved with the appellate order dated 23.9.2024 preferred this appeal. The ld. AR submitted a paperbook containing 63 pages. The ld. AR referred to the written submissions dated 24.12.2024 and relied upon the order of the ....