ACIT Vs Ardee Infrastructure Pvt Ltd (ITAT Delhi)
ITAT Delhi held that External Development Charges (EDC) is an advance collected to provide common facilities and other services to the prospective flat owners. Since, the same is collected on approval of HUDA, it cannot form part of Profit and Loss Account. Accordingly, addition towards the same rightly deleted.
Facts- Revenue has preferred the present appeal mainly contesting that CIT (A) has erred in deleting the addition of Rs.1,80,39,139/- made on account of EDC (External Development Charges) paid to HUDA without appreciating the facts that preparation of statement of profit and loss in the provisions of Schedule III to the Companies Act, 2013 is not as per the accounting norms as laid down.
Conclusion- Held that the EDC is nothing but an advance collected to provide common facilities and other services to the prospective flat owners and such provision of services are reimbursable, the same was collected in advance. As and when it is executed, the same are charged to the WIP. Since the project under consideration is not yet completed, the collected advance cannot be charged to profit and loss account. Further, the assessee has collected the same for providing the common services on the approval of HUDA, this is only on the basis of reimbursement and there is no profit element. Therefore, it cannot be form part of Profit and loss Account. Therefore, the findings of ld CIT(A) are just and proper.
