Sourya Towers Pvt Vs DCIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT) Delhi has overturned a disallowance of ₹64.72 crore claimed by Sourya Towers Private Limited as a loss on an abandoned real estate project in Amritsar. The tribunal ruled that the loss incurred by the real estate developer was revenue in nature and allowable as a deduction in Assessment Year 2012-13.
The case, Sourya Towers Pvt Vs DCIT (ITAT Delhi), centered on the company’s Amritsar project, which was abandoned due to an arbitration dispute between its directors. The company, engaged in real estate promotion and development, had claimed the entire amount incurred on the project as a loss in its profit and loss account, offsetting its taxable business profits.
Background of the Dispute
The Assessing Officer (AO) initially disallowed the loss, arguing it was a prior period expense (related to Assessment Year 2010-11) and capital in nature. This disallowance was upheld by the Commissioner of Income Tax (Appeals) [CIT(A)] in the first round of proceedings. Sourya Towers appealed to the ITAT, which initially upheld the CIT(A)’s decision on August 29, 2017.
The assessee then filed miscellaneous applications with the Tribunal and subsequently appealed to the Delhi High Court. The High Court, in an order dated February 16, 2018, allowed Sourya Towers to withdraw its appeal with the liberty to approach the court again depending on the outcome of the miscellaneous applications. The Tribunal dismissed both the original and amended miscellaneous applications on November 7, 2022, and November 9, 2022, respectively.
