Case Law Details
Brief about Case
The assessee company was engaged in the business of real estate development. Vide order of Hon’ble High Court, 19 Group companies engaged in similar business were merged in the assessee company w.e.f 01.04.1999. These companies had purchased stamp papers worth Rs.24290550/- for execution of various land purchased from various farmers. However, sale deeds could not be executed as farmers had refused to execute the same and therefore, in view of Stamp Act, an application for refund of 90% of stamp paper value was filed on 27.04.2001 before Collector Gurgaon after writing of Rs.2429055/- in A.Y. 2002-03 being 10% amount not refundable. Collector Gurgaon vide order dated 08.02.2003, rejected the claim of these companies on the ground of claim being time-barred by limitation u/s 50 of Indian Stamp Act. Hence, balance Rs.21861495/- was claimed by the assessee company as loss in the year under consideration. AO however did not accept the argument of assessee and disallowed the claim of Rs.21861495/- on the ground of claim being capital in nature and related to earlier years. On an appeal before CIT(A), order of A.O. was upheld. Aggrieved assessee, filed appeal before ITAT.
Contention of Assessee
Ld. A.R. submitted that it was undisputed fact that the merging companies of the assessee had purchased stamp papers for registration of land in ordinary course of business for registration of land purchased. However, the stamp papers could not be utilized as sellers had backed out of the agreements and, therefore, stamp papers remained unutilized. It was submitted that only 90% of the cost of stamp papers could have been recovered from revenue authorities, therefore, assessee itself had written off 10% of the cost of stamp papers in the year itself and had made claim with revenue authorities for refund of 90% of the cost of stamp papers. Therefore, the amount for 90% of claim was not written off in the year of purchase as assessee was hopeful of getting refund. Ld. A.R. further submitted that during the year under consideration, the assessee realized this fact that the amount is not recoverable and, therefore, it decided to write off the same. Ld. A.R. relied on the order of Hon’ble Supreme Court in the case of Kerala State Industrial Development Corpn. Ltd. 2012 (TIOL) 83 SCIT wherein it was held that the amount was allowable as deduction when it was written off in the books of account. Continuing his arguments, Ld. A.R. submitted that due to continuous efforts, the assessee was able to recover a partial amount of Rs.74,11,018/- in Assessment Year 2008-09 which the assessee had included in its income in the said year, therefore he submitted that the assessee had incurred genuine business expenditure the deduction of which has been denied whereas it has been taxed for amount which was recovered in the Assessment Year 2008-09.
Contention of Revenue
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