Case Law Details
Though the questions are multiple, issue is single, namely, the deduction of Rs.61,08,500/- claimed by the assessee towards expenditure being part of development charges. The assessee had paid such sum to Surat Municipal Corporation towards water connection charges. Assessee was engaged in the business of development of land. Assessing Officer disallowed such claim on the ground that the liability of the assessee had not crystallized during the year under consideration. The Assessing Officer noticed that there was some dispute between the assessee as a developer and one NFL as a contractor on whose behalf the land was being developed with respect to who should bear such charge. Such issue was clarified on 1.9.2005 and that therefore, according to the Assessing Officer liability to the assessee was crystallized only on that day and not earlier. For some reason, without any further reference, he also invoked section 43B of the Act and concluded that such expenditure was not allowable either under section 37 or under section 43B of the Act.
Both the lower appellate authorities allowed assessee’s claim after recording factual findings that assessee had actually incurred the said expenditure. Liability in respect of the same had been crystallized during the relevant year and hence, the same cannot be termed as a contingent liability.Neither the contractee had reimbursed the assessee nor had the contractee claimed such amount by way of expenditure. The said view was upheld by the Honorable High Court also.
HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL No. 932 of 2011
COMMISSIONER OF INCOME TAX-II
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