Housing & Urban Development Vs ACIT (ITAT Delhi)
ITAT Delhi held that grant-in-aid incurred wholly and exclusively for the purpose of business is allowable as deduction. Accordingly, appeal is allowed and addition of the same by AO is liable to be deleted.
Facts- The assessee company is engaged in the business of providing finance for development of housing and infrastructure projects. During the course of assessment proceedings, the assessee claimed expenditure pertaining to earlier years amounting to Rs. 3 lakhs as deduction. The same was disallowed on account of prior period expenses.
Further, AO made addition of Rs. 1,69,91,000/- on account expenditure on grants-in-aid. AO also disallowed an amount of Rs. 26,40,710/- under section 14A of the Income Tax Act.
Conclusion- Held that once it is proved that the said expenditure is not claimed as deduction in earlier years, then the same would be squarely allowable as deduction during the year under consideration. With these directions, the Ground No. 1 raised by the assessee is allowed for statistical purposes.
Held that assessee would be entitled for deduction in respect of grant-in-aid expended by it on the ground that same are to be construed as wholly and exclusively incurred for the purpose of business of the assessee.
