Case Law Details
Neelkamal Realtors Suburban Pvt. Ltd. Vs ACIT (ITAT Mumbai)
ITAT find that identical issue has been decided by the co-ordinate Bench in case of Emdee Digitronics Pvt. Ltd Vs. PCIT in ITA No. 361/Kol/2019 dated 28th June, 2019, wherein the co-ordinate Bench in Para No.12 relying on the decision of M/s Naaraayani Sons Pvt. Limited, in ITA No. 1796-1798/Kol/2017, order dated 21.08.2018 held that interest expense on late deposit of VAT, service tax, TDS etc are allowable expenditure under section 37(1) of the Act. In view of the above fact, respectfully following the decision of Kolkata Bench of ITAT, we hold that such expenses are not disallowable under section 37(1) of the Act. Further, VAT laws, provident laws and service tax laws clearly provide for payment of interest if there is a delay in payment of fees. Therefore, it is apparent that those respective laws allowed the belated payment along with interest. Therefore, those are not affected by explanation–1 to section 37(1) of the Act.
ITAT allows cost of TDR on percentage completion method
ITAT find that assessee company is engaged in developing real estate projects comprising of ₹1,65,138/- sq. mt. saleable area. For construction of this area, the permissible floor space index of the land is ₹1,63,604/- sq. mt. and therefore company is required to own FSI by purchasing transferable development rights. The assessee provided for cost of transferable development rights amounting to ₹6,08,67,000/-. The detail working of this TDR is given at page no. 92 of the Paper Book. At page no. 93 of the Paper Book, assessee has estimated the cost of the TDR considering the rate of TDR at ₹3083/– per sq. ft. up to 31st March, 2016, 90.27% of the area has been sold and assessee has already recognized TDR cost of ₹4,08,22,351/-. For this year, assessee has claimed a provision of ₹9,26,837/- on the basis of percentage of area sold. Therefore, it is apparent that the cost of the TDR is ascertained and liability related to the area sold by the assessee required to be provided, when income offered for taxation. Further, the assessee is claiming deduction since 2009-10 and has already been allowed deduction on the same methodology amounting to ₹4,08,22,351/- up to 31st March 2015. We do not find any reason to disturb it. Even otherwise, in percentage completion method the Revenue is recognized based on percentage of work completed and therefore all probable expenditure up to that percentage level are to be recognized as expenditure. In view of this, we reverse orders of the lower authorities and direct learned Assessing Officer to delete the disallowance of ₹9,26,837/-on account of TDR.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
Please become a Premium member. If you are already a Premium member, login here to access the full content.
