ACIT Vs Dosti Realty Ltd. (ITAT Mumbai)
Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has issued a comprehensive ruling on cross-appeals filed by the Assistant Commissioner of Income Tax (ACIT) and Dosti Realty Ltd., addressing several contentious tax issues for the assessment year 2016-17. The Tribunal’s decision partially favored the revenue on the matter of depreciation on goodwill arising from amalgamation, while upholding the assessee’s claims regarding project expenses, future provisions, and certain disallowances under Section 14A of the Income-tax Act, 1961.
Background of the Dispute
Dosti Realty Ltd. had filed its return of income at ₹50,49,56,130/-. The case was selected for scrutiny, and the Assessing Officer (AO) significantly enhanced the assessment to ₹152,56,16,760/- under normal provisions. The AO made substantial additions, including:
- ₹13,10,64,252/- for disallowance of depreciation on goodwill.
- ₹1,58,34,292/- for disallowance of certain expenses.
- ₹86,68,91,003/- on account of provisions made for meeting future expenses.
- ₹68,71,080/- disallowed under Section 14A.
Aggrieved by the AO’s order, Dosti Realty Ltd. appealed to the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) granted substantial relief to the assessee by deleting all the aforementioned additions. This prompted the Revenue to file an appeal before the ITAT, challenging the relief granted, while the assessee filed a cross-objection on related and additional grounds.
