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2023 (7) TMI 335 - AT - Income TaxDisallowance towards the amount paid to the landlord as compensation - compensation as paid to the seller of the land not towards purchase of the land but towards the delay in handing over the possession of the built up area, as was stipulated to be - HELD THAT - At the initial stage, the assessee claimed such compensation to have been paid to Tenant, whereas, during the course of assessment proceedings, the assessee claimed it as compensation to the seller. AR relied on the Sale cum Development made on 05-12-2008, which has been placed on record to support the contention that the payment so made was compensation to the owner of the flats for delay in handing over of the possession. Since this is an additional evidence which was not there before the authorities below, it would be just and fair if the impugned order is set aside and the matter is remitted to the AO for verifying the relevant clauses of the agreement. Appeal is allowed for statistical purposes.
Issues involved:
The only issue raised in this appeal is against the confirmation of disallowance of Rs. 12.00 lakh towards the amount paid to the landlord as compensation. Summary: The appeal was directed against the order passed by the CIT(A) in relation to the assessment year 2018-19. The assessee, a Promoter and Builder, purchased land for construction of flats and claimed Rs. 12.00 lakh as deduction for compensation paid to the landlord. The Assessing Officer (AO) questioned the deduction, citing section 18 of Real Estate Regulatory Authority (RERA), 2016, which pertains to compensation for flat owners, not land sellers. The AO disallowed the claim, a decision upheld in the first appeal. Upon review, the Tribunal found that the compensation of Rs. 37.00 lakh was paid to the land seller for delay in possession, not land purchase. A portion had been claimed as work-in-progress in earlier years. The Tribunal noted conflicting statements by the assessee regarding the payee of the compensation. An agreement presented as additional evidence indicated the payment was indeed compensation for delay in possession to the flat owner. Consequently, the Tribunal set aside the previous order and remitted the matter to the AO for further verification based on the agreement. The AO was instructed to treat the amount as work-in-progress if found to be compensation for delay, or decide otherwise after due process. In conclusion, the appeal was allowed for statistical purposes, with the order pronounced on 7th June, 2023.
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