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TMI Blog2014 (12) TMI 1155X X X X Extracts X X X X X X X X Extracts X X X X ..... a Rao, AM,JJ. For the Appellant : Shri R Muralidhar For the Respondent : Shri R N D souza ORDER Per: Vijay Pal Rao: This appeal by the assessee is directed against the order dated 2.11.2012 of CIT(A) for the A.Y. 2009-10. The assessee has raised following ground:- The learned A.O has erred in law and facts in disallowing payment of BMC charges of ₹ 34,39,800/- by treating it as penal in nature a per Explanation to section 37(1) of the Act and not allowing the same u/s 37(1) of the Act by ignoring the fact that the same were compensatory in nature and laid out wholly and exclusively for the purpose of business and not for any purpose which is an offence or which is prohibited by law and the Honourable Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evelopment of the property in question vide order dated 1.4.1993. The IOD was issued on 23rd September 1993. The commencement certificate was also issued on 28th September 1993 by the BMC. Thereafter, the Municipal Corporation issued full occupancy certificate of the building in question on 30.03.2000. He has pointed out that subsequently as per the directions of Hon'ble High Court in a writ petition filed by the legal heirs of the owner of the property, the occupancy certificate granted by the authority, was revoked vide order dated 30.5.2005. The Ld. Authorized Representative has then submitted that the full occupancy was subsequently restored by the Municipal Corporation vide order dated 17.12.2008, therefore, there is no violation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition filed by the legal heirs of the original owner of the land before the Hon'ble High Court in WP No. 34/2002, wherein, the assessee as well as the Municipal Corporation and Government of Maharashtra were made parties as respondents. The Hon'ble High Court directed the Government of Maharashtra to give the hearing within one month to both the parties and accordingly disposed off the writ petition. It is only to facilitate the hearing to the legal heirs of the owner of the land, the municipal corporation withdrawn the occupancy certificate. In the proceedings, as directed by the Hon'ble High Court, the Municpal Corporation has found that there was no objection to develop and grant of occupation certificate for the building in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was revoked till 17th December 2008 when it was restored. It is pertinent to note that it is not a fresh occupancy certificate issued by the Municipal Corporation but the original certificate was restored. This is not a payment for compounding/regularizing the construction but only to meet the technicalities of Gap between the occupancy certificate revoked and restored. In the case of CIT Vs. Ahmedabad Cotton Mfg. Co. ltd. Ors. (supra), the Hon'ble Supreme Court observed in para 12 as under:- 21. Therefore, what needs to be done by an assessing authority under the Act, in examining the claim of an assessee that the payment made by such assessee was a deductible expenditure under section 37 although called penalty is, to see wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed in para 26 as under;- 26. The question whether the amount of ₹ 4 lakhs paid by the assessee was or was not in the nature of penalty for infraction of municipal laws and bye-laws has to be answered in favour of the assessees. Expenses which are permitted as deductions are such as are made for the purpose of carrying on business. They are for the purpose of keeping the business going and of making it pay. They are to enable a person to carry on and earn profit in that business. Any expenditure laid out or expended wholly and exclusively for the business is an allowable deduction in computing the income. What is money wholly and exclusively laid out for the purpose of trade is a question which has to be determined upon the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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