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TMI Blog2018 (5) TMI 1017X X X X Extracts X X X X X X X X Extracts X X X X ..... ept that the assessee submitted before the authorities below that the said payment represented the non refundable deposit to be placed with the BMC for the multi storey building constructed by it. The matter requires a thorough examination and verification at the level of AO. Therefore, we restore it back to the file of AO with a direction to examine the same and decide afresh as per law and facts after affording a reasonable opportunity of being heard to the assessee. This ground is allowed for statistical purposes. Disallowance regarding society maintenance charges - Held that:- The said expenses are covered in the mutual settlement reached between the builder and the society. A.R. also filed a certificate before the Bench stating that society has provided some amount towards expenses as settlement amount for handing over to the society. The matter needs examination and verification at the level of AO as to whether the said expenses incurred by the assessee to the tune of ₹ 47,35,028/- is in fact borne by the assessee in terms of the various documents filed by the assessee during the year. Accordingly, we restore this issue to the file of AO with a direction to decide th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harges amounting to ₹ 47,35,028/-. The appellant prays that the society maintenance charges paid by the appellant being builder, before the handling over the building to society should be allowed as expenses. The appellant prays to delete the disallowance made of ₹ 47,35,028/- with respect to the society maintenance charges. Ground No.4: On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding the disallowance made by the learned A.O. regarding legal expenses of ₹ 50,00,000/-.The appellant prays that the said amount should he allowed as a deduction under section 37(1) of the Act as the same has created for the legal expenses likely to be incurred for the formation of society and to cover up the expenses for conveyance deed for transferring the land to the society. The appellant reserves its right to add, alter, amend or delete the grounds of appeal. 3. The issue raised in ground No.1 is against the upholding of disallowance of ₹ 77,96,174/- as made by the AO on account of sundry balances written off being capital loss and not allowed as business expenses under section 36(1)(vii) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng called Shreepati Arcade and this was the only project in the said AOP and after completion of the said project and selling of the projects, the AOP will cease to exist in the last year which is the current year the assessee found that the advances which were shown in the balance sheet as loans and advances to the tune of ₹ 26,55,000/- to various parties in connection with the business of the assessee and not on capital account but on purely for business purposes were found to be not recoverable and hence were written off. The said advances clearly fall under section 36(1)(vii)/37 of the Act as the advances were made in the ordinary course of business in connection with the business activities of the assessee. Similarly, the deposits with the BEST and Municipal Corporation were given for the construction purposes out of which some were not recoverable as assessee failed to recover the same during the year to the tune of ₹ 16,56,647/-. Likewise the money recoverable from the flat buyers to the tune of ₹ 34,88,500/- which was shown as recoverable from the debtor was written off after the assessee failed to realize the same. The Ld. A.R. brought to the notice of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the profit and loss account. So far as sundry debtors are concerned, the same are allowable in the year of writing off. In view of these facts, we are inclined to reverse the order of Ld. CIT(A) on this issue and allow the ground raised by the assessee. The AO is directed accordingly. 9. The issue raised in ground No.2 is against the confirmation of disallowance of ₹ 2,35,50,100/- by Ld. CIT(A) as made by the AO on account of non payment of license fee under the provisions of section 43B of the Act. 10. The facts in brief are that the assessee claimed by way of license fee in the P L Account a sum of ₹ 2,35,50,100/- which was shown as payable to BMC. Upon a query by the AO as to how the said claim is allowable in view of the provisions of section 43B of the Act, the assessee submitted that after completion of multi storey building with basement, developer has to keep basement deposit with BMC and such deposit is non refundable and is part of the cost of the construction of the project. While finalizing the accounts, the assessee has debited to the P L Account the amount payable to BMC towards basement deposit. This being the last year of the AOP, all the assets as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the due date as contemplated by section 139(1) of the Act, the same was rightly disallowed by the AO and affirmed by the ld CIT(A). 14. Having heard the arguments of both the parties, we find that a sum of ₹ 2,35,50,100/- was provided in the books of accounts and charged to the P L Account on account of provision of non refundable deposits to BMC which is to be compulsorily made in relation to a multi storey construction of a building with basement. The said deposit was not paid till the year end and it was transferred to the capital account of the partner Mr. Rajendra R. Chaturvedi for the payment to the BMC as and when the demand is raised by the BMC. The authorities below treated the same as statutory payment covered under the provision of section 43B of the Act and disallowed and added the same to the income of the assessee. After perusing the order of the authorities below, we find that facts are not coming out conspicuously as to the nature of the payment except that the assessee submitted before the authorities below that the said payment represented the non refundable deposit to be placed with the BMC for the multi storey building constructed by it. Under these ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, I do not find any infirmity in the order of the AO and he is justified in making disallowance of ₹ 47,35,028/-. This ground of appeal is dismissed. 18. Having heard the rival submissions of both the parties and perused the material on record, we find that assessee charged Society Maintenance Charges of ₹ 47,35,028/- after reducing the interest earned from the bank on corpus fund created for the society formation. The assessee has to look after the management and maintenance of the building as caretaker till the society is formed. Thus, whatever expenditure incurred on the said maintenance of the building were charged to the P L Account after reducing the interest received from the bank on the corpus fund created for the society formation. Ld. CIT(A) upheld the disallowance on the ground that assessee has already handed over the possession to the buyers/tenants the premises and therefore maintenance charges have to be made by the residents and not by the builder. During the course of hearing, the Ld. A.R. filed minutes of proceedings of the society dated 12.08.2017 and submitted that assessee has contributed ₹ 1,20,00,000/- towards corpus funds in order to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fically maintained independently by appellant for which contribution is separately collected by the appellant developer from its tenants/buyers and further, as per clause 46(k) (Page 28) of the said agreement, the tenants /buyers have to contribute regularly for such outgoings, in as much as in the event and in future if such expenses are incurred, then the same have to be met by tenants/buyers and not by the developer. Considering the factual matrix as aforesaid of this uncrystalised liability, I do not find any merit in the contention of the appellant. The AO is justified in disallowing the provisions of legal expenses of ₹ 50,00,000/-. This ground of appeal is dismissed. 21. Having heard the rival submissions of both the parties and perusing the material on record including the documents filed by the Ld. A.R. in the form of certificate from the assessee and minutes of proceedings of the society, we find that the issue is seized off between the society and the assessee as is apparent from the documents placed before us. Since these documents require verification and examination at the level of AO, we restore the issue back to the file of the AO with the direction to e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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