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TMI Blog2018 (4) TMI 1882X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the payment on account of EDO Charges amounting to 1,74,48,000/- is penal in nature. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the disallowance of 1,70,22,000/- made by the AO without discussing the detailed reasons given by the AO for the above disallowance in the assessment order. 3. That the order of CIT(A) is perverse, erroneous and is not tenable on facts and in law, 4. That the grounds of appeal are without prejudice to each other. 5. That the appellant craves leave to add, amend, alter or forgo any ground(s) of appeal either before or at the time of hearing of the appeal. 2. It is observed that appeal was listed for hearing on 31/08/2017 and as on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest payable on EDC. Ld. AO issued show cause notice dated 23/02/2015 to assessee to show cause as to why interest expenses towards delayed payment of EDC debited to P&L account should not be disallowed, as this payment is penal in nature. Assessee vide reply dated 27/02/2015 submitted that, EDC is payable by developer to Haryana government for external development work related to water supply, stream rage, drains, roads, streetlights etc, up to the site of the developer. It was submitted that as per the license agreement, assessee had option of paying EDC charges over a period, in installments with interest at the rate of 12% per annum and an additional interest in case of over due of any installment at the rate of 3% per annum. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of EDC would carry an interest of 12% per annum and in case of any delay in the payment of installments on the due date, and additional penal interest of 3% per annum would be chargeable upto a period of 3 months and for additional 3 months with the permission of DGTCP. The appellant has chosen to pay EDC charges in installments with interest. Accordingly, it provided interest payable on the same @12%+3% amounting to Rs. 17.02 lacs+ Rs. 4.26 lacs, totaling to Rs. 21.28 lacs and it has also provided interest on balance amount @12% amounting to Rs. 153.20 lacs for the period 24.01.2012 to 31.03.2012. Thus a total of Rs. 1,74,48,000/- has been claimed towards the interest payment. It has been argued that this is a revenue expenditure, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed as business expenditure being revenue in nature, however, Rs. 4,26,000/- is not allowed being penalty in nature and confirmed. 5. Aggrieved by the order of Ld. CIT (A) revenue is in appeal before us now. 6. Ld. Sr. DR submitted that assessee paid interest of 12 + 3 % as per the agreement which do not form part of installment in toto. He submitted that payment of interest cannot constitute part of cost of project of assessee and therefore cannot be considered as normal business expenditure. He supported the order of Ld.AO 7. we have perused the submissions advanced by both the sides in the light of the records placed before us 7.1 From the observations recorded by Ld. CIT (A), it appears that, license the agreement allows assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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