9911796707
TMI Blog2011 (11) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... count of impact fee paid to Surat Municipal Corporation in violation and infraction of provisions of law to Surat Municipal Corporation which is not an eligible for deduction under Section 37 of the Act. 2. On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting disallowance of interest on account of utilization of interest bearing funds in advancing interest free loans to specified persons under Sec. 40A(2)(b) of the Act holding that no direct nexus is proved by the A.O., ignoring the material facts that the assessee had paid interest free advances to specified persons through cheque and the assessee had always debit balance in its bank accounts which itself prove that the interest bearing funds had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AR that the payment made to the SMC under the said Scheme was an expenditure which was incurred wholly and exclusively for the Assessee s construction business. The AR sought to distinguish the case of Maddi Venkatraman Co. Pvt. Ltd. (229 ITR 534) which had been relied upon by the A.O., on the ground that the facts of the two cases were not the same. According to the AR, the very nature of the expenditure i.e. of Impact Fees and Balcony Charges itself suggested that such payments were in the nature of fees and not penalty. The AR placed reliance on several cases-laws of his own, and submitted that on similar set of facts and circumstances, the DCIT Circle-3, Surat allowed the Assessee s claim of Balcony Cover Charges of Rs.3 lakhs, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had covered 50%, thereby exceeding permissible limit laid down by the byelaws. Time for revalidation of the plan having expired, the assessee applied for the sanction of a revised plan of the building with only 12 storey on the ground that there had been excess construction in the second floor. The revised plan was sanctioned condoning the additional coverage and the other irregularities, on the condition that the assessee paid an adhoc of Rs. 4 lakhs. The Hon ble Delhi High Court, affirming the decision of the ITAT, held that the said sum of Rs.4 lakhs was an allowable deduction. 6.1. The facts of our assessee s case are almost similar to that of M/s. Loknath Co. (supra) as seen from the order of the Executive Engineer dated 19-10-200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of a compensatory payment under the Scheme floated by the Gujarat Government, the fees/charges paid by the assessee were clearly allowable as permissible deductions. The A.O. is directed to delete the addition o f Rs. 13,02,923/-. 5. Against this deletion of addition, the Revenue is in appeal before us. At the time of hearing the DR relied on the order of the Assessing Officer. Whereas the A.R. relied on the order of the Ld. CIT (A) and the Tribunal s order in ITA Nos.968/Ahd/2007 1029/Ahd/2007 Asst. Year 2003-04 in the case of ACIT, Circle-6,Surat vs. M/s Nanavati Motors M/s Nanavati Motors vs. ITO Ward 4(1), Surat. 6. After hearing both the parties and perusing the record, we find that the ld. CIT(A) s order is in confo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere all new, except to M/s. Pranay Traders of Rs.7 lakhs and a part of the advance given to M/s. Jay Ambe Corporation of Rs. 1,27,1210/-. Therefore, there was no diversion of any interest-bearing fund for non-business purposes. Payments made to M/s. Pranay Traders and M/s. Jay Ambe Corporation were for supply of building materials which however subsequently did not materialize, and the assessee had not been able to recover the said amounts. These parties were not covered u/s. 40A(2)(b). It has been further submitted that the assessee had total unsecured loans of Rs.1,06,70,477/- out of which only Rs.22,49,729/- was on interest as stated by the AO himself. In the earlier year, the interests on the deposits were fully allowed on the ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
