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TMI Blog2023 (8) TMI 670X X X X Extracts X X X X X X X X Extracts X X X X ..... and the funds received were on the basis of valid MOU against booking of space and on the basis of fixed return plan offered by the assessee, hence, the expenditure incurred was for the purpose of commercial expediency and meeting the fund requirement of the business. We further find that CIT(A) has deleted the addition by following the order of his predecessor. No infirmity in the order of the Ld. CIT(A), hence, we affirm the same and dismiss the ground no. 1 raised by the Revenue. Addition on account of compensation given to various parties - HELD THAT:- We note that since the project was given from Gannon Dunkerly to M/s Merlyn Projects Ltd, so the credit has to be given on the shortfall worked out in the quantity of steel and thus this expenditure is valid claim of the assessee and made for the purpose of business. In view of the aforesaid discussions, we are of the considered opinion, that the above expenditure of Rs. 2,24,08,048/-, on account of compensation given to various parties are made for the purpose of business, hence, the same were rightly deleted by the CIT(A), which do not require any interference on our part, therefore, we affirm the same and dismiss the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hased by Mrs. Sunita Beriwala and Ms. Vishakha Beriwala from M/s Suncity Projects Private Limited. For this an amount of Rs. 30 lacs was made by them to the company. Also the assessee company took the booking from the sellers on cost to cost basis without paying any premium. The subsequent demands of the Builder were also paid by the assessee company. In this regards we are enclosing herewith copy of agreement to sell with Mrs. Sunita Beriwala and Ms. Vishakha Beriwala as Annexure-VII. The assessee company is in the business of Real Estate and expected to earn substantial profit by renting out the said property. Unfortunately, market for commercial property did not pick up and the assessee company transferred the booking for a consideration of Rs. 3,03,10,350/- to M/s Trishul Infratech Private Limited as business prudence. 4. AO noted from the sale agreement dated 29.09.2009, it is clear that the sale was effected on 29.09.2009 relevant to AY 2010- 11. Hence, AO held that the loss on the transaction of this property has been wrongly claimed in the relevant assessment year. Accordingly, the same was disallowed and added to the income of the assessee. 5. Upon assessee s appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue expenditure, which is incurred wholly and exclusively for the purpose of business, must be allowed in its entirely in the year in which it is incurred. It cannot be spread over to a number of years even if the assessee has written it off in his books over a period of a number of years. Since, the expenditure incurred is not relevant to the previous year of relevant assessment year i.e. 2011- 12. So, the claim of the appellant is not allowable. Therefore, the disallowance made by the AO of Rs. 95,27,110/- is hereby confirmed. Hence the ground of appeal is dismissed. 6. Against the above order, assessee is in appeal before us. We have heard both the parties and perused the records. 7. Ld. Counsel of the assessee submitted that though the agreement for sale was entered on 29.09.2009 but the purpose thereof was carried out in the present assessment year. However, Ld. Counsel for the assessee could not produce any material to justify the submission that the agreement of sale was given effect in the present assessment year. In these circumstances, we do not find any infirmity in the order of Ld. CIT(A) and we uphold the same. This ground of assessee is dismissed. RE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mercial expediency and meeting the fund requirement of the business. We further find that ld. CIT(A) has deleted the addition by following the order of his predecessor in appeal no. 233/14-15 dated 20.7.2015. In view of above and respectfully following the precedents as aforesaid, we do not find any infirmity in the order of the Ld. CIT(A), hence, we affirm the same and dismiss the ground no. 1 raised by the Revenue. 10. As regards the addition of Rs. 2,24,08,048/- on account of compensation given to various parties is concerned, Ld. AR submitted that compensation paid of Rs. 15618000/- to Gannon Dunkerly, Rs. 31,72,752 + Rs. 28,36,074/- to Unit Holders and Rs. 781722/- to Merlyn Project Limited. As regards compensation of Rs. 15618000/- is concerned, it is noted that this compensation was paid on account of termination from the contract of project Vipul Tech Square-1 for the work done by the Gannon Dunkerly and in the business when compensation is paid for breach of contract, such compensation is to be treated as normal incidence of business, hence, compensation was paid for business purpose and is an allowable expense u/s. 37(1) of the Act. As regards, Rs. 31,72,752 to Unit Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly covered by the decision of the ITAT for the assessment year 2010-11 in assessee s own case decided in ITA No. 5507/Del/15 in Assessee s appeal wherein, on exactly similar facts, the Tribunal deleted the addition made u/s. 14A and allowed the ground of appeal raised by the assessee by relying upon the decision of the Jurisdictional High Court in Cheminvest Ltd. (61 Taxman.com 118 Delhi. Similarly, in the case in hand, Ld. AR has submitted that the assessee has not earned any exempt income during the year under consideration and for this purpose the assessee has submitted the computation of income and copy of balance sheet. Here in this matter, vide paragraph no. 2.2 of the assessment order, it is found that the assessee has been pleading before the AO that in the year under consideration they did not have any exempt income. However, the AO while placing reliance on Special Bench decision of the Tribunal in the case of Cheminvest ltd. Vs. ITO 317 ITR 86 wherein it was held that expenditure was allowable to the assessee without any requirement of earning or receipt of income. On that analogy, the AO held that the expenditure shall be disallowed whether or not any income was generat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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