Appeal details
Counselvise Citation
[2018] 125 COUNSELVISE.COM (IT) 7466 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 3 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
09-07-2018
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
B
Assessment Year
2011-2012
Appeal Filed On
06-07-2017
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . , , BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ./I.T.A. NO.1680/CHNY/2017 / ASSESSMENT YEAR : 2011-2012. CHAITANYA BUILDERS & LEASING (P) LTD, KAKANI TOWERS 4 TH FLOOR, NO.15, KHADER NAWAZ KHAN ROAD, CHENNAI 600 006. VS. THE ADDITIONAL COMMISSIONER OF INCOME TAX, COMPANY RANGE I, CHENNAI 600 034. [PAN AAACC 1338E] ( / APPELLANT) ( /RESPONDENT) ! ' # / APPELLANT BY : SHRI. T.N. SEETHARAMAN, ADV. $%! ' # /RESPONDENT BY : SHRI. R.V. AROON PRASAD, JCIT. & ' ' () /DATE OF HEARING : 09-07-2018 *+ ' () /DATE OF PRONOUNCEMENT : 09-07-2018 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER: ASSESSEE IN THIS APPEAL, WHICH IS DIRECTED AGAIN ST AN ORDER DATED 27.04.2017 OF LD. COMMISSIONER OF INCOME TA X (APPEALS)-1, CHENNAI, IS AGGRIEVED ON A DISALLOWANCE OF C33,18, 000/- CLAIMED BY IT AS SECURITY DEPOSITS WRITTEN OFF. ITA NO.1680/2017. :- 2 -: 2. LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE SU M OF C33,18,000/- WAS GIVEN AS SECURITY DEPOSITS TO CHEN NAI METROPOLITAN DEVELOPMENT AUTHORITY (IN SHORT THE CMDA) FOR T HE PURPOSE OF SANCTIONING VARIOUS PROJECTS AND SUCH AMOUNTS WER E NEVER REFUNDED BY THE CMDA. AS PER THE LD. AUTHORISED REPRESENTATI VE, ASSESSEE, BEING A DEVELOPER OF RESIDENTIAL AND COMMERCIAL PR OJECTS, COULD NOT DO ITS BUSINESS, WITHOUT GIVING SUCH DEPOSITS WHICH W ERE A PREREQUISITE FOR OBTAINING VARIOUS PERMITS AND LICENSES FROM CMD A. FURTHER, AS PER THE LD. AUTHORISED REPRESENTATIVE, THERE WAS NO VIO LATION TO EXPLANATION TO SECTION 37(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) IN THE WRITE-OFF OF THE CMDA DEPOSITS. CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT CMDA HAD NOT FOR FEITED THE DEPOSITS FOR VIOLATION OF ANY PLANNING PERMISSION O R BUILDING PLANS. ACCORDING TO HIM, ASSESSEE HAD CONSIDERED IT FIT TO WRITE OFF THE DEPOSITS SINCE IT COULD NOT PURSUE WITH THE CMDA F OR REFUND OF SUCH AMOUNT AND THE DECISION WAS TAKEN IN THE INTEREST O F ITS BUSINESS SO AS TO KEEP GOOD RELATIONS WITH CMDA. AS PER THE LD . AUTHORISED REPRESENTATIVE, THOUGH ASSESSEE DID NOT PRODUCE ANY EVIDENCE TO SUBSTANTIATE ITS CLAIM FOR REFUND OF THE DEPOSITS WITH CMDA, THIS COULD NOT BY ITSELF DISENTITLE THE ASSESSEE FROM CLAIMING A WRITE-OFF, DUE TO THE IMPRACTICALITY OF GETTING THE AMOUNT BACK FROM CMDA. ITA NO.1680/2017. :- 3 -: 3. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONGL Y SUPPORTING THE ORDERS OF THE LOWER AUTHORITIES SUBM ITTED THAT ASSESSEE COULD NOT PRODUCE ANY EVIDENCE FOR ANY CLAIM FOR R EFUND MADE BY IT WITH CMDA. FURTHER, AS PER THE LD. DEPARTMENTAL R EPRESENTATIVE, CMDA THROUGH ITS LETTER DATED 11.03.2014 HAD MENT IONED ABOUT FORFEITURE OF DEPOSITS AND THIS WAS TAKEN NOTE OF BY LD. COMMISSIONER OF INCOME TAX (APPEALS). CONTENTION OF THE LD. DEP ARTMENTAL REPRESENTATIVE WAS THAT ASSESSEE CHOSE NOT TO MAKE AN APPLICATION FOR REFUND SINCE IT WAS AWARE THAT THERE WERE VARI OUS VIOLATIONS COMMITTED BY IT VIZ-A-VIZ THE SANCTIONED BUILDING P LANS. 4. AD LIBITUM REPLY OF THE LD. AUTHORISED REPRESENTATI VE WAS THAT THE CLAIM OF WRITE OFF OF THE DEPOSITS WITH CMDA, IF IT WAS CONSIDERED AS NOT ALLOWABLE, IT SHOULD BE ALLOWED TO BE ADDED TO THE COST OF CONSTRUCTION OF THE RELATED PROJECTS. AS P ER THE LD. AUTHORISED REPRESENTATIVE, SUCH A CLAIM WAS PREFERRED AS AN A LTERNATIVE GROUND BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) BY THE LATTER AUTHORITY DID NOT ALLOW IT. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOT DISPUTE D THAT WRITE-OFF OF ITA NO.1680/2017. :- 4 -: C33,18,000/- EFFECTED BY THE ASSESSEE WERE OF CMDA DEPOSITS. ASSESSEE COULD NOT PLACE ANY EVIDENCE TO SHOW THAT IT HAD EVER MADE ANY CLAIM FOR REFUND WITH CMDA. CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE IS THAT IN THE INTEREST OF ITS BUSIN ESS, IT COULD NOT MAKE SUCH A CLAIM. WE ARE UNABLE TO APPRECIATE THIS CONT ENTION. ONCE THE AMOUNTS PLACED WITH CMDA ARE CLASSIFIED AS DEPOSITS , CLAIMING REFUND OF SUCH AMOUNT, IN OUR OPINION, WILL NOT AFFECT AS SESSEES BUSINESS IN ANY MANNER. ESPECIALLY SO, SINCE CMDA IS A PUBIC AU THORITY. ASSESSEE CANNOT SAY THAT IT HAD CLAIMED THE WRITE-OFF AS B AD DEBTS SINCE ADMITTEDLY, THERE WERE DEPOSITS. THUS, IN OUR OPINI ON, LOWER AUTHORITIES WERE JUSTIFIED IN DISALLOWING THE CLAIM OF WRITE-O FF OF DEPOSITS WITH CMDA. HOWEVER, THERE IS AN ALTERNATIVE SUBMISSION OF THE ASSESSEE THAT IT SHOULD BE ALLOWED TO ADD SUCH WRITTEN OFF AMOUNTS TO THE COST OF CONSTRUCTION OF THE PROJECTS FOR WHICH SUCH DEPO SITS WERE GIVEN TO CMDA, TO THE EXTENT FORFEITED BY CMDA. THIS ISSUE IN OUR OPINION CAN BE LOOKED INTO BY THE LD. ASSESSING OFFICER. ONCE THE ASSESSEE HAS CLAIMED THE DEPOSITS AS A WRITE OFF IN ITS BOOKS OF ACCOUNTS, THEN IT COULD LEGITIMATELY ARGUE FOR ADDITION OF SUCH AMOU NTS, TO THE EXTENT FORFEITED BY CMDA TO THE COST OF CONSTRUCTION. HE NCE, WHILE CONFIRMING THE ORDERS OF THE LOWER AUTHORITIES IN S O FAR AS DISALLOWANCE OF WRITE OFF OF DEPOSITS IS CONCERNED, WE SET ASID E THE ORDERS OF THE LOWER AUTHORITIES IN SO FAR AS IT RELATES TO THE AL TERNATIVE CLAIM OF THE ITA NO.1680/2017. :- 5 -: ASSESSEE THAT THE FORFEITED AMOUNTS OF CMDA DEPOSI TS ARE TO BE ALLOWED AS PART OF COST OF CONSTRUCTION THE RESPECT IVE PROJECTS. ASSESSEE HAS TO PRODUCE EVIDENCE BEFORE LD. ASSESSI NG OFFICER SUBSTANTIATING ITS CLAIM OF FORFEITURE OF DEPOSITS. FOR THIS LIMITED PURPOSE, WE REMIT THE ISSUE BACK TO THE FILE OF THE LD. ASSESSING OFFICER FOR CONSIDERATION AFRESH, IN ACCORDANCE WITH LAW. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON MONDAY, THE 9 TH DAY OF JULY, 2018, AT CHENNAI. SD/- SD/- ( ) (GEORGE MATHAN) / JUDICIAL MEMBER ( . '#'$ ) (ABRAHAM P. GEORGE) % &' / ACCOUNTANT MEMBER - ' / CHENNAI . / DATED: 9 TH JULY, 2018 KV / ' $(0 1 2 1 ( / COPY TO: 1 . ! / APPELLANT 3. & 3( ( ) / CIT(A) 5. 167 $(8 / DR 2. $%! / RESPONDENT 4. & 3( / CIT 6. 79 :' / GF
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