SHANTIVAN DEVELOPERS P. LTD, MUMBAI V. ITO 11(2)(2), MUMBAI

ITA 2763/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9953 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 26-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 17-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V JANARDHANAN
• Assessee Lawyers: DEVANG K SHAH
• Keywords: Business income; Business expenditure; Revenue expenditure

Judgement Text

, SMC , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.2763/MUM/2017 : ASST.YEAR 2012-2013 M/S. SHANTIVAN DEVELOPERS PVT. LTD. 1 BINA SHOPPING CENTRE, M.V.ROAD ANDHERI (EAST), MUMBAI 400 069. PAN : AABCS1419H. / VS. THE INCOME TAX OFFICER WARD 11(2)(2) MUMBAI. ( / APPELLANT) ( / RESPONDENT) /APPELLANT BY : SHRI DEVANG K.SHAH /RESPONDENT BY : SHRI V.JANARDHANAN / DATE OF HEARING : 27.06.2017 / DATE OF PRONOUNCEMENT : 01.09.2017 / O R D E R THIS IS AN APPEAL BY THE REVENUE ARISING OUT OF THE ORDER OF LEARNED CIT(A) DATED 20.01.2017 PERTAINING TO ASSESSMENT YEAR 2012-2013. 2. THE GROUNDS OF APPEAL READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) - 18, MUMBAI [WCIT(A)'], HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE INCOME TAX OFFICER - 11(2)(2), MUMBAI, ('ASSESSING OFFICER' / 'AO1'), SURROUNDING THE CLAIM FOR DEDUCTION OF RS. 10 LAKHS DEBITED AS STAMP DUTY TO PROJECT & DEVELOPMENT EXPENSES IN PROFIT & LOSS ACCOUNT WHILE COMPUTING THE BUSINESS INCOME, FAILING, TO APPRECIATE THAT THE WRITE-OFF OF THE STAMP DUTY WAS WHOLLY AND EXCLUSIVELY IN RELATION TO BUSINESS OPERATIONS AND SUCH CAUSE OF ACTION WAS DUE TO APPELLANT'S ANTICIPATION AS 'NON-RECOVERABLE' GIVEN THE CIRCUMSTANCES AND TO ALIGN WITH THE INCOME-EXPENSE MATCHING CONCEPT TO ARRIVE AT THE TRUE PROFITS FOLLOWING THE PROJECT COMPLETION METHOD FOR RECOGNITION OF PROFIT AND LOSS FROM THE PROJECT. ITA NO.2763/MUM/2017. M/S.SHANTIVAN DEVELOPERS PRIVATE LIMITED. 2 2. THE LEARNED C1T(A) FAILED TO CONSIDER THAT THE APPELLANT RECEIVED PARTIAL REFUND OF AFORESAID STAMP DUTY FROM THE STAMP AUTHORITIES TO THE EXTENT OF RS. 9 LAKHS (AS AGAINST T. 10 LAKHS) IN AY 2013-14 (FY 2012-13) AND THE SAME HAS BEEN DULY RECOGNISED AS INCOME (I.E., REDUCED FROM PROJECT & DEVELOPMENT EXPENSES) IN ITS AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 AND RETURN OF INCOME FOR AY 2013-14. THE APPELLANT PRAYS THAT THE CLAIM FOR DEDUCTION OF RS. 10 LAKHS DEBITED AS STAMP DUTY TO PROJECT & DEVELOPMENT EXPENSES BE WHOLLY ALLOWED WHILE COMPUTING BUSINESS / TAXABLE INCOME FOR AY 2012-13. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR CANCEL ANY GROUND OR GROUNDS BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 3. BRIEF FACTS OF THE CASE ARE AS UNDER:- 3.1 THE ASSESSEE HAS DEBITED RS.10 LAKH TOWARDS STAMP DUTY UNDER THE HEAD `PROJECT DEVELOPMENT EXPENSES. THE DETAILS WERE CALLED FOR BY THE A.O. AND THE ASSESSEE SUBMITTED THAT THIS AMOUNT WAS PAID AGAINST THE FLAT BOOKED BY ONE OF THEIR CUSTOMERS IN DECEMBER 2009 AND THE DEAL WAS LATER ON GOT CANCELLED. THE ASSESSEE FURTHER SUBMITTED LEDGER COPIES AND BANK STATEMENT TO SUPPORT ITS CLAIM BEFORE THE A.O. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE SAME DUE TO THE FOLLOWING REASONS:- (A) UNDER ORDINARY BUSINESS PARLANCE IN THE BUILDING INDUSTRY THE PAYMENT OF STAMP DUTY IS THE OBLIGATION OF THE PURCHASER AND NOT THE SELLER OF THE FLAT UNLESS THERE IS EXPRESS AGREEMENT TO THIS EFFECT AND THE SAME IS INCORPORATED IN THE AGREEMENT. FROM THE DETAILS FILED IN THE FORM OF AGREEMENT THERE IS NO SUCH MENTION OF SUCH AN UNDERSTANDING. HENCE IT IS UNACCEPTABLE THAT THE ITA NO.2763/MUM/2017. M/S.SHANTIVAN DEVELOPERS PRIVATE LIMITED. 3 ASSESSEE COMPANY WAS UNDER ANY OBLIGATION TO MAKE THE PAYMENT OF SUCH STAMP DUTY LIABILITY. FURTHER TO CLAIM SUCH EXPENSE UNDER THE HEAD PROJECT DEVELOPMENT IS NOT PROPER. (B) SECONDLY FOR THE SAKE OF ARGUMENT PURPOSE WITHOUT CERTIFYING THE TENABILITY OF THE CLAIM, THE PAYMENT IS MADE IN THE YEAR 2009 AND THEREFORE SUCH AN AMOUNT CAN BE CLAIMED AS EXPENSE IN THE CURRENT YEAR. (C) THIRDLY EVEN IF THE CONTENTION OF THE ASSESSEE COMPANY IS ACCEPTABLE THEN, IF THERE IS A CANCELLATION OF A DEAL ON WHICH STAMP DUTY IS PAID. THE CORRECT PROCEDURE WOULD BE TO CLAIM THE REFUND OF THE STAMP DUTY PAID WITH THE STAMP AUTHORITIES. IT CANNOT BE CLAIMED AS AN EXPENSE. 3.2 FROM THE ABOVE, THE A.O. CONCLUDED THAT THE CLAIM IS NOT IN THE ORDINARY PRUDENCE OF BUSINESS AND THUS IT CANNOT BE DEEMED AS A BUSINESS EXPENDITURE WHICH IS ALLOWABLE. 4. UPON ASSESSEES APPEAL, LEARNED CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY HOLDING AS UNDER:- 1. THE APPELLANT HAS CLAIMED AMOUNT OF STAMP DUTY WHICH IS NOT THE EXPENSE OF THE APPELLANT COMPANY. 2. STAMP DUTY IS ALWAYS BORNE BY THE BUYER. 3. THIS STAMP DUTY IS PERTAINING TO SELLER. 4. THE APPELLANT HAS NOT PRODUCED ANY CLAUSE IN THE AGREEMENT WHICH MAKES THIS SUM OF RS. 10 LACS AS LIABILITY OF THE APPELLANT, 5. THERE IS NO M. O. U. WHICH COMPELLED APPELLANT TO INCUR THIS EXPENDITURE. ITA NO.2763/MUM/2017. M/S.SHANTIVAN DEVELOPERS PRIVATE LIMITED. 4 6. THE APPELLANT HAS CLAIMED STAMP DUTY AS PROJECT DEVELOPMENT EXPENSES WHICH ITSELF IS NOT TENABLE IN LAW. 7. THE STAMP DUTY WAS PAID IN 2009. NO CANCELLATION DEED WAS RELIED UPON TILL A.Y. 2012-13. 8. SUM PAID AMOUNTING TO RS.10 LAC CANNOT BE ATTRIBUTED TO EXPENSE DURING THE YEAR. 9. THE APPELLANT HAS NEVER PREFERRED REFUND FROM STAMP DUTY AUTHORITIES. 10. MORE IMPORTANTLY, THE APPELLANT HAS ALREADY RECOVERED IN A SUBSEQUENT TEAR, IN VIEW OF THE ABOVE, THE CLAIM OF THE APPELLANT DOES NOT HAVE ANY MERIT BECAUSE THE SAME WAS SHOWN RECOVERABLE FROM THE SAID PARTIES AND THEREFORE CANNOT PERTAIN THE CHARACTER OF EXPENSES. MOREOVER, THE APPELLANT OF RS. 9 LACS DURING THE A.Y. 2013-14; THIS ALSO PROVES THE CONTENTION THAT THE APPELLANT HAS WRONGLY CLAIMED A SUM OF RS.10 LACS AS EXPENSES. I HAVE THEREFORE, NO HESITATION IN UPHOLDING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 5. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORD. I FIND THAT ASSESSEE HAS CLAIMED EXPENDITURE ON ACCOUNT OF THE STAMP DUTY ON A DEAL OF SALE OF FLAT WHICH DID NOT MATERIALIZE. IN THIS REGARD THE REASONING OF THE AUTHORITIES BELOW IS QUITE CORRECT THAT THE IMPUGNED EXPENDITURE WAS NOT ALLOWABLE IN THE HANDS OF THE ASSESSEE AS REVENUE EXPENDITURE. AT BEST THE ASSESSEE COULD HAVE SOUGHT REFUND FROM THE STAMP DUTY AUTHORITY. HERE I NOTE THAT ASSESSEE HAD SOUGHT REFUND AND A SUM OF RS.9 LAKH HAS ALREADY BEEN CREDITED BY THE ASSESSEE NEXT YEAR. 6. IN THIS REGARD, LEARNED COUNSEL OF THE ASSESSEE HAS MADE A SUBMISSION THAT SINCE RS.9 LAKH IS ALREADY OFFERED FOR TAXATION NEXT YEAR, THE TAXATION OF RS.10 LAKH THIS YEAR WILL BE DOUBLE TAXATION OF THE EXTANT AMOUNT. HENCE HE PLEADED THAT CORRESPONDING RELIEF TO THE ASSESSEE SHOULD BE GIVEN. ITA NO.2763/MUM/2017. M/S.SHANTIVAN DEVELOPERS PRIVATE LIMITED. 5 7. UPON CAREFUL CONSIDERATION, I FIND THAT AN EXPENDITURE WHICH IS NOT ALLOWABLE IN THE CURRENT YEAR CANNOT BE ALLOWED ON THE PLEA THAT A CORRESPONDING AMOUNT HAS ALREADY BEEN OFFERED FOR TAXATION IN THE NEXT YEAR. HOWEVER, IT IS ALSO SETTLED LAW THAT AS THE SAME AMOUNT CANNOT BE TAXED TWICE. HENCE, IN MY CONSIDERED OPINION, THE ASSESSEE IS FREE TO MOVE NECESSARY APPLICATION FOR APPROPRIATE RELIEF, BEFORE THE CONCERNED AUTHORITIES IN THE SUBSEQUENT YEARS. 8. IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENT, I DO NOT FIND ANY INFIRMITY IN THE ORDER OF AUTHORITIES BELOW AND HENCE I UPHOLD THE SAME. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED ON THIS 01 ST DAY OF SEPTEMBER, 2017. SD/- ( SHAMIM YAHYA ) ACCOUNTANT MEMBER MUMBAI; DATED : 01 ST SEPTEMBER, 2017. DEVDAS* / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT, MUMBAI. 4. / CIT(A), MUMBAI 5. , , / DR, ITAT, MUMBAI 6. [ / GUARD FILE.