PARKSONS PRESS P.LTD, MUMBAI V. DCIT RG 8(2), MUMBAI

ITA 5051/MUM/2011

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9795 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 13-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 27-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESH
• Assessee Lawyers: YOGESH THOR
• Keywords: Business income; Earning of tax free income; Fair market value
• Section: 43B; 14A; 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAM LAL NEGI , JM ITA NO. 5051 / MUM/20 1 1 ( ASSESSMENT YEAR : 2007 - 08 ) M/S. PARKSONS PRESS PVT. LTD., 41/B, LALBAUG INDUSTRIAL ESTATE, DR. AMBEDKAR ROAD LALBAUG , MUMBAI VS. DCIT RG 8(2), MUMBAI PAN/GIR NO. AAACK1463C APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI YOGESH THOR REVENUE BY SHRI SAURABH DESHPANDE DATE OF HEARING 26 / 05 /201 7 DATE OF PRONOUNCEME NT 26 / 07 /201 7 / O R D E R PER R.C.SHARMA (A.M ) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 17, MUMBAI DATED 28/02/2011 FOR A.Y. 2007 - 08 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE: - 1. RE: DEDUCTION NOT GRANTED IN RESPECT OF THE COLLECTOR'S LIABILITY RS.2,41,15,5991 - : 1.1. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONFIRMING DISALLOWANCE OF THE COLLECTORS LIABILITY RS.2,41,15,599 / - , BEING THE LIABILITY ARISING PURSUAN T TO CARRYING OUT THE DEVELOPMENT OF THE PROPERTY WHILE DETERMINING THE INCOME FOR THE YEAR UNDER CONSIDERATION. 1.2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE COLLECTORS LIABILITY OF RS.2,41,15,599 IS PART OF COST OF DEVELOPMENT OF THE PROPERTY A ND AS SUBSTANTIAL REVENUE ARISING ON SALE OF THE PROPERTY HAS BEEN OFFERED FOR TAXATION THE CORRESPONDING COST IS ITA NO. 5051/MUM/2011 M/S. PARKSONS PRESS PVT. LTD., 2 ALLOWABLE ON PRINCIPLE OF MATCHING OF COST AND REVENUE. 1.3. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT DEDUCTION IN RESPECT OF THE COLLE CTORS LIABILITY OF RS.2,41,15,599 / - IS ALLOWABLE U / S. 37(1) OF THE ACT. 2. RE: DISALLOWANCE IN RESPECT OF AMOUNT PAYABLE TO COLLECTOR RS. 2,41,15,599/ - U/S. 43B OF THE LT. ACT, 1961 2:1. WITHOUT PREJUDICE TO GROUND NO.1 ABOVE, AND IN THE ALTERNATIVE, T HE LEARNED CIT(A) ERRED IN MAKING DISALLOWANCE U / S 43B OF THE LT. ACT, 1961 AMOUNTING TO RS. 2,41,15,599/ - IN RESPECT OF THE COLLECTORS LIABILITY. 2.2. THE LEARNED CIT(A) FAILED TO APPRECIATE FACT THAT THE COLLECTOR'S LIABILITY IS NOT ANY SUM PA YABLE BY WAY OF TAX, DUTY, CESS OR FEE UNDER ANY LAW. IT IS A CONTRACTUAL . LIABILITY ARISING PURSUANT TO THE DEVELOPMENT OF THE PROPERTY AND NOT A STATUTORY LIABILITY. 3. RE: DISALLOWANCE U/S 14A OF THE LT. ACT, 1961 AMOUNTING TO RS.5,39,175/ - 3.1. T HE LEARNED CIT (APPEALS) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ADOPT THE DISALLOWANCE U/S 14A AT RS. 5,39,175 WHEN THE APPELLANT HAS INCURRED DIRECT EXPENSES IN FORM OF PMS CHARGES OF RS. 3,77,605 ONLY. 3.2. W ITHOUT PREJUDICE TO THE CONTENTION T HAT DISALLOW ANCE U/S 14A SHOULD BE ONLY RS.3 ,77,605, THE LEARNED CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ADOPT THE DISALLOWANCE U/S 14A AT RS. 5,39,175 INSTEAD OF RS. 5,17,543 AS UNDER: SR. NO. PARTICULAR AMOUNT (RS.) REMARKS 1 DIRECT EXPE NDITURE PMS CHARGES PAID TO ENAM SECURITIES PVT. LTD., 3,77,605 2 INTEREST EXPENSES NIL CIT(A) HAS OPINED AT PARA 5.3 OF HER ORDER THAT NO DISALLOWANCE WAS CALLED FOR OUT OF INTEREST CLAIMED. DESPITE THIS, IT APPEARS ERRONEOUSLY INTEREST OF RS.21,093 HAS BEEN STILL CONSIDERED WHILE DIRECTING DISALLOWANCE AT RS.5,39,175/ - 3 0.5% OF AVG. INVESTMENT 1,40,478 ITA NO. 5051/MUM/2011 M/S. PARKSONS PRESS PVT. LTD., 3 IL. RELIEF SOUGHT: 1. YOUR APPELLANT PRAYS THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) BE MODIFIED BY ALLOWI NG DEDUCTION IN RESPECT OF THE COLLECTORS' LIABILITY OF RS. 2,41,15,599 AND RESTRICTING DISALLOWANCE TO RS. 3,77,605 UNDER SECTION 14A OF INCOME TAX ACT, 1961 . 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF A RE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF PACKING MATERIALS AND PRINTING. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE A.O. OB SERVED FROM THE COMPUTATION OF INCOME THAT THE ASSESSEE COMPANY HAS REDUCED ITS BUSINESS INCOME BY RS.2 ,41,15,599/ - BEING AMOUNT PAYABLE TO COLLECTOR TOWARDS 50% OF UNEARNED INCOME ON LAND AT 15, SHAH INDUSTRIAL ESTATE, ANDHERI (WEST), MUMBAI IT IS FURTHER SEEN THAT THE ASSESSEE HAS APPENDED A NOTE ON THE FOOT OF COMPUTATION OF INCOME WHICH READS AS UNDER: 'COMPUTATION OF COLLECTOR'S LIABILITY ON ACCOUNT OF UNEARNED INCOME ON LAND AT 15 SHAH INDUSTRIAL ESTATE, OFF VEERA DESAI ROAD, ANDHERI (WEST), THOUGH NOT PROVIDED IN THE ACCOUNTS, IS PAYABLE IN ACCORDANCE WITH TERM OF ALLOTMENT OF LAND IN FORM HH - 1 AND G OVERNMENT OF MAHARASHTRA NOTIFICATION DATED 21.05.2006. (COPY ATTACHED), AS WORKED OUT HEREUNDER: VALUATION OF LAND ADMEASURING 3692.40 SQ. YARDS (3087.33) 62,364,066 LESS: REDUCTION IN VALUE BEING COLLECTORS LAND @ 20% B=A *20% 12,472,813 C=A - B 49 ,891,253 LESS: UNEARNED INCOME AS PER COLLECTORS ORDER (STATED ABOVE) D 1,660,055 AMOUNT OF UNEARNED INCOME E=C - D 48,231, 198 PROVISION 50% OF U NEARNED INCOME F=E / 2 24,115,599 4. IT IS FURTHER OBSERVED THAT THE AUDITOR UNDER NOTE NO.6 OF NOTES TO THE ACCOUNTS HAS APPENDED THE FOLLOWING NOTE: '6. THE COMPANY HAD PURCHASED RIGHT OF REVERSION FOR LAND AT 15 SHAH INDUSTRIAL ESTATE, OFF VEERA DESAI ROAD, ANDHERI (W), MUMBAI 400 058 FROM M/S. MEMA ENGINEERS AND CONTRACTORS PVT. LTD (MEMA) VIDE DEED OF REVERSION DATED 17TH FEBRUARY 2000 UNDER THE TERMS AND CONDITION ITA NO. 5051/MUM/2011 M/S. PARKSONS PRESS PVT. LTD., 4 STATED IN FORM HH - 1 FOR ALLOTMENT OF LAND TO M EMA. THE SAID LAND WAS ALLOTTED TO MEMA BY THE ADDL. COLLECTOR OF BOMBAY, BOMBAY SUBURBAN DISTRICT ON THE TERMS AND CONDITION STATED IN FORM HH - 1 DATED 3RD JULY, 1964 IN PURSUANCE TO ORDER DATED 31ST DECEMBER 1959 OF THE ADDL. COMMISSIONER OF BOMBAY AND AS MODIFIED BY THE LETTER DATED 28TH MAY 1964 FROM THE UNDER SECRETARY TO THE GOVERNMENT OF MAHARASHTRA, REVENUE AND FOREST DEPARTMENT. THE SAID REVERSION WAS MADE EFFECTIVE BY THE DISTRICT COLLECTOR BOMBAY, BOMBAY SUBURBAN DISTRICT; VIDE HIS ORDER DATED 3 0TH AUGUST, 2003 WITH AN OBLIGATION TO MAKE PAYMENT OF THE 50% OF UNEARNED INCOME BASED ON MARKET VALUE FROM FUTURE TRANSFER AFTER DEVELOPMENT OF THE PROPERTY, AT RESPECTIVE TIME. THE GOVERNMENT OF MAHARASHTRA, REVENUE AND FOREST DEPARTMENT HAS ISSUED A NOTIFICATION DATED 21.05.2006 TO ENFORCE USE OF READY RECKNOR VALUE FOR LAND VALUATION FOR USE OF GOVERNMENT LAND ON LEASE OR RENT, AND TO INCLUDE THE IMPROVED METHODS OF VALUATION OF GOVT. LAND IN RESPECTIVE CASES. SINCE COMPANY HAS DEVELOPED THE PROPER TY AS COMMERCIAL COMPLEX AND HAVE TRANSFERRED SUBSTANTIAL PORTION OF THE PROPERTY DURING THE YEAR THE COMPANY IS LIABLE TO PAY 50% OF INCREMENT IN THE VALUE OF LAND, CALCULATED ON THE BASIS OF VALUE GIVEN IN THE READY RECKNOR FOR THE LAND IN THE AREA, CONS IDERING THAT THE LAND BEING, COLLECTOR I GOVERNMENT LAND FAIR MARKET VALUE OF THE LAND WILL BE 80% OF THE READY RECKNOR VALUE. LIABILITY OF FOR SUCH EARNED INCOME IS WORKED OUT AS UNDER: VALUATION OF LAND ADMEASURING 3692.40 SQ.YARDS (3087.33 SQ.MTRS.) @ 20200 PER SQ. MTR. (AS PER READY RACKNOR) A 62,364,066 LESS: REDUCTION IN VALUE BEIN~ COLLECTORS LAND @ 20% B=A *20% 12,472,813 C= A - B 49,891,253 LESS: UNEARNED INCOME AS PER COLLECTORS ORDER (STATED ABOVE) D 1,660,055 AMOUNT OF UNEARNED INCOME E=C - D 48,231,198 AMOUNT PAYABLE TO THE COLLECTOR TOWARDS 50% OF UNEARNED INCOME F=E/2 24,115,599 5. AO OBSERVED THAT IN THE ABSENCE OF ANY SPECIFIC DEMAND LETTER FROM THE COLLECTOR BOMBAY SUBURBAN THE COMPANY HAS NOT PROVIDED SUCH LIABILI TY IN THEIR BOOKS OF ACCOUNTS, H AD THE ABOVE LIABILITY OF RS.2,41, 15,599/ - BEEN PROVIDED IN THE ACCOUNTS, THE PROFIT FOR THE YEAR WOULD HAVE B EEN LOWER BY THE SAME AMOUNT . ACCORDINGLY HE ADDED RS.2,41,15,559/ - IN THE ASSESSEES INCOME. ITA NO. 5051/MUM/2011 M/S. PARKSONS PRESS PVT. LTD., 5 6. THE AO ALSO MADE A DISALLOWANCE U/S.14A AMOUNTING TO RS.6,00,945/ - . 7. BY THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED BOTH THE ADDITIONS AGAINST WHICH THE A SSESSEE IS IN FURTHER APPEAL BEFORE US. 8. IT WAS ARGUED BY THE LD. AR THAT THE ASSESSEE HAD PURCHASED RIGHT OF REVERSION IN RESPECT OF A LEASEHOLD LAND AT 15 SHAH INDUSTRIAL ESTATE OFF VEERA DESAI ROAD, ANDHERI WEST, MUMBAI 400 058 VIDE DEED OF REVERSIO N DATED FEBRUARY 17, 2000 FROM M / S. MEMA ENGINEERS AND CONTRACTORS PVT . LTD. THE SAID MEMA ENGINEERS HAD ACQUIRED THE LEASEHOLD LAND UNDER AGREEMENT DATED JULY 03, 1964 WITH THE COLLECTOR OF BOMBAY . T HE SAID REVERSION WAS MADE EFFECTIVE BY THE DISTRICT COL LECTOR BOMBAY, BOMBAY SUBURBAN DISTRICT (''THE COLLECTOR') VIDE ORDER DATED AUGUST 30, 2003 WITH AN OBLIGATION TO MAKE PAYMENT OF THE 50% OF UNEARNED IN CREASE BASED MARKET VALUE FROM FUTURE TRANSFER AFTER DEVELOPMENT OF THE PROPERTY AT THE RESPECTIVE TIM E. 9. HE FURTHER CONTENDED THAT GOVERNMENT OF MAHARASHTRA, REVENUE AND FOREST DEPARTMENT HAD VIDE NOTIFICATION DATED MAY 21, 2006 STATED TO ENFORCE USE OF READY RECKNOR VALUE FOR LAND VALU ATION FOR USE OF GOVERNMENT LAND ON LEASE OR RENT AND TO INCLUDE THE IMPROVED METHODS OF VALUATION OF GOVERNMENT LAND IN RESPECTIVE CASES. D URING THE RELEVANT PREVIOUS YEAR, THE A SSESSEE HAD COMPLETED THE DEVELOPMENT OF THE COMMERCIAL BUILDING AND HAS OFFERED THE PROFITS ON SALE OF COMMERCIAL UNITS AT SHAH INDUSTRIAL ESTATE . FURTHER, THE A SSESSEE HAD CLAIMED ITA NO. 5051/MUM/2011 M/S. PARKSONS PRESS PVT. LTD., 6 DEDUCTION OF LIABILITY TO COLLECTOR TOWARDS 50% OF THE UNEARNED INCREASE AMOUNTING TO RS.2,41,15,599/ - . THIS LIABILITY WAS COMPUTED BASED ON READY RECKNOR AS PER THE ABOVE REFERRED NOTIFICATION. THE A SSESSEE DID NOT ACCO UNT THIS LIABILITY IN THE BOOKS OF ACCOUNT FOR THE YEAR ENDED MARCH 31, 2007. A DISCLOSURE IS MADE AS NOTES TO ACCOUNTS, INTER ALIA, THAT IN THE ABSENCE OF ANY SPECIFIC DEMAND LETTER FROM THE COLLECTOR, THE A SSESSEE HAD NOT PROVIDED SUCH LIABILITY IN THEI R BOOKS OF ACCOUNTS. INDEED, THE AUDITORS HAVE QUALIFIED THE AUDIT REPORT TO STATE THAT THE ASSESSEE HAS UNDERSTATED THE INCOME THE EXTENT OF RS.2,41,15,559/ - AS THE AMOUNT PAYABLE TO THE COLLECTOR HAS NOT BEEN DEBITED IN THE BOOKS OF ACCOUNTS. 10. AS PE R LD. AR C OLLECTOR'S LIABILITY IS NOT ANY SUM PAYABLE BY WAY OF 'TAX, DUTY, CESS OR FEE' UNDER ANY LAW. IT IS A CONTRACTUAL LIABILITY ARISING PURSUANT TO THE CONDITIONS IN - BUILT IN THE AGREEMENT FOR PURCHASE OF THE RIGHTS IN THE LAND BY THE ASSESSEE AND IS THEREFORE NOT COVERED BY THE PROVISIONS OF 43B OF THE ACT . 11. THE LD. AR FURTHER CONTENDED THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE JURIS DICTIONAL TRIBUNAL IN THE CASE OF MEMA ENGINEERS & CONTRACTORS PVT. LTD. V. A CIT (ITA NO. 654/MUM/2011) WHEREIN ON SAME FACTS THE HONBLE TRIBUNAL HAS HELD THAT 50% OF THE UNEARNED INCREASE IS TO BE CONSIDERED AS CONTRACTUAL LIABILITY AND IS NOT HIT BY THE PROVISIONS OF SECTION 43B OF THE ACT. ITA NO. 5051/MUM/2011 M/S. PARKSONS PRESS PVT. LTD., 7 12. WITH REGARDS TO THE CONTENTION O F THE LD. AO AND LD. CIT(A) THAT SINCE THE ASSESSEE HAS NOT BOOKED THE LIABILITY IN THE BOOKS OF ACCOUNTS, THE LI A BILITY HAS NOT CRYSTALLISED DURING THE YEAR, LD. AR SUBMI TTED THAT THE QUESTION AS TO WHETHER THE A SSESSEE IS ENTITLED TO A PARTICULAR DEDUCTI ON OR NOT DEPENDS ON THE PROVISIONS OF LAW AND THE ENTRIES IN THE BOOKS OF ACCOUNTS CANNOT BE CONSIDERED AS DECISIVE OR CONCLUSIVE FACTOR . F OR THIS PURPOSE, RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF KEDARNATH JUTE MFG. CO. LTD. V. CIT (82 ITR 363) WHEREIN IT WAS HELD THAT: WE ARE WHOLLY UNABLE TO APPRECIATE THE SUGGESTION THAT IF AN ASSESSEE UNDER SOME MISAPPREHENSION OR MISTAKE FAILS TO MAKE AN ENTRY IN THE BOOKS OF ACCOUNT AND ALTHOUGH, UNDER THE LAW, A DEDUCTION MUS T BE ALLOWED BY THE INCOME - TAX OFFICER, THE ASSESSEE WILL LOSE THE RIGHT OF CLAIMING OR WILL BE DEBARRED FROM BEIGN ALLOWED THAT DEDUCTION. WHETHER THE ASSESSEE IS ENTITLED TO A PARTICULAR DEDUCTION OR NOT WILL DEPEND ON THE PROVISION OF LAW RELATING THERE TO AND NOT ON THE VIEW WHICH THE ASSESSEE MIGHT TAKE OF HIS RIGHTS NOR CAN THE EXISTENCE OR ABSENCE OF ENTRIES IN THE BOOKS OF ACCOUNT BE DECISI VE OR CONCLUSIVE IN THE MATTER. 13. THE LD. AR ALSO PLACED RELIANCE ON CBDTS NOTIFICATION NO. 9949 DATED JANU ARY 25, 1996 ISSUED U/S. 145(2) OF THE ACT, WHICH STATES THAT AS PER THE PRINCIPLE OF PRUDENCE, PROVISIONS SHOULD BE MADE FOR ALL KNOWN LIABILITIES AND LOSSES EVEN THOUGH THE AMOUNT CANNOT BE DETERMINED WITH CERTAINTY AND REPRESENTS ONLY A BEST ESTIMATE IN THE LIGHT OF AVAILABLE INFORMATION. THUS EVEN THE DEPARTMENT ALLOWS THE ASSESSEE TO FOLLOW THE POLICY OF PRUDENCE. A COPY OF THE SAID NOTIFICATION WAS HANDED OVER AT THE TIME OF HEARING. ON THE OTHER HAND, THE LD. DR RELIED ON THE EVIDENCE RECORDED BY T HE LOWER AUTHORITIES TO TH E FACT THAT IT WAS THE CONTINGENT LIABILITY WHICH DID NOT ACCRUE NOR PAID BY THE ASSESSEE EITHER DURING THE ITA NO. 5051/MUM/2011 M/S. PARKSONS PRESS PVT. LTD., 8 YEAR UNDER CONSIDERATION OR EVEN IN THE SUBSEQUENT YEAR. ACCORDINGLY, THE A.O. WAS JUSTIFIED IN ADDING THE PROVISION MADE BY THE ASSESSEE WHILE COMPUTING ITS TAXABLE INCOME WITH RESPECT TO TH E ACCOUNT WHICH DID NOT ACCRUE NOR PAID BY THE ASSESSEE. WITH REGARD TO RULE 14A DISALLOWANCE , THE CONTENTION OF THE LD. DR WAS THAT THE A.O. HAD COMPUTED DISALLOWANCE AS PER RULE 8D, ACC ORDING TO WHICH EVEN IN THE YEARS FALLING TO A.Y. 2008 - 09 REASONABLE DISALLOWANCE IS REQUIRED TO BE MADE IN RESPECT OF EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME. 14. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AU THORITIES BELOW AND DELIBERATED THE JURISDICTIONAL PRONOUNCEMENT CITED BY THE LD. AR AND DR BEFORE US . FROM THE RECORD, WE FOUND THAT THE ASSESSEE HAD OBTAINED THE RIGHT OF REVERSION FOR LAND AT 15, SHAH INDUSTRIAL ESTATE BY PURCHASE FROM M/S. MEMA ENGINEE RS AND CONTRACTORS PVT. LTD. VIDE DEED OF REVERSION DATED 17 TH FEBRUARY 2000. THE DEED WAS SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN FORM HH1, WHICH WAS THE FORM OF AGREEMENT TO BE PASSED BY PERSONS INTENDING TO BECOME OCCUPANTS OF LAND INCLUDED IN A DEVELOPMENT SCHEME OR IN OTHER SPECIAL CASES. ACCORDING TO THIS FORM WHICH WAS GIVEN BY M. ELECTRICAL AND MECHANICAL APPLIANCES (P) LTD. (THE EARLIER NAME OF THE VENDOR, MEMA ENGINEERS & CONTRACTORS (P) LTD.) TO THE ADDITIONAL COLLECTOR OF BOMBAY, BOMBAY SUBURBAN DISTRICT ON 31.7.1964, MEMA HAD AGREED TO PAY LAND REVENUE FROM TIME TO TIME BASED ON ASSESSMENTS TO BE MADE BY GOVERNMENT , ALL TAXES, RATES AND CESS LEVIABLE IN RESPECT OF ITA NO. 5051/MUM/2011 M/S. PARKSONS PRESS PVT. LTD., 9 THE SAID LAND. THE GRANT OF LAND WAS ALSO SUBJECT TO SPECIAL CONDITIONS O NE OF WHICH WAS THAT THE GOVERNMENT WILL BE ENTITLED TO HALF THE UNEARNED INCREMENT IN THE EVENT OF THE SALE OR TRANSFER WHETHER OUTRIGHT OR AS A RESULT OF UNREDEEMED MORTGA G E. FROM THE RECORD, WE FOUND THAT THE COLLECTOR HAD DETERMINED THE PROVISIONAL LIA BILITY TO BE PAID BY THE ASSESSEE ON THE ASSESSEE GETTI NG THE REVERSIONARY RIGHT FROM M EMA ENGINEERS BY DEED DATED 17.2.2000, PENDING FINAL DETERMINATION BY THE ASSISTANT DIRECTOR, DEPARTMENT OF TOWN PLANNING ON BEHALF OF THE COLLECTOR. THIS LETTER SHOWS THAT THOUGH THE EVENT WHICH OCCASIONED THE PAYMENT OF A PORTION OF THE UNEARNED INCOME ACCRUED IN THE YEAR 2000 IT WAS ONLY IN THE YEAR 2003 THAT THE COLLECTOR WAS AWARE OF THE EVENT AND THE OCCASION WAS ASSESSEES REQUEST TO THE COLLECTOR TO ALLOW IT USE TO PROPERTY COMMERCIALLY. (THIS IS CLEAR FROM THE OPENING SENTENCE OF THE LETTER WHICH REFERS TO THE ASSESSEES REQUEST FOR COMMERCIAL USE). THE ASSESSEE HAS NOT STATED FURTHER WHETHER THE FINAL DETERMINATION FOR THE UNEARNED INCOME FOR THE TRANSFER IN 2 000 HAS BEEN INTIMATED BY THE GOVERNMENT AND WHETHER IT HAD MADE FURTHER PAYMENTS. THE ASSESSEE HAD NOT STATED AS TO HOW MANY FLATS OR FLOORS WERE DEVELOPED AND HOW MANY SOLD OR TO WHOM. 15. THE LIABILITY WOULD CRYSTALLIZE ONLY WHEN THE COLLECTOR MUMBAI S UBURBAN DISTRICT CONSIDERS THE MATTER AND DETERMINES THE AMOUNT TO BE PAID BY THE ASSESSEE AS GOVERNMENTS SHARE OF UNEARNED INCOME. THIS IS SUPPORTED BY THE FACT THAT THE ASSESSEE ITSELF HAS NOT MADE ANY PROVISION IN ITS ACCOUNTS FOR THE LIABILITY. THE AU DITOR HAS STATED THAT THE ASSESSEE ITA NO. 5051/MUM/2011 M/S. PARKSONS PRESS PVT. LTD., 10 HAS NOT MADE THE PROVISION IN THE ABSENCE OF A SPECIFIC DEMAND FROM THE COLLECTOR. 16. IT IS CLEAR FROM THE ABOVE THAT THE LIABILITY NEITHER ACCRUED NOR CRYSTALLISED NOR PAID NOR ACCOUNTED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE BENCH SPECIFICALLY ASKED THE ASSESSEE TO F URNISH ANY DOCUMENTARY EVIDENCE INDICATING THE ACTUAL ACCRUAL AND/OR PAYMENT OF LIABILITY TILL TODAY, HOWEVER, THE ASSESSEE WAS UNABLE TO PRODUCE ANY EVIDENCE TO THIS FACT. UNDER THESE FAC TS AND CIRCUMSTANCES, THE DEDUCTION OF EXPENDITURE CANNOT BE ALLOWED. IN THE INTEREST OF JUSTICE, WE RESTORE THIS MATTER BACK TO THE FILE OF THE A.O. WITH A DIRECTION TO COMMUNICATE DIRECTLY TO THE COLLECTOR OF MUMBAI SO AS TO FIND OUT IF ANY LIABILITY IS PAYABLE BY THE ASSESSEE TOWARDS THIS PROJECT AND TO DECIDE THE SAME AFRESH AS PER LAW. 17. WITH REGARD TO THE DISALLOWANCE MADE U/S. 14A AS PER RULE 8D, WE OBSERVE THAT IN VIEW OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN CASE OF GODREJ AND BOYCE , RULE 8D IS APPLICABLE W.E.F. A.Y. 2008 - 09. HOWEVER, THE ASSESSMENT YEAR UNDER CONSIDERATION IS A.Y. 2007 - 08 WHEREIN RULE 8D IS NOT APPLICABLE. AS PER THE FACTS AND FIGURES PLACED ON RECORD WE DIRECT THE A.O. TO RESTRICT THE DISALLOWANCE U/S. 14A TO THE EXTENT O F RS.3,77,065/ - BEING AMOUNT OF PMS CHARGES PAID TO ENAM SECURITIES P. LTD. WE DIRECT ACCORDINGLY. ITA NO. 5051/MUM/2011 M/S. PARKSONS PRESS PVT. LTD., 11 18. IN THE RESULT, THE APPEAL IS ALLOWED IN PART, IN TERMS INDICATED HEREINABOVE. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 26 / 07 /2017 S D/ - ( RAM LAL NEGI ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 26 / 07 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESP ONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//