M/s Triad Resorts and Hotels (P) Ltd., Bangalore V. ITO, Bangalore

ITA 791/BANG/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1478 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 02-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 13-06-2014
• Court: TRIBUNAL
• Department Lawyers: ANURAG SAHAY
• Assessee Lawyers: C P RAMASWAMI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Depreciation; Cost of acquisition; Corroborative evidences
• Section: 50C; 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH C BEFORE SHRI VIJAYPAL RAO, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.791 -793/BANG/2014 (ASST. YEAR 2008-09) 1) M/S TRIAD RESORTS & HOTELS PVT. LTD. (ITA NO.791 ) 2) M/S NOORANI PROPERTIES PVT. LTD., (ITA NO.792) 3)M/S VERDE DEVELOPERS PVT. LTD., (ITA NO.793) APARANTA NO.2208, HAL III STAGE, 80 FT ROAD, KODIHALLI, BANGALORE-560 008. . APPELLANT VS. THE INCOME-TAX OFFICER, WARD-12(2), BANGALORE. . RESPONDENT APPELLANT BY : SHRI C.P RAMASWAMI, C.A RESPONDENT BY : SHRI ANURAG SAHAY, CIT DATE OF HEARING : 2-09-2015 DATE OF PRONOUNCEMENT : 9-10-2015 O R D E R PER BENCH : THESE THREE APPEALS BY THE RELATED ASSESSEE ARE DIR ECTED AGAINST THE RESPECTIVE ORDERS DATED 20/3/2014 AND 28/3/2014 OF ITA NO.791-793/B /14 2 COMMISSIONER OF INCOME-TAX (APPEALS), MYSORE, FOR THE ASSESSMENT YEAR 2008-09. 2. SINCE THE IDENTICAL ISSUES ARE INVOLVED IN THESE APPEALS RELATING TO THE TRANSACTIONS OF DEVELOPMENT OF THE PROPERTY UNDER JOINT DEVELOPMENT AGREEMENT AND SUBSEQUENT CANCELLATION A S WELL AS SALE OF THE PROPERTY THEREFORE FOR THE PURPOSE OF RECORDING THE FACTS WE TAKE THE APPEAL IN ITA NO.792/BANG/2014 AS LEAD CASE. 3. THE ASSESSEE COMPANY WAS IN THE BUSINESS OF PROP ERTY DEVELOPMENT IN BANGALORE. THE ASSESSEE ALONG WITH OTHER TWO PARTIES NAMELY M/S TRIAD RESORTS & HOTELS LTD., AND M/S N OORANI PROPERTIES PVT. LTD., HAS . ENTERED INTO MASTER DEV ELOPMENT AGREEMENT WITH CLASSIC INFRASTRUCTURE AND DEVELOPMENT LTD., F OR JOINT DEVELOPMENT OF THE LAND VIDE AGREEMENT DATED 5/12/2 000. ALL THESE ASSESSEES PURCHASED THE RESPECTIVE LANDS IN THE Y EAR 1996. AS PER THE AGREEMENT, THE ASSESSEE RECEIVED A REFUNDABLE D EPOSIT OF RS.11,70,00,000/- AND WAS ENTITLED TO RECEIVE A SPE CIFIC PARTS OF BUILD UP AREA IN THE PROJECT AS ITS SHARE. HOWEVER, THE AGREEMENT DID NOT MATERIALIZED AND THE JOINT AGREEMENT WAS CONSEQUENT LY TERMINATED VIDE SETTLEMENT DATED 29/8/2007 BETWEEN THE PARTIES . THEREAFTER THE ITA NO.791-793/B /14 3 ASSESSEE VIDE SALE DEED DATED 29/9/2007 TRANSFERRED THE PROPERTY TO ITC LTD., FOR A CONSIDERATION OF RS.16,62,80,172/- IN THE MEANWHILE SURVEY U/S 133A WAS CONDUCTED ON 5/6/2008 AND SUBSE QUENT TO SURVEY, THE ASSESSEE FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING CAPITAL GAIN AS WELL AS INCOME FROM OTHER SOURCES. WHILE COMPLETING THE ASSESSMENT VID E ORDER DATED 31/2/2010, THE AO MADE ADDITION ON ACCOUNT OF FULL VALUE CONSIDERATION U/S 50C OF THE INCOME-TAX ACT APART F ROM THE ADDITION ON ACCOUNT OF COST OF ACQUISITION AND COST OF IMPRO VEMENT OF ASSET WHILE COMPUTING THE LONG TERM CAPITAL GAIN. THE AS SESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT(A) WHO HAS GRAN TED PART RELIEF TO THE ASSESSEE BY DELETING THE ADDITION MADE ON ACCOU NT OF INVOKING SEC. 50C OF THE INCOME-TAX ACT. HOWEVER, THE CIT(A ) HAS CONFIRMED THE ADDITION MADE BY THE AO IN RESPECT OF THE COST OF ACQUISITION AND COST OF IMPROVEMENT OF THE PROPERTY. THE REVENUE H AS NOT CHALLENGED THE ORDER OF THE CIT(A) SO FAR AS THE RE LIEF WAS GRANTED BY DELETING THE ADDITION MADE ON ACCOUNT OF FULL VALUE CONSIDERATION U/S 50C. THUS, THE ASSESSEE HAS RAISED THE FOLLOWING GR OUNDS BEFORE US. ITA NO.791-793/B /14 4 1) THE ORDER OF THE LEARNED CIT(A), IS SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE APPELLANT, IS A GAINST LAW, WEIGHT EVIDENCE AND PROBABILITIES OF THE CASE. 2) THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF PARTIAL COST OF ACQUISITION BEING DELAYED PAYMENTS MADE TO ND PATEL OF A SUM OF RS.3,45,000/-, AS SHE FAILED TO APPRECIATE THAT THE SAID SUM WAS THE AMOUNT DETERMINED AS THE SHARE OF THIS APPELLANT PAYABLE TO ND PATEL FOR PERFECTING THE TI TLE. SHE OUGHT TO HAVE ALLOWED THE SUM AS COST OF ACQUISITION. 3) A) THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF COST OF IMPROVEMENT INCURRED DURING F.Y 2007-08 OF AN AGGREGATE AMOUNT OF RS.48,39,367/ - BEING THE INTEREST ON LOANS BORROWED FOR PURCHASE O F THE PROPERTY AND OTHER ADMINISTRATIVE EXPENSES INCURRED (IN PURSUANCE OF THE JOINT DEVELOPMENT AGREEMENT) AND INCLUDED IN THE WORK-IN-PROGRESS (AS REFLECTED CONTEMPORANEOUSLY FROM YEAR TO YEAR IN TH E RESPECTIVE BALANCE SHEETS) BECAUSE SHE FAILED TO APPRECIATE THAT THE APPELLANT WAS INCORPORATED ONLY FOR THAT PURPOSE BUT WAS FORCED TO SELL THE PROPERTY WI THOUT FURTHER DEVELOPMENT. B) THE LEARNED CIT(A) FURTHER ERRED IN CONFIRMING T HE DISALLOWANCE OF AN ADDITIONAL AMOUNT OF RS.6,79,246 /- INCURRED AS COST OF IMPROVEMENT WITHOUT APPRECIATIN G THE REASONS FOR PAYMENT OF SUCH AMOUNT. SHE OUGHT TO HAVE ALLOWED THE SAME. ITA NO.791-793/B /14 5 4) A) THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF COST OF IMPROVEMENT INCURRED OF AN AGGREGATE AMOUNT OF RS.1,00,19,294/- BETWEEN FY 198 8-99 AND F.Y 2006-07 DESPITE RECOGNIZING THE FACT THAT T HE EXPENSES WERE GENUINELY INCURRED FOR MAINTAINING TH E PROPERTY AND SECURING THE TITLE FROM TRESPASSERS AN D TO SETTLE WITH CLAIMANTS OF TITLE. SHE OUGHT TO HAVE ALLOWED THE CLAIM FULLY. B) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT E XPENSES INCURRED FOR SALE GUARDING THE TITLE OF PROPERTY HE LD BY THE APPELLANT HAVE TO BE ALLOWED AS CAPITAL COST OF IMPROVEMENT AGAINST SALE CONSIDERATION AND CONSEQUE NTLY ERRED IN CONFIRMING THE DISALLOWANCE. C) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT BUT FOR SAFE GUARDING THE TITLE FROM SUCH CLAIMANTS AND TRESPASS ERS THE APPELLANT WOULD NOT HAVE GOT THE PRICE FOR WHICH TH E PROPERTY WAS ULTIMATELY SOLD. CONSEQUENTLY, SHE ER RED IN CONFIRMING THE DISALLOWANCE OF THE COST OF IMPROVEM ENT. D) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT WHE N SURVEY WAS CONDUCTED MUCH AFTER THE SALE OF THE PRO PERTY, THE SURVEY TEAM WAS HANDICAPPED IN PROPERLY APPRISI NG ITSELF ON THE COST OF MAINTAINING THE PROPERTY IN T HE PAST DECADE. CONSEQUENTLY, SHE ERRED IN CONFIRMING THE COST OF IMPROVEMENT INCURRED OVER A PERIOD OF ABOUT TEN YEA RS. 5) FOR THE ABOVE GROUNDS AND SUCH OTHER GROUNDS T HAT MAY BE URGED AT THE TIME OF HEARING, THE APPELLANT PRAY S THAT THE APPEAL BE ALLOWED. ITA NO.791-793/B /14 6 4. GROUND NO.1 IS GENERAL IN NATURE AND DOES NOT RE QUIRE ANY SPECIFIC ADJUDICATION. 5. GROUND NO.2 IS REGARDING DISALLOWANCE OF COST OF IMPROVEMENT OF RS.1,25,78,425/-. THE ASSESSEE HAS CLAIMED THE COST OF ACQUISITION AS WELL AS COST OF IMPROVEMENT OF THE PROPERTY AT R S.1,32,78,425/-. IT WAS AGGREGATED COST INCURRED UNDER DIFFERENT HEADS. HOWEVER THE PERIOD STARTING FROM FINANCIAL YEAR 1995-96 TILL 20 07-08, THE ASSESSEE SHOWN THESE COST UNDER THE PROJECT INVESTMENT AND A RE BEING CARRY FORWARD EVERY YEAR. DURING THE COURSE OF ASST. PRO CEEDINGS, THE AO ASKED THE ASSESSEE TO SUBMIT COMPLETE DETAILS OF TH IS COST. IN REPLY, THE ASSESSEE FILED A CHART SHOWING PROJECT INVESTME NT WHICH ADDS UP TO RS.1,32,78,425/- TILL THE FINANCIAL YEAR 2007-08. THE AO FOUND THAT EXCEPT THE AMOUNT OF RS.1 LAKH INCURRED HAD SHOWN S ETTLEMENT, THE OTHER EXPENSES ARE SHOWN ADMINISTRATIVE EXPENSES SU CH AS AUDIT FEE, PROFESSIONAL CHARGES, OFFICE RENT, TELECOMMUNICATIO N AND OTHER MISC. EXPENSES. THUS, THE AO WAS OF THE VIEW THAT ALL TH ESE GENERAL ADMINISTRATIVE EXPENSES HAS NOTHING TO DO WITH THE IMPROVEMENT OF THE LAND IN QUESTION. ACCORDINGLY, THE AO HAS DISA LLOWED THE COST OF ACQUISITION/IMPROVEMENT OF THE PROPERTY AMOUNTING T O RS.1,25,78,425/- AFTER ALLOWING RS.7 LAKH PAID TOWA RDS SUIT ITA NO.791-793/B /14 7 SETTLEMENT. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT(A) BUT COULD NOT SUCCEED. BEFORE US, THE LEARNED AR OF THE ASSESSEE REFERRED TO THE DETAILS OF EXPENSES AT PAGE NO.241 OF THE PAPER BOO K AND SUBMITTED THAT THE ENTIRE EXPENDITURE HAS BEEN RECORDED IN TH E BOOKS OF ACCOUNT AND IT WAS NOT CLAIMED BY THE ASSESSEE BEING CAPITA LIZED. THEREFORE, THE LEARNED AR HAS SUBMITTED THAT THE SAID EXPENDIT URE WHICH WAS CAPITALIZED TO THE INVESTMENT IS AN ALLOWABLE COST OF ACQUISITION OR IMPROVEMENT OF THE CAPITAL ASSET WHILE COMPUTING TH E CAPITAL GAIN U/S 48 OF THE ACT. 7. THE LEARNED AR HAS POINTED OUT THAT THE CLAIM OF THE ASSESSEE IS COMPRISING OF INTEREST PAID TO ITC FOR THE PERIOD P RIOR TO THE JOINT DEVELOPMENT AGREEMENT ENTERED INTO IN THE YEAR 2000 , WHEREAS THE LAND IN QUESTION WAS ACQUIRED IN THE FINANCIAL YEAR 1996-97. HE HAS REFERRED THE TDS DEDUCTION ON THE INTEREST PAYMENT TO THE ITC AND SUBMITTED THAT THE PAYMENT OF INTEREST IS NOT DOUBT ED. THE LEARNED AR OF THE ASSESSEE HAS RELIED UPON THE FOLLOWING DECIS IONS : ITA NO.791-793/B /14 8 1) CIT VS. MAITHREYI PAI, 152 ITR 247 2) CIT VS. ABRAR ALVI, 247 ITR 312 3) CIT VS. SRI HARIRAM HOTELS PVT. LTD., 325 ITR 136 8. ON THE OTHER HAND, THE LEARNED DR HAS RELIED UPO N THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESS EE FAILED TO PROVE THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE IS FOR IMPROVEMENT OF THE PROPERTY OR INCURRED FOR THE PURPOSE OF ACQUISITION OF PROPERTY. HE HAS SUBMITTED THAT THE AO HAS ALREADY ALLOWED RS.7 LAKH OUT OF THE TOTAL CLAIM OF THE ASSESSEE WHICH PERTAINS TO THE P AYMENT MADE BY THE ASSESSEE IN SETTLEMENT OF DISPUTE REGARDING THE PRO PERTY. THE OTHER EXPENDITURE INCURRED BY THE ASSESSEE HAS NO CONNECT ION WITH THE COST OF ACQUISITION OR IMPROVEMENT OF PROPERTY IN QUESTI ON. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSION AS WELL AS RELEVANT MATERIAL ON RECORD. THE ASSESSEE CLAIMED A TOTAL EXPENDITURE OF ITA NO.791-793/B /14 9 RS.1,32,78,425/- INCURRED FROM THE FINANCIAL YEAR 1 995-96 TO 2007-08. IT IS CLAIMED BY THE ASSESSEE THAT THE SAID EXPENDI TURE HAS BEEN INCURRED ON ACCOUNT OF COST OF ACQUISITION AND IMPR OVEMENT OF THE LAND IN QUESTION. THE DETAILS OF THE EXPENSES ARE GIVEN AT PAGE NO.241 OF THE PAPER BOOK AND FOR THE SAKE OF READY REFERENCE WE REPRODUCE THE DETAILS COMPRISING THE ITEM OF THE EX PENDITURE AND GRAND TOTAL OF EACH EXPENDITURE FOR ALL THE YEARS A S UNDER: ITEM OF EXPENDITURE GRAND TOTAL PARTICULARS 23,834.00 AUDIT FEES 7,274.00 BANK CHARGES 52,993.00 BANK INTEREST ON OD 500.00 CAP IN CLSD PART FIRM W/OFF (TNV HSG) 250,110.00 CONSTRUCTION OF ROAD 58,350.90 CONVEYANCES 1,052,055.00 DEPRECIATION (FUN & FIX) 258,430.00 DIRECTOR REMUNERATION 27,984.40 ENTERTAINMENT CHARGES 30,410.00 FILING FEES 9,640.00 FINANCE CHARGES 13,200.00 ITA NO.791-793/B /14 10 FURNITURE SHIFTING CHARGES 86,567.00 HIRE CHARGES 5,421.55 INSURANCE CHARGES 69,376.34 INTEREST CHARGES 1,948,615.00 INTEREST ON CAR LOAN 7,981.00 INTEREST TO ITC REF LTD 110,000.00 INTEREST EXPENSES 750,039.00 LEASE RENT 766,621.57 LEGAL EXPENSES 175,200.00 MARKETING & SALES 12,357.90 MATERIAL FOR CONSTRUCTION 12,357 MEETING EXPENSES 38,470.68 MISCELLANEOUS EXPENSES 67,392,18 MOTOR CAR EXPENSES 15,008.00 NEWSPAPER AND SUBSCRIPTION 65,776.00 OFFICE SUPPLIES 17,611.00 POSTAGE AND COURIER 1,676545.00 PRELIMINARY EXPENSES W/OFF 846,946.00 PROFESSIONAL CHARGES 169.994.70 PROPERTY MANAGEMENT A/C 261,000.00 REPAIR AND MAINTENANCE 76,172.00 SALARY TO STAFF 700,000.00 ITA NO.791-793/B /14 11 STAFF WELFARE 563.00 SUIT SETTLEMENT 563,634.00 TDS PENALTY 1,310.20 TELEPHONE CHARGES 24,500.00 TIFFIN ALLOWANCE 774,348.93 TRANSFER CHARGES FOR ELECTRIC METER 10,531.00 TRANSFER FROM SUNCITY 78,231.19 TRAVELLING EXPENSES UTILITIES ADD PREVIOUS YEARS B/F LESS REIMBURSEMENT OF EXPENSES (93,978.00) 10. IT IS CLEAR FROM THE DETAILS GIVEN ABOVE THAT T HE APART FROM THE INTEREST PAYMENT NO OTHER EXPENDITURE HAS ANY CONNE CTION IN RELATING TO THE IMPROVEMENT OR COST OF ACQUISITION OF THE LA ND IN QUESTION. THE AO HAS ALREADY ALLOWED RS.7 LAKHS TOWARDS THE SUIT SETTLEMENT AMOUNT IN RELATION TO THE DISPUTE OF THE LAND TITLE . THEREFORE, SO FAR AS THE CLAIM OF THE ASSESSEE PERTAINING TO THE EXPENDI TURE FOR REMOVING THE ENCUMBRANCE OR PRESERVING THE ASSET, THE SAME H AS ALREADY BEEN ITA NO.791-793/B /14 12 ALLOWED BY THE AO. THE DECISION RELIED UPON BY THE ASSESSEE ARE RELEVANT ONLY TO THE ISSUE OF ALLOWABILITY OF THE E XPENDITURE INCURRED FOR REMOVING HURDLES OF TRANSFER OF THE PROPERTY AN D THE INTEREST PAID BY THE ASSESSEE ON AMOUNT BORROWED FOR THE PURCHASE OF THE PROPERTY. ONE OF THE EXPENDITURE HAS ALREADY BEEN ALLOWED BY THE AO, THEREFORE, WE ARE OF THE VIEW THAT THE OTHER THAN THE INTEREST EXPENDITURE NO OTHER EXPENDITURE CAN BE ALLOWED EI THER AS COST OF THE ACQUISITION OR COST OF IMPROVEMENT OF THE LAND AS P ER THE PROVISION OF SEC. 48 OF THE ACT. AS REGARDS INTEREST EXPENDITUR E, THE SAME IS ALLOWABLE AS COST OF ACQUISITION IF PAID ON THE AMO UNT USED FOR ACQUISITION OF THE LAND IN QUESTION. FURTHER THE INTEREST PAID FOR THE PERIOD PRIOR TO THE JOINT DEVELOPMENT AGREEMENT WOU LD BE ALLOWABLE AS COST OF THE ACQUISITION. ACCORDINGLY, THE AO IS DIRECTED TO VERIFY AND DETERMINE THE INTEREST PAID ON THE BORROWED FUN DS USED FOR ACQUISITION OF THE LAND IN QUESTION UP TO THE DATE OF DEVELOPMENT AGREEMENT AND ALLOWED THE SAME AS COST OF ACQUISITI ON WHILE COMPUTING THE CAPITAL GAIN ON THE SALE OF LAND. A CCORDINGLY, THIS GROUND OF THE ASSESSEE IS ALLOWED IN PART. GROUND NO.3 11. DISALLOWANCE OF THE INDEXED COST OF EXPENSES ITA NO.791-793/B /14 13 12. WHILE COMPUTING THE CAPITAL GAIN, THE ASSESSEE REDUCED THE SALE CONSIDERATION BY INDEX COST OF ACQUISITION AND INDE X COST OF IMPROVEMENT. THE DETAILS OF THE EXPENDITURE ARE RE PRODUCED BY THE AO AT PAGE 4 AS UNDER: FINANCIAL YEAR COST OF ACQUISITION/IMPROVEMENT INDEXED COST OF ACQUIT ION/IMPROVEMENT 1996-97 29556636 53395759 1997-98 2231765 3715113 1998-99 605775 950946 1999-00 929015 1315906 2001-02 660650 854503 2002-03 3250820 4007163 2003-04 549675 654149 2004-05 481670 552917 2005-06 1600000 1773843 2006-07 650000 690077 2007-08 13278425 13278425 13. THE LAST ITEM OF THE EXPENDITURE OF RS.1,32,78, 425/- HAS ALREADY BEEN DEALT WITH BY US WHILE DECIDING IN GROUND NO. 2 OF THE ASSESSEES ITA NO.791-793/B /14 14 APPEAL. THEREFORE, WHILE DECIDING THE GROUND NO.3, WE ARE CONCERNED WITH THE EXPENDITURE CLAIMED BY THE ASSESSEE OF RS. 1,79,85,653/-. THE AO HAS OBSERVED THAT THE ASSESSEE HAS NOT PRODU CED ANY BILL OR OTHER INDEPENDENT SUPPORTING EVIDENCE TO PROVE THE CLAIM OF THE EXPENDITURE FOR IMPROVEMENT OF THE LAND OR COST OF THE LAND. THE AO NOTED THAT DURING THE COURSE OF SURVEY PROCEEDINGS U/S 133A OF THE ACT, STATEMENTS OF DIRECTORS OF THE ASSESSEE WERE RECORDED WHO HAVE STATED THAT NO DEVELOPMENT WORK HAS BEEN CARRIED OU T ON THE SAID LAND EXCEPT THE BOUNDARY WALL WHICH WAS CONSTRUCTED BY T HE ITC GROUP AT ITS COST AND NOT BY THE ASSESSEE. ACCORDINGLY, THE AO DISALLOWED THE CLAIM OF THE ASSESSEE BY REJECTING THIS SELF MADE V OUCHERS PRODUCED BY THE ASSESSEE AFTER THE EXPIRY OF 18 DAYS FROM TH E DATE OF SURVEY. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT(A) BUT COULD NOT SUCCEED. THE CIT(A) HAS CONFIRMED THE AC TION OF THE AO BY HOLDING THAT THE ASSESSEE HAS FAILED TO ESTABLIS H THAT THE EXPENDITURE WAS INCURRED ON LAND AND THAT IT HAS RESULTED IN AN Y IMPROVEMENT OF THE PROPERTY. 14. BEFORE US, THE LEARNED AR OF THE ASSESSEE SUBMI TTED THAT THE VOUCHERS WERE PRODUCED ON 24/6/2008 WHICH IS AFTER THE SURVEY ITA NO.791-793/B /14 15 CONDUCTED AND MUCH BEFORE THE ASSESSMENT PROCEEDING S. THEREFORE GENUINENESS OF THE EXPENSES CANNOT BE DOUBTED. HE HAS SUBMITTED THAT THE ENTIRE EXPENDITURE WAS RECORDED IN THE BOO KS OF ACCOUNT AND CAPITALIZED BEING PART OF THE WORK-IN PROGRESS OF T HE PROJECT. THE ASSESSEE DID NOT CLAIM THE SAID AMOUNT OF EXPENDITU RE UNTIL THE LAND WAS SOLD THE OTHER PARTIES TO THE JOINT DEVELOPMENT AGREEMENT HAVE CORROBORATED THE EXPENDITURE INCURRED BY THE A SSESSEE. THE ASSESSEE WAS THE OWNER OF THE LAND AND ALL RISK AND REWARD BELONG TO ASSESSEE. THUS, THE LEARNED AR HAS SUBMITTED THAT THE EXPENDITURE IS AN ALLOWABLE CLAIM. HE HAS REFERRED CLAUSE 17 AND 1 8 OF JOINT DEVELOPMENT AGREEMENT AT PAGE 187 OF THE PAPER BOO K AND SUBMITTED THAT THE ASSESSEE WAS AT RECEIVING END AN D UNDER THE OBLIGATION TO INCUR THE EXPENDITURE TO OBTAIN NECE SSARY SECTIONS AND PERMISSION AS WELL IMPROVEMENT WORK. 15. ON THE OTHER HAND, THE LEARNED DR HAS REFERRED THE FINDING OF THE AO AND CIT(A) AND SUBMITTED THAT IN THE ABSENCE OF SUPPORTING EVIDENCE THE AO HAS DOUBTED THE GENUINENESS OF THE EXPENDITURE AND VOUCHERS WHICH ARE SELF MADE WITHOUT ANY BILLS OF D ETAILS OF THE WORK EXECUTED BY THE 3 RD PARTY . FURTHER, THE VOUCHER WERE PRODUCED AFTER ITA NO.791-793/B /14 16 THE GAP OF 18 DAYS FROM THE DATE OF SURVEY CONDUCTE D. THEREFORE, THE SAME ARE AFTER THOUGHT AND SELF SERVING RECORD PROD UCED BY THE ASSESSEE. EVEN OTHERWISE THE EXPENDITURE DOES NOT RESULT IN ANY IMPROVEMENT OF THE ASSET AND CLAIM OF THE ASSESSEE IS CONTRARY TO THE STATEMENT OF THE DIRECTORS OF THE ASSESSEE COMPANY RECORDED DURING THE SURVEY PROCEEDINGS. THE CLAIM OF THE ASSESSEE WAS ALSO FOUND TO BE INCORRECT BY THE ITO WHO VISITED THE SITE. 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. THE ENTIRE EXPENDITURE IS CLAI MED TO HAVE BEEN INCURRED IN CASH. HOWEVER, THE ASSESSEE HAS NOT PR ODUCED ANY BILLS OR DETAILS OF WORK AS WELL AS PARTIES TO WHOM THE PAYM ENT WAS MADE. WHAT WAS PRODUCED BY THE ASSESSEE WERE THE SELF MAD E VOUCHERS WITHOUT ANY CONFIRMATION FROM THE OTHER PARTY. IT IS PERTINENT TO NOTE THAT THE ASSESSEE COMPANIES ARE IN THE BUSINESS OF DEVELOPMENT OF THE PROPERTIES AND THE JOINT DEVELOPMENT AGREEMENT WERE ENTERED INTO BETWEEN THE PARTIES IN CONNECTION WITH THEIR BUSINE SS ACTIVITIES. THE ASSESSEE WERE TO GET 13% OF THE DEVELOPED PROPERTY AND THE INCOME FROM THE SALE THE DEVELOPED PROPERTY WOULD BE THE B USINESS INCOME OF THE ASSESSEE. THEREFORE, ANY ACTIVITY UNDER THE JO INT DEVELOPMENT ITA NO.791-793/B /14 17 AGREEMENT WAS IN THE NATURE OF BUSINESS ACTIVITY O F THE ASSESSEE. THE EXPENDITURE INCURRED IN PURSUANT TO OR AS AN OBLIGA TION UNDER THE JOINT DEVELOPMENT AGREEMENT CAN BE CLAIMED AS BUSINESS E XPENDITURE DESPITE THE FACT THAT THE SAID JOINT DEVELOPMENT P ROJECT COULD NOT MATERIALIZE. THEREFORE, THE EXPENDITURE INCURRED S UBSEQUENT TO THE JOINT DEVELOPMENT AGREEMENT CANNOT BE TREATED AS T HE EXPENDITURE INCURRED FOR IMPROVEMENT OF THE CAPITAL ASSET IN QU ESTION. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY ERROR OR LEGALITY IN THE ORDERS OF THE AUT HORITIES BELOW TO QUA THIS ISSUE. 17. THIS GROUND IS ACCORDINGLY, DISMISSED. 18. THE GROUNDS AND ISSUES RAISED IN ALL THREE APPE ALS ARE IDENTICAL. THEREFORE, IN VIEW OF OUR FINDING ON THESE TWO ISSU ES ALL THREE APPEALS STANDS PARTLY ALLOWED. 19. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E ARE PARTLY ALLOWED. ITA NO.791-793/B /14 18 ORDER PRONOUNCED IN THE OPEN COURT ON 9TH OCT, 2015. SD/- SD/- (JASON P BOAZ) (VIJAYPAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER VMS. BANGALORE DATED : 9/10/2015 COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REGISTRAR, I TAT, BANGALORE.