ANTARCTICA PROPERTIES COMPANY LIMITED,DELHI vs. DCIT CENTRAL CIRCLE 13, DELHI

Brief facts of the case are that the assessee is engaged in the business of real estate, declaring total income of INR 1,46,870/- in the return of income filed on 31.03.2107. The case was selected for scrutiny and the AO observed that the assessee has not carried out any construction activity however, had claimed expenses in the Profit & Loss Account and claimed as set off against the income from other sources and rental income therefore, out of total expenses of INR 95,06,788/-, expenses to the tune of INR 57,05,898/- were disallowed by the AO and added back to the total income of the assessee.

Against the said order, the assessee preferred an appeal before ld. CIT(A) who vide impugned order dated 16.08.2025, has dismissed the appeal of the assessee.

Aggrieved by the said order, the assessee is in appeal before the Tribunal by taking various Grounds of appeal mentioned in the appeal memo.

Ground of appeal No.1 is with respect to the non-service of notice u/s 143(2) of the Act and Ground of appeal No.2 is with respect to the confirmation of disallowance of INR 57,05,898/-.

Before us, no effective submissions was made on behalf of the assessee with respect to Ground of appeal No.1 therefore, the same is hereby dismissed being not pressed.

With respect to Ground of appeal No.2, Ld.AR submits that during the year under appeal, assessee was engaged in the construction of ongoing project of commercial complex however, due to certain legal hurdles, no actual construction activity was carried out and expenses which are directly related to

Per contra, ld. Sr. DR for the Revenue vehemently supported the orders of the lower authorities and submits that the assessee has regularly followed the method of Accounting where expenses incurred on the project were capitalized in the work-in-progress. During the year under appeal, admittedly when no construction activity was carried out and there was solitary project undertaken by the assessee therefore, all the expenses incurred pertained to the same project and accordingly, same must be added to the cost of the project. Under these circumstances, as per ld. CIT DR, the AO has rightly made the disallowance and requested for the confirmation of the order of the lower authorities.

Heard the contentions of both the parties and perused the material available on record. In the instant case, it is an admitted fact that the assessee was engaged in the business of construction activity where one project was 3

Whereas the AO in para 2.4 of its order has given a table, elaborately discussed the nature of expenses so claimed. It is observed that except the payment of salary of INR 4,56,000/- paid for day-to-day activities, all the other expenses such as finance cost of INR 4,08,098/-, legal and professional charges of INR 49,71,800/- and commission of INR 3,26,000/- cannot be treated as expenses of routine nature. It is further observed that out of the total legal and professional charges paid at INR 60,71,800/-, assessee itself has disallowed INR 11 Lakhs and balance of INR 49,71800/- was claimed in Profit & Loss Account. Since the solitary project undertaken was put on hold due to legal hurdles, entire legal and professional charges incurred could only be held directly related to the said project and cannot be held as routine expenses. The case law relied upon by the assessee are related to the issue where expenses were claimed as per the consistently followed method of accounting which in the instant case is not in dispute. The sole dispute is with respect to the nature of payment whether they were routine in nature or related to the project under taken by the assessee which is purely a question of fact and is to be decided after considering the purpose for which the same is incurred. As observed above,

In view of the above discussion, out of total disallowance of INR 57,05,898/-, a sum of INR 4,56,000/- is treated as business expenditure and remaining disallowance of INR 5,49,898/- is hereby upheld. Ground of Appeal No.2 raised by the assessee is hence, partly allowed.

In the result, appeal filed by the assessee is partly allowed. Order pronounced on 24/07/2026.