M/S LEPAKSHI KNOWLEDGE HUB PVT LTD ,BANGALORE vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-4(1)(1), BANGALORE

The Ld.AR at the outset submitted that the legal issue raised by assessee in Ground no. 3 is not pressed. Accordingly this ground is dismissed as not pressed.

In Ground nos. 4-6, the issue alleged by assessee is in respect of the disallowance made by the Ld.AO of Rs.2,32,21,079/- Page 3 of towards the proportionate land development cost u/s. 40A(2)(a) of the Act. The primary contention of the assessee is that the computation of disallowance by the Ld.AO that forms part of the assessment order is not in accordance with the Accounting Standards and law. He submitted that, the Ld.AO partly disallowed the opening work in progress and considered the claim of cost of sale from the previous assessment year without any basis. The Ld.AR took us to the relevant observation wherein, the disallowance is computed. For the sake of convenience, the same is scanned and reproduced as under and he submitted that assessee has evidences to establish the expenditure incurred that cannot form part of the disallowance u/s. 40A(2)(a) of the act for the year under consideration.

In respect of Ground no. 7, the Ld.AR submitted that depreciation claimed on building and furniture fittings were disallowed by the Ld.AO. for the reason that the same was not put to use, as per the report filed by the Inspector, who visited the premises on 25/03/2015. He submitted that, there are various evidences to establish the claim of depreciation that has not been considered.

Based on the above, the Ld.AR submitted that, both the issue needs to be reverified in accordance with law. The Ld.DR though vehemently supported the orders passed by Ld.CIT(A), could not contradict the fact that the computation by Page 5 of Ld.AO regarding the disallowance u/s. 40A(2)(a) is not in accordance with law. We have perused the submissions advanced by both sides in the light of records placed before us. 6. Based on the submissions by the assessee on both the issues, and without expressing our opinion on merit, we deem it appropriate to remand these issues alleged by assessee for the year under consideration to the Ld.AO for a denovo verification, considering the observations by CBI reproduced in the assessment order. The Ld.AO is directed to verify each and every expenses claimed by the assessee and the assessee is directed to furnish the evidences/documents, ledger a/c., cash books if any in support of the claim. The Ld.AO shall consider the claim in accordance with law having regards to the evidences filed in support by the assessee. Needless to say that proper opportunity of being heard must be granted to assessee. Accordingly, Ground nos. 4-7 filed by assessee stands allowed for statistical purposes. In the result, the appeal filed by the assessee stands allowed for statistical purposes. Order pronounced in the open court on 20th October, 2022.