What did the Tribunal hold?

The Tribunal found that while the expenses were not fully substantiated, they were integral to the assessee's business and reflected in the books of both parties. Therefore, a partial disallowance was deemed appropriate.

The assessee, a property dealer, claimed land filing expenses of INR 51,40,000/- related to land sold during the year. The Assessing Officer disallowed the entire claim due to lack of adequate evidence.

What were the issues?

Whether land development expenses incurred by a property dealer are allowable when not fully substantiated by evidence, and if not, to what extent.

M/S. Banke Bihari Properties Pvt… vs ITO | ITAT Delhi 2025

Income Tax Appellate Tribunal, DELHI “F” BENCH: NEW DELHI

Before: SHRI PRADIP KUMAR KEDIA & SHRI VIMAL KUMAR

For Appellant: Shri Rohit Tiwari, Adv. &, Ms. Tanya, Adv

For Respondent: Ms. Harpreet Kaur Hansra, CIT DR

Hearing: 09.12.2024Pronounced: 07.03.2025

Year : 2010-11] M/s. Banke Bihari Properties vs ITO Pvt.Ltd., 144/2, ANS House Ward-2(3) Ashram, Mathura Road New Delhi. New Delhi-110014. PAN-AACCB6652Q APPELLANT RESPONDENT Appellant by Shri Rohit Tiwari, Adv. & Ms. Tanya, Adv. Respondent by Ms. Harpreet Kaur Hansra, CIT DR Date of Hearing 09.12.2024 Date of Pronouncement 07.03.2025 ORDER

PER PRADIP KUMAR KEDIA, AM :

The captioned appeal has been filed at the instance of the assessee seeking to assail the First Appellate order dated 03.10.2023 passed by Commissioner of Income Tax (A)-2, New Delhi [“CIT(A)”] under s. 250(6) of the Income Tax Act, 1961 [“the Act”] arising from the assessment order dated 15.03.2013 passed under s. 143(3) of the Act pertaining to assessment year 2010-11.

As per grounds of appeal

, the assessee has challenged the disallowance of INR 51,40,000/- towards land filing expenses incurred in relation to land held by the assessee in its stock and sold during the year.

3. Heard the rival submissions and perused the material available on record.

4. The main object of the assessee company is stated to be purchase and sale of land and other immovable properties. During the year under consideration, the assessee has incurred land development expenses of INR 51,40,000/- in aggregate towards purchase of soil for land development and incurring labour charges thereon. Such expenses have been claimed against the Revenue generated from sale of land. The AO has cast out on the correctness of such claim towards expenditure incurred and therefore disallowed entire land filing expenses which was, in turn, endorsed by the CIT(A).

On perusal of the analysis carried out by the Revenue authorities, it appears that adequate evidences are not available at the end of the assessee to justify such expenditure to the hilt. However, it may be borne in mind that such expenses are integrally connected to the nature of business carried out by the assessee. The assessee has submitted bills of soil supplier. The AO has not made any enquiry with the supplier with reference to the supply of soil. The assessee has also placed evidence that the corresponding supplier has recorded the transactions in its books which was consummated in determination of resultant taxable income.

In our opinion, while the expenses incurred has not been adequately proved, it cannot be said with a degree of certainty that the expenditure has not been incurred at all, particularly when the transactions have been duly reflected in the books of the assessee as well as that of supplier.

In the fitness of thing, we consider it expedient to restrict the disallowance to 10% of the aggregate expenses incurred of INR 51,40,000/- to meet the ends of justice.

M/S. BANKE BIHARI PROPERTIES PVT. LTD.,NEW DELHI vs. ITO, NEW DELHI

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