MEGHA PROPERTY DEVELOPERS PRIVATE LIMITED,MUMBAI vs. INCOME TAX OFFICER, WARD 4(2)(4), MUMBAI

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ITA 1919/MUM/2018Status: DisposedITAT Mumbai28 June 2018AY 2008-094 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the society formation expenses were a statutory liability of the assessee after selling flats, and therefore, were necessary for business. The disallowance was set aside.

What were the facts?

The assessee, a real estate developer, had its assessment reopened by the AO based on an audit objection. During the reassessment, the AO disallowed society formation expenses of Rs. 1,23,000/-.

What were the issues?

The primary issues were the validity of reopening the assessment and the allowability of society formation expenses as a business expenditure.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3),Section 37(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC”, BENCH MUMBAI

For Appellant: Ms. Priyanka Jain
For Respondent: Ms. N. Hemalatha
Hearing: 31/05/2018Pronounced: 28/06/2018

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC”, BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI C.N. PRASAD, JM (Assessment Year :2008-09) M/s. Megha Porperty Developers Vs. Income Tax Officer, Ward Pvt. Ltd., 4(2)(4) 701-A, Niranjan Building Room No.647, Aayakar 99, Marine Drive Bhavan, M.K. Road Mumbai – 400 002 PAN/GIR No.AAFFM5593B Appellant) .. Respondent) Assessee by Ms. Priyanka Jain Revenue by Ms. N. Hemalatha Date of Hearing 31/05/2018 Date of Pronouncement 28/06/2018 आदेश / 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)- 9, Mumbai dated 06/06/2016 for A.Y.2008-09 in the matter of order passed u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961.

2.

In this appeal assessee is aggrieved by the action of CIT(A) upholding reopening of assessment u/s.147. Assessee is also aggrieved for disallowance of expenditure of Rs.6,47,483/-.

3.

Rival contentions have been heard and record perused.

4.

Facts in brief are that assessee is engaged in the business of real estate development. On the basis of audit objection, AO reopened assessment by issue of notice u/s.148. During the course of re- M/s. Megha Property Developers assessment proceedings, AO disallowed expenditure u/s. 37(1). Expenditure so incurred was necessary for business and assessee has submitted a brief note on each payment. Assessee has incurred society formation expenses. After selling of Flats it is statutorily liability of assessee to form society as per MOFA, act. Therefore, assessee paid Rs.1,23,000/- to Mr. Ramraja D Sasane towards his fees for collecting information details of all the promoter members of the society and filling and following the procedure with the registrar for registering the name of the society and their after formation of Madhrri Co-Op Housing Society, (Ledger account of Society formation expenses, Visiting Card of Consultant, Bills and PAN card are placed at Page No.56-59). Hence, expenses was wholly and exclusively for the business purpose. Assessee has also incurred transport expenditure of Rs.60,350/-. The AO observed that assessee has not filed details of transportation expenditure so incurred. We found that assessee has filed vouchers for the payment of transportation charges. Out of the expenditure so paid, we found that no supporting document was filed in respect of tempo charges of Rs.350/-, accordingly, we restrict the disallowance to the extent of Rs.350/-. Assessee has also incurred expenditure of Rs.1,12,349/- on account of medical insurance. Out of which Rs.48,078/- was on account of medical insurance premium, Rs.8,955/- on account of car insurance of Tata Indigo and Rs.13,124/- on account of insurance of Maruti Balleno. Assessee has also paid fire insurance premium for insurance of building amounting to M/s. Megha Property Developers Rs.13,928/- and also fire insurance of building at Madhuri amounting to Rs.18,099/- and Rs.10,165/- on account of insurance premium. From the record, we found that Expenses were incurred for insuring the business fixed assets and unsold premises. a) Rs.48,078/- is paid to New India insurance company. b) Rs.13,124/- insurance premium for Car Maruti Baleno paid to New India Insurance Company. c) Rs.8,955/- Insurance premium for Car Tata Indigo Rs. 13926/ - Insurance premium for fire and special perils for project Madhuri, Airoli to Bajaj Alianz General Insurance. d) Rs,18,099/ -Insurance premium paid to TATA A1G for Madhuri Project, Airoli

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