The Tax Publishers2020 TaxPub(DT) 5088 (Karn-HC)

INCOME TAX ACT 1961

Section 37(1)

Following the case Prestige Estates Projects (P) Ltd. v. Dy. CIT [ITA No. 302/2013, dt. 8-10-2013], expenditure incurred as fee for minor deviation from the initially sanctioned plan and to bring the actually constructed structure in conformity with the modified plan as per building bye laws of the assessee is disallowable on the ground that such payment amounted to penalty not falling under section 37(1).

Business expenditure - Allowability - Expenditure incurred as fee for minor deviation from the initially sanctioned plan and to bring the actually constructed structure -

AO disallowed the claim of expenditure incurred as fee for minor deviation from the initially sanctioned plan and to bring the actually constructed structure in conformity with the modified plan as per building bye laws of the assessee on the ground that such payment amounted to penalty not falling under section 37(1). Held: The question of law has been answered against the assessee by a Bench of this Court in case of Prestige Estates Projects (P) Ltd. v. Dy. CIT [ITA No.302/2013, dt. 8-10-2013]. It is also not in dispute that against the aforesaid order, an appeal has been filed which is pending before the Supreme Court. Therefore, it was appropriate to direct AO to give effect to his order with regard to the issue involved.

Followed:Prestige Estates Projects (P) Ltd. v. Dy. CIT [ITA No.302/2013, dt. 8-10-2013].

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2010-11


INCOME TAX ACT 1961

Section 14A Rule 8D(2)(iii)

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