INCOME TAX ACT, 1961

Section 37

Business expenditure - Addition of demurrages for delay in execution of the project - Allowability -

Assessee was engaged in business of real estate development, construction and sale of flats. Assessee claimed project expenses account under two heads, namely, liquidated damages and demurrages for delay in execution of project. AO however disallowed the same. CIT(A) allowed the appeal in part and allowed the claim of assessee in respect of demurrages for delay in execution of project. Tribunal reversed the order of CIT(A). Held: From perusal of order passed by Tribunal, it was evident that order passed by Tribunal was based on the fact that assessee was not able to produce original deed of arbitration. Since Revenue had disputed genuineness of the entry made in books of account and Tribunal has failed to take into account the remand report of ACIT and joint venture agreement, therefore, matter was remanded back to Tribunal to pass an order as it may deem fit in accordance with law after affording an opportunity of hearing.

REFERRED : Bharat Earth Movers v. CIT (2000) 245 ITR 428 (SC) : 2000 TaxPub(DT) 1505 (SC) Sassoon J. David And Co. Pvt. Ltd. v. CIT (1979) 118 ITR 261 (SC) : 1979 TaxPub(DT) 1025 (SC) Metal Box Co. of India Ltd. v. Their Workmen (1969) 73 ITR 53 (SC) : 1969 TaxPub(DT) 0152 (SC) Calcutta Co. Ltd. v. CIT (1959) 37 ITR 1 (SC) : 1959 TaxPub(DT) 0180 (SC) Jiwanram Sheoduttrai v. CIT (2005) 279 ITR 512 (Cal) : 2005 TaxPub(DT) 1777 (Cal-HC)

FAVOUR : In assessee's favour

A.Y. :

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