Income Tax Appellate Tribunal - Ahmedabad
Blessing Construction, Surat vs Department Of Income Tax on 28 May, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL AT
AHMEDABAD
"C" BENCH
Before: Shri D.K. Tyagi, Judicial Member and
Shri Anil Chaturvedi, Accountant Member
I.T.A. No.2722/Ahd/2009
A. Y. 2006-07
Vs. M/s Blessing Constructio n
Off. Ishita Row House,
ACIT, Circle-3 Behind Sanghavi Tower,
Surat Adajan Road, Surat
PAN-AAGFB1228B
Appellant Respondent
Department by : Shri Vinod Tanwani, Sr. D.R.
Assessee by : Shri Anil K. Shah, A.R.
Date of hearing : 28.05.2012
Date of pronouncement : 28.05.2012
आदे श/ORDER
PER : D.K. TYAGI, JUDICIAL MEMBER
This is Revenue's appeal against the order of ld. CIT(A) dated 29.06.2009 passed in Appeal No.CAS/II/345/2008-09.
2. Revenue has taken following ground:-
"On the facts and in the circumstances of the case and in law, the ld. CIT(A), Surat has erred in deleting the disallowance of 'impact fees' of Rs.13,95,672/- holding that I.T.A. No.2722/Ahd/2009 2 A. Y. 2006-07 the assessee had carried out the construction of balcony as per 'sanctioned plan' including 'balcony cover' and no unauthorized or illegal construction is carried out by the assessee."
3. Brief facts of the case are that during the assessment proceedings the A.O. observed that the assessee has debited a sum of Rs.13,95,672/- under the head as "SMC Fees". When assessee was asked to furnish details in respect of this entry, the assessee submitted that this sum represents the fees paid for covering balconies in the building constructed by the assessee, the assessee being engaged in the business of construction. The assessee further contended that such payment did not represent any penalty as he was not charged for the contravention of any law. It was essentially in the nature of fees which was paid for getting the approval of the SMC to cover the balconies since it was not included in the original plan which was earlier approved. In response to show cause notice issued by the A.O. the assessee furnished the details of the payment made for the period of time within the relevant financial year and contended that the fees were paid in accordance with the circular issued by the City Development Officer a copy of which was also furnished before the A.O. It was, thus, the contention of the assessee that it was a commercial expenditure and was incurred as on essential part of the assessee's business. The A.O., however, rejected these submissions of the assessee and observed that the fees was charged for the violation of the building plan and this represent a contravention of the relevant law, consequently, it was in the nature of I.T.A. No.2722/Ahd/2009 3 A. Y. 2006-07 penalty which was not allowable as a deduction under the Act. The A.O., therefore, disallowed and added a sum of Rs.13,95,672/- to the assessee's total income.
4. Before ld. CIT(A) the assessee reiterated the submissions made before the A.O. Reliance was also placed in the case of Vastushilp Corporation decided by ld. CIT(A) whose facts were identical with that of the assessee. Ld. CIT(A), placing reliance on his decision in the case of Vastushilp Corporation held that impact fee for balcony cover charges paid by the assessee were not in the nature of penalty and therefore there was no reason for the A.O. to disallow this sum of Rs.13,95,672/- and the same was deleted by him. Aggrieved by this order of ld. CIT(A) now the Revenue is before us.
5. At the time of hearing both parties agreed that the issue now is covered by Hon'ble ITAT decision in the case of Vastushilp Corporation, ITA No.96/Ahd/2009 dated 30.11.2011 wherein following was held:- "After considering the rival submissions and perusing the record, we find that the addition of Rs.6 lacs has been made by the AO by treating the payment of Rs.6 lacs made by the assessee to Surat Municipal Corporation for covering balconies as penal in nature. The ld. CIT(A) after analyzing the facts in detail and following the decisions of Hon'ble Delhi High Court in the case of Loknath & Co. (supra) and Hon'ble Karnataka High Court in the case of CIT vs. Syndicate Bank (supra) on similar facts has given relief to the assessee by holding that the payment of Rs.6 lacs made by the assessee to Surat Municipal Corporation was in fact compensatory in nature and, therefore, no disallowance was called for in this case. Since the Revenue has neither distinguished facts of this case from the facts of the cases relied on by the ld. CIT(A) nor any contrary decision was relied upon at the time of hearing before us, we are left with no option but to confirm I.T.A. No.2722/Ahd/2009 4 A. Y. 2006-07 the order passed by the ld. CIT(A). The ground raised by the Revenue is dismissed."
Respectfully following the same, the order passed by ld. CIT(A) is hereby upheld.
6. In the result, Revenue's appeal is dismissed.
Order pronounced in open Court on 28.05.2012
Sd/- Sd/-
(Anil Chaturvedi) (D.K. Tyagi)
Accountant Member Judicial Member
True Copy
N.K. Chaudhary, Sr. P.S.
Ǒदनांकः- 28 /05/2012 अहमदाबाद ।
आदे श कȧ ूितिलǒप अमेǒषत / Copy of Order Forwarded to:-
1. अपीलाथȸ / Appellant
2. ू×यथȸ / Respondent
3. संबंिधत आयकर आयुƠ / Concerned CIT
4. आयकर आयुƠ- अपील / CIT (A)
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड[ फाइल / Guard file.
By order/आदे श से, उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद ।