CIT(A) cannot disallow Compensation paid to Taparies When a Complete list and evidence are submitted by the assessee, the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) held as above.
Appellant M/s. ASI Industries Ltd. challenged the disallowance made by the AO and confirmed by the CIT(A) qua compensation paid to the taparies (the taparies are the people who have illegally encroached upon the land of the assessee meant for mining purposes) for A.Y. 2011-12, 2012-13, 2013-14 & 2014-15.
The CIT(A) confirmed the disallowance by observing that “when the assessee has bought the land in question from the government of Rajasthan, the government must give the assessee clear and peaceful possession of this land and assessee has been claiming this deduction on account of compensation paid to the taparies year on year and it does not fit into the scheme of a business ordinarily run by a prudent businessman to allow the encroachment of his land every year and then to claim the compensation”.
A Coram of Shri Kuldip Singh, judicial member and Shri Om Prakash Kant, accountant member observed that the assessee has brought on record the complete list and compensation amount paid to the said taparies and the entire payment has been made through the banking channel.
The Tribunal held that CIT(A) is not allowed to decide the issue merely based on conjuncture and surmises without controverting the evidence brought on record by the assessee. Further set aside the CIT(A) and direct the AO to delete the disallowance made/confirmed in this case on account of compensation paid to taparies. The appeal filed by the assessee is partly allowed for statistical purposes.
Shri Reepal Tralshawala appeared for the assessee and Smt. Shailaja Rai appeared for the revenue.
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