The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench has held that the developer is not eligible for claiming deduction in respect of the expenses incurred on the land if the bills were raised after the transfer of such land.
The assessee is an individual engaged in the business of Construction and Real Estate Development. While filing the income tax return for the relevant year, he claimed to have incurred certain expenses towards the land leveling /Mati Puran amounting to Rs. 33,42,400/-. However, the Assessing Officer (AO) rejected the claim in the absence of sufficient documentary evidence and held that such expenditure was not incurred by the assessee for its alleged business activities.
On the first appeal, the Commissioner of Income Tax (Appeals) confirmed the above view.
Concurring with the findings of the departmental authorities, the Tribunal noted that there was an expenditure incurred by the assessee after the transfer of the property to M/s Shukun Corporation dated 18th April 2013.
“In our considered view once the property has been transferred, then there was no reason for the assessee to incur any expenditure thereon. As such the assessee before us has not justified, based on any documentary evidence, that he was under the obligation to incur the expense after the date of the transfer of the property. Accordingly, the bills raised upon the assessee after the date of 18th April 2013 are not eligible for deduction land. The total of these bills comes to Rs. 15,69,400/-. The same is disallowed. Hence the ground of appeal of the assessee is partly allowed,” the Tribunal said.
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