The Income Tax Appellate Tribunal (ITAT), Pune bench has held that the development expenditure on sale of land is not allowable as deduction under the Income Tax Act, 1961 in the absence of documentary evidence.
A division bench of Shri Inturi Rama Rao, Accountant Member and Shri Partha Sarathi Chaudhury, Judicial Member was considering an appeal of the assessee, Mr. Rohan Pereria, a business man. During the course of assessment proceedings, the Assessing Officer made addition of Rs.62,21,737/- by disallowing the development charges incurred on sale of land situated at Baner, Pune for want of evidence. The Assessing Officer also made addition on account of unexplained expenditure incurred on foreign travel expenses of Rs.1,00,000/-.
On first appeal, the CIT(A) confirmed the action of the Assessing Officer as the appellant had failed to substantiate the expenditure incurred on development of land during the period from 1988-89 to 2006-07.
While upholding the order of the assessing officer, the Tribunal held that “On careful perusal of the order of the Assessing Officer, it was clear that the claim made for allowance of development expenditure was disallowed for want of evidence in support of the expenditure incurred on development of the said land. Even before the ld. CIT(A), the appellant had not produced any evidence in support of the expenditure incurred on development of land. In the absence of any evidence in support of development of land, the clam cannot be allowed. Therefore, we do not find any merits in the contentions raised by the appellant.”
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