The Delhi bench of the Income Tax Appellate Tribunal (ITAT) while set-aside the assessment order held that external development charges paid to urban development authority did not attract the provisions of Section 43B of Income Tax Act Income Tax Act.
Section 43B of Income Tax Act states that when the income of assessee is generated under the head of profits and gains of business or profession, the assessee can claim certain payments as expense.
Tulip Infratech Pvt. Ltd filed the appeal against the order of CIT(A) upholding the decision of assessing officer on the issue of addition made by him under section 43B of Income Tax Act on account of External Development Charges (EDC).
Salil Aggarwal Counsel for the assese submitted that assessee builder/developer made payment of EDC to Haryana Urban Development Authority (HUDA) for obtaining the right to develop the specific land which is not covered under Section 43B of the Income Tax Act.
Pankaj Khanna counsel for the revenue submitted that assessee had not made payment of EDC to the Government of Haryana, then, it has to be disallowed under Section 43B of the Income Tax Act.
The coordinate bench of Shamim Yahya, (Accountant Member) and C.M. Garg, (Judicial Member) allowed the appeal filed by the assessee.
Further the bench observed that the disallowance made by the AO and upheld by the CIT(A) under Section 43B of the Income Tax Act on account of EDC charges did not attract the provisions of section 43B of the Income Tax Act and the same is allowable to the assessee even if the same was not paid before the due date for filing the return of income.
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