TDS Deducted, Physical Verification Done, Payments by Cheque : Madras HC Upholds ITAT Order Allowing Development Expenses, Rejects Revenue’s Appeal [Read Order]
The Court held that the Department’s claims of lack of documentary support were insufficient to disturb concurrent findings of fact by CIT(A) and ITAT.
ITAT - order - Taxscan
ITAT - order - Taxscan
The Madras High Court has upheld the order of the Income Tax Appellate Tribunal ( ITAT ) which allowed development-related expenses claimed by M/s Bharat Promoters as it was backed with physical site verification and evidence.
The Court dismissed two tax case appeals filed by the Income Tax Department, holding that no substantial question of law arose from the Tribunal’s findings.
The Assessing Officer disallowed over ₹6.97 crore claimed as development expenses, brokerage, and interest in the assessee’s return for the assessment year 2007-08.
The disallowed components included levelling and filling of land, road development, repairs to infrastructure like wells and compound walls, and commission paid to brokers. While the Commissioner of Income Tax (Appeals) partially allowed the deductions, both the assessee and the Department approached the ITAT, which fully allowed the claims.
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While dismissing the Department’s appeals, a bench comprising Chief Justice K.R.Shriram and Justice Sunder Mohan observed that the ITAT’s findings were supported by material evidence.
The Tribunal had noted that payments were made by cheque, TDS was duly deducted, and that contractors had filed their income tax returns, indicating the genuineness of the transactions, observed the bench.
The court also noted that the Tribunal found that physical verification of the land and infrastructure confirmed that the claimed development work such as road construction and repair of compound walls and water structures had actually been carried out.
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The Court also upheld the ITAT's acceptance of commission payments to a broker named Maruthanayagam, which was corroborated both by the broker and the purchaser in their sworn statements. Observing that the factual findings were based on a proper evaluation of evidence, the Court held that the Department’s claims of lack of documentary support were insufficient to disturb concurrent findings of fact by CIT(A) and ITAT.
Consequently, the Court decided that the Department's appeal did not raise any important legal issues, and as a result, both tax case appeals were rejected.
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