Signing of JDA is Proof that Assessee began Enterprise: ITAT permits Expenditure Declare

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from Rasheela Basheer

JDA - Business - ITAT - Expense Accounting - TaxscanShare icon

The Hyderabad Bank of the Income Tax Appellate Tribunal (ITAT) has ruled that the fact that the Assesse has entered into a Joint Development Agreement (JDA) to develop the property is evidence that the assessee has commenced business.

The Assesse company that buys, buys, leases or exchanges, develops, sells, leases or otherwise dispenses land, buildings, apartments for residential use and other uses.

As part of the assessment process, the AO has put an amount of Rs. 69.19.950 / – in the income statement for legal, professional and consulting costs under the heading “Administrative expenses” as capital expenditure.

The judicial member, Mr. SS Godara, and the accountant member, Mr. LP Sahu, noted that of the P&L account expenses cited above, the AO approved some of the expenses by treating them as income expenses while only legal, professional and Consultation fees of Rs. 69.19.950 / – was not treated as capital expenditure.

“While the CIT (A) has determined that these expenses can be approved under U / s 35D, but not under U / s 37 (1) of the law. We note that the Assesse concluded a joint development agreement on January 18, 2008 for the development of the property, ie the start of business activities was commenced in the case of the real estate business operated by the Assesse. Therefore, in this regard, there is no confusion that the valuer has not started his work. JDA was registered for the development of the property to be treated as an assessee, which has started its activity in the real estate industry. The jurisprudence of the ld. AR supports the assessee’s case. Therefore the expenses of the appraiser for legal, professional and consulting costs of Rs. 69.19.950 / – are hereby admitted as income expenses ”, decided the bank.

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