Allowed appeal against ITAT holding that liability for land repayment arose immediately on contract execution. Court held entire expenditure deductible in year of receipt, distinguishing precedent and clarifying that Fixed Deposit name does not alter liability timing.
Tax Case Appeal allowed; questions of law answered in favour of assessee.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated: 15.02.2016
Coram:
The Hon'ble Mr.Justice V.RAMASUBRAMANIAN and
The Hon'ble Mr.Justice N.KIRUBAKARAN
Tax Case Appeal No.960 of 2007
M/s. Macro Marvel Projects Ltd., "Gelneden Place", 813, P.H. Road, Kilpauk, Chennai-600 010.
... Appellant
Versus
Assistant Commissioner of Income Tax, Company Circle-IV (1), 121. Nungambakkam High Road, Chennai - 600 034.
... Respondent
Tax Case Appeal filed under Section 260-A of the Income Tax Act, 1961, against the Order dated 1.3.2007 passed by the Income tax Appellate Tribunal, Chennai 'B' Bench, Chennai in ITA No.129 /Mds./04.
For Appellant : Dr.Anita Sumanth For Respondent : Mr.T.R.Senthilkumar, SC
JUDGMENT
(Judgment of the Court was made by V.Ramasubramanian, J)
This Tax Case Appeal is filed by the Assessee, under Section
260A of the Income Tax Act, 1961. It was admitted on 5.7.2007 on
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the following substantial questions of law:-
"1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the entire amount of repayment is not liable to be deducted in computing the income in the year of receipt itself?
2. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that only 1/5th of the amount can be claimed as deduction in each of the five years?
appearing for the appellant and Mr.T.R.Senthilkumar, learned Standing Counsel for the Department.
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be spread over a period of five years, since the liability to pay accrues only at the end of five years.
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Industrial Investment Corporation Limited vs. Commissioner of Income Tax [225 ITR 802] . In that view, the Tribunal reversed the decision of the Commissioner of Income Tax (Appeals). Hence the assessee is before us.
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guarantee, so that the cost of the plot paid by him is repaid by the bank, after the expiry of five years. In order to enable the bank to do this, the assessee creates a Fixed Deposit. Therefore, the Tribunal found that the liability was incurred immediately, but the payment was postponed.
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Company Limited, would apply squarely to the facts of the case. The decision in M/s Madras Industrial Investment Corporation Limited , was rightly distinguished by the Commissioner of Income Tax (Appeals) but wrongly interpreted by the Tribunal.
(V.R.S., J) (N.K.K., J) 15.02.2016
Index : Yes or No Internet : Yes or No
To
The Income tax Appellate Tribunal, Chennai 'B' Bench, Chennai.
V.RAMASUBRAMANIAN, J AND N.KIRUBAKARAN, J
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gr
T.C.(A) No.960 of 2007
15.02.2016
2 issues framed by the court
Whether the entire amount of repayment due under a land sale scheme was liable to be deducted in the year of receipt itself rather than spread over five years.
Whether the Tribunal was correct in limiting the deduction claim to only 1/5th of the amount for each of the five years.
1 provisions across 1 enactments
M/s. Macro Marvel Projects Ltd.
Assistant Commissioner of Income Tax, Company Circle-IV (1)
V. Ramasubramanian
N. Kirubakaran
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
