ITAT held that payment for property tax is an annual activity and the same will be in the nature of Revenue expenditure
CA Pratibha Goyal | Dec 22, 2022 |
Payment of annual property tax to local municipal authorities Revenue Expenditure: ITAT
The issue that came up for our consideration is the disallowance of rates & taxes amounting to Rs.8,20,602/-. The AO has disallowed payments made to Members Secretary, Pondicherry Planning Authority amounting to Rs.6,40,709/- and payment made to Mr.R.Viswanathan towards ROC fees amounting to Rs.13,100/- and payment of property taxes to Pondicherry Panchayat amounting to Rs.1,66,793/-, all totaling to Rs.8,20,602/- debited under the head ‘rates & taxes’ on the ground that they are in the nature of capital expenditure. It was the arguments of the assessee that the amounts debited under the head ‘rates & taxes’ are recurring expenses which are Revenue in nature.
After hearing both the parties and perusing the materials available on record and ITAT Found that amount paid to Member Secretary, Pondicherry Planning Authority, amounting to Rs.6,40,709/- is for taking permission to let out the premises to tenant for different purpose other than the purpose for which the planning permission has been taken from the local authority and as per Tribunal said expenditure is definitely in the nature of Revenue in nature and therefore, AO was directed to delete the additions made towards amount paid to Member Secretary Pondicherry Planning Authority amounting to Rs.6,40,709/-.
As regards payment made to Mr.R.Viswanathan towards ROC fees, it is a professional fee paid for rendering professional services in connection with filing documents with ROC an thus, same cannot be considered as capital in nature and thus, ITAT directed AO to delete additions made on this account amounting to Rs.13,100/-.
As regards payment for property tax to Pondicherry Panchayat, it is an annual property tax levied by local municipal authorities and the same will be in the nature of Revenue expenditure and therefore, AO was directed to delete the additions made towards disallowance of property tax paid to Pondicherry Panchayat amounting to Rs. 1,66,793/-.
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