Dy.CIT, Circle-1(3), Hyderabad V. M/s Building Blocks Projects India P Ltd., Hyderabad

ITA 1318/HYD/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82526 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 11-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: I B RAMAKRISHNA
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1318/HYD/14 : ASSESSMENT YEAR 2010 - 11 DY. COMMISSIONER OF INCOME - TAX, CIRCLE 1(3), HYDERABAD V/S. M/S. BUILDING BLOCKS P ROJECTS INDIA PVT. LTD., HYDERABAD (PAN AAFCM 8352 F) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI I B.RAMAKRISHNA DR RESPONDENT BY : NONE DATE OF HEARING 13 . 11 .2014 DATE OF PRONOUNCEMENT 14.11.2014 O R D E R PER P.M.JAGTAP, ACCOUNTANT MEMBER : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) II, HYDERABAD DATED 28.04.2014, WHEREBY HE DELETED THE ADDITION OF RS.72,05,422 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF REGISTRATION EXPENSES. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, WHICH IS EN G AGED IN THE BUSINESS OF BUYING LAND, LAYING OUT PLOTS OF SUC H LAND AND SELLING THE SAID PLOTS TO THE BUYERS/INVESTORS. THE RETURN OF INCOME FOR THE Y E AR UNDER CONSIDERATION WAS FIL E D BY IT ON 29.09.2010 DECLARING A TOTAL INCOME OF RS .73,60,579. IN TH E PROFIT & LOSS ACCOUNT FILED ALONGWITH THE SAID RETURN , A SUM OF RS .72,05,422 WAS DEBITED BY TH E ASSESSEE ON ACCOUNT OF PLOT REGISTRATION CH A R G ES UNDER THE HEAD ADMINISTRATIVE EXPENDITURE. ACCOR D ING TO THE ASSESSING OFFICER, REGISTRATION CHAR G ES FOR P L OTS ARE GENERALLY PAID BY THE BUYERS AS PER THE I TA NO. 1318 /H YD/20 1 4 M/S. BUILDING BLOCKS PROJECTS INDIA PVT. LTD. HYDERABAD 2 NORMAL PRACT ICE. HE TH E R E FORE, REQUIRED THE ASSESSEE TO SUPPORT AND SUBSTANTIATE ITS CL A IM FOR DEDU CT ION ON ACCOUNT OF P L OT REGISTRATION C H A R G ES. IN REPLY, I T WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE REGISTRATION EXPENSE S OF THE PLOT BUYERS W E RE BORNE BY IT ONLY TO PROMOTE THE S A LES AND THE SAME TH E R E FORE, WERE ALLOWABLE ON THE BASIS OF BUSINESS EXPEDIE N CY. THI S EXPLANATION OF THE ASSESSEE W AS NOT FOUND ACCEPTABLE B Y THE ASSESSING OFFICER . A LTHOUGH THE ASSESSEE WAS READY TO FURNISH THE CONFIRMATION LETTERS F ROM THE PLOT BUYERS TO SUPPORT AND SUBSTANTIATE ITS CL A IM O F HAVING PAID THE REGISTRATION CHARGES, THE ASSESSING OFFICER HELD TH A T THE SAME COULD NO T FORM A CONCLUSIVE EVIDENCE TO ESTABLI S H THE CASE OF THE ASSESSEE ON THIS ISSUE. HE ALSO NO T ED T H A T THE RE WAS NO M ENTION IN THE RELEVANT DO C UM E N T PRODUCED THAT THE PLOT REGISTRATION EXPEN SE S OF THE BUYER WERE ACTUALLY BORNE BY THE ASSESSEE COMPANY. HE THEREFORE, DISALLO W ED THE R E GISTRATION EXPENSES OF RS. 72,05,422 CLAIMED BY TH E ASSESSEE AND ADDED THE S A I D AMOUNT TO THE TOTAL IN C OM E O F TH E ASSESSEE IN THE ASSESSMENT COMPLETED UNDER S .143(3) VIDE O R DER DATED 22.3.2012. 3. AGAIN S T THE ORDER PASSED BY THE ASSESSING OFFICER UNDER S.143(3 ) , AN APPE A L WAS P R EFERR ED BY TH E ASSESSEE BEFORE THE LEARNED CIT(A) AND AFTER CONSIDERING THE SUBMI S SION S MADE BY THE ASSESSEE AS WELL AS THE DOCUMENTARY EVIDENCE PL A CED ON RECORD IN SUPPO R T, THE LEARNED CIT(A) DELETED THE DISALLOWANCE MAD E BY THE ASSESSING OFFICER ON ACCOUNT OF PLOT REGIS T RATION CH A RGES FOR TH E FOLLO W IN G REASON S GIVEN IN PAR A GRAPH 5 OF THE IMPU G N E D O R DER - 5. THE I N FORMATION ON RECORD IS CAREFULLY CONS I D ERE D. THE APPELLANT REITERATED THE SAME SUBMISSION MADE BEFORE THE ASSESSING OFFICER STATING THAT IT IS THE GENERAL PRACTICE OF THE COMPANY THAT THE REGI STRATION CHARGES ARE BO R NE BY THE CUSTOMERS. HOWEVER, DUE TO RECESSION IN REAL ESTATE MARKET AND DUE TO REGIONAL AGI TA TION FOR SEPARATE I TA NO. 1318 /H YD/20 1 4 M/S. BUILDING BLOCKS PROJECTS INDIA PVT. LTD. HYDERABAD 3 STATEHOOD OF T E LANGANA AND DU E TO FAR OF LOCATION OF SITE, I.E. THE SITE IS LOCATED BEYOND SHADNAGAR, MAHABUBNAGAR DI S TR ICT, WHICH IS M ORE THAN 50 KM. AWAY FROM TH E CITY. IN ORDER TO ATTRACT THE CUSTOMERS, IN SOME CA S ES REGISTRATION CHAR G ES WERE PAID. FURTHER DURING THE COU R SE OF APPELL A TE PROCEEDINGS, THE AUTHORISED REPRESENTATIVE SUBMITTED THE ORIGINAL REC E IPTS HAVING PAID THE REGISTRATION CHARGES. AFTER PERUSING TH E SE RECEIPTS, IT IS UNDERSTOOD THAT ALL THE RECEIPTS ARE IN THE NAME OF EITHER BUILDING BLOCKS PROJECTS I NDIA P V T. LTD., HYDERABAD, OR IN THE NAME OF SHRI T.MADHUSUDHAN R ED D Y, ON E OF THE DIRECT ORS OF THE COMPANY. ALL THE PAYM E N T S ARE MADE IN CASH AND IT WAS EXPLAINED T H A T THE SUB - R E GISTRAR DO NOT ACCEPT THE CHEQUES OR ANY OTHER MODE OF PAYM E N T TOWAR D S REGISTRAT IO N CH A R G ES. IT WAS FURTHER EXPLAINED BY TH E AUTHORISED REPRESENTATIVE THAT UNLESS T HE A PPELLANT COMPANY PAYS THE REGI ST R A TION C H A R G ES, THEY WOULD NO T POS S ESS THE ORIGINAL CHALLANS OF THE REGISTRATION CHARES PAYM E N T S. HAVING GONE THROUGH THE I N F ORMATION ON RECORD, I CON S I D ER THERE IS MERIT IN APPELLANTS SUB M I S SION THAT IN ORDER TO OVERCOME RECESSION IN REAL ESTATE MARKET DURING THE F.Y. 2009 - 10 , THE APPELLANT IN C URRED REGIS T RATION CH A R G ES IN SOME CA S ES TO BOOST UP THE SALE. THOUGH IT IS TH E GENERAL PR A CTICE THAT THE BUYERS MEET THE REGISTRATION CHARGES BUT HO WEV ER IT IS NOT UNUSUAL PRACTICE FOR THE SELLER TO MEET SUCH EXPENSES IN SPECIAL CIRCUMSTANCES. IT ALL DEPENDS ON THE DEMAND AND SUPPLY AND THE TERMS BETWEEN THE SELLER AND THE BUYER. FURTH E R I DO NO T FIND ANY MERIT IN ASSESSING OFFICERS CONTENTION THAT WHEN THE BUYERS SELL T H E PLOTS, THEY MIGHT CLAIM THE REGISTRATION CHARGES AS COST OF THE PLOT IN COMP U TING THE C APITAL GAINS. AS FAR AS R E GISTRATION DEPARTMENT IS CONSIDERED, IT DOES NOT MATTER WHO PAYS THE R E GISTRATION CH A R G ES. ALL THAT MAT T ERS IS WHETHER THE REGISTRATION CH A R G E WAS PAID O R NO T . EVEN IN THE R E GISTER ED SALE DEED AL S O, ONLY TH E AMOUNT O F REGISTRATION CH A R G ES I TA NO. 1318 /H YD/20 1 4 M/S. BUILDING BLOCKS PROJECTS INDIA PVT. LTD. HYDERABAD 4 PAID IS RECORDED. WHO HAS PAID THESE REGI S TRATION CHARGES IS NOT RECORDED IN THE SALE DEED. HOW E VER, WHETHER THE REGISTRATION CHAR G ES ARE PAID BY THE SELLER OR BUYER IS EVIDENT F R OM THE RECEIPT GIVEN BY THE REG I S TRATION D EPARTMENT WHICH IS THE CATEGORICAL PROOF OF PAYMENT. FROM THI S RECEIPT IT IS EVIDENT IT I S THE SELLER WHO PAID THE R EGI S TRATION CHAR G ES AND NO T THE BUYER. I N TH E SE CIRCUMSTANCES, THE A SSESSING OFFICER IS DIRECTED TO ALLO W THE R E GIS TR ATION CHAR G ES PAID BY THE APPELLANT OF RS.72,05,422/ - . THEREFORE, THIS APPEAL IS ALLOWED. 4. AT THE TIME OF H E ARING BEFORE US, NONE HAS A P PPEAR ED ON BEHALF O F THE ASSESSEE DESPITE THE FACT THAT NO T ICE OF H E ARING S ENT T O THE ASSESSEE BY RPAD ON THE ADDRESS GIVE N IN FORM NO.36 IS DULY SERVED , A PROOF OF WHICH I S AVAILABL E ON RECORD. THIS APPEAL O F TH E REVENUE IS THER E FORE , BEING DISPOSE D OF EX - PARTE - QUA THE RESPONDENT ASSESSEE - AFTER H EA RING THE ARGUMENTS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSING THE RELE V ANT MATERIAL ON RECORD. AS RIGHTLY POINTED OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, SOME OF THE ORIGINAL RECEIPTS S H OWING PAYMENT OF REGI S TRATION CH A R G ES W E RE FILED BY TH E A SSESSEE FOR THE FIRST TIME BEFORE THE LEARNED CIT(A) AND RELYING ON THI S ADDITIONAL EVIDENCE, THE LEARNED CIT(A) ALLOWED THE CLAIM O F TH E ASSESSEE FOR DEDUC T ION ON ACCOUNT OF REGI ST RATION CH A R G ES, WITHOUT GIVING ANY OPPORT U NITY TO TH E ASSESSING OFFICER TO VERIFY THE SAME AND WITHOUT EVEN INSI ST ING F OR PRODUCTION OF A LL THE RELEVANT RECEIPTS IN ORIGINAL SHOWING PAYM E NT OF R E GIS T RATION CH ARG ES. HE HAS ALSO SUBMI T TED THAT MERELY B E CAU S E THE ASSESSEE IS HAVING THE ORIGINAL RECEIP T S, IT CANNOT BE PRESUMED T H A T THE REGISTRATION C HARGES WERE PAID BY TH E ASSESSEE . HE HAS CONTENDED THAT SUCH PRESUMPTION DRAWN BY THE LEARNED CIT(A) ITSELF IS NO T CORRECT AND TH E LEARNED CIT(A) SHOULD H A VE AT LEAST ASKED FOR THE CON F IRM A TION LET T ERS F R OM TH E CON C ERNED BUYERS ACCEPTING THE PAYMENT OF REGISTRATION CHARGES BY THE ASSESSEE. I TA NO. 1318 /H YD/20 1 4 M/S. BUILDING BLOCKS PROJECTS INDIA PVT. LTD. HYDERABAD 5 5. KEEPING IN VIEW THE SUBMI S SION S MADE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE AND TAKING INTO CON S I D ERATION TH E M A TERIAL AVAILABLE ON RECORD INCLU D IN G THE O R DERS OF TH E AUTHO R ITI E S BELOW, WE FIND THAT THE RELIEF ALLOWED BY THE LEARNED CIT(A) BY THE IMPUGNED ORDER TO THE ASSESSEE ON TH E ISSUE UNDER CON S I D E R ATION RELYING ON THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE IS IN VIOLATION OF RULE 46A O F TH E INCOME - TAX RUL E S, 19 62. MOREOVER, AS RIGHTLY CONTENDED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, THE POSSESSION OF THE ORI GI N A L RECEIPTS BY TH E ASSESSEE ALONE I S NOT SUFFICIENT TO ESTABLISH THAT THE REGISTRATION CH A R G ES ARE PAID BY THE ASSESSEE, UNLESS THE SAME IS CORROBO R ATED BY THE CON F I R MATIONS ISSUED BY TH E CONCERNED PURCHASERS, CONFIRMING THE FACT THAT THE REGI S TRATION CH A R G ES ARE BORNE BY THE ASSESSEE. WE TH E R E FORE, CON S IDER IT FAIR AND PROPER AND IN T HE INTE R ESTS OF JU S TI C E TO SET ASIDE THE IMPU G N E D ORDER OF THE LEAR NED CIT(A) GIVING RELIEF TO THE ASSESSEE ON THIS IS S UE AND RESTORE THE MATTER TO THE FILE OF TH E ASSESSING OFFICER WITH A DIRECTION TO DECIDE TH E SAME AFRESH, AFTER GIVING THE ASSESSEE PROPER AND SUFFICIENT OPPOR T UNITY TO ESTABLISH THAT THE REGISTRATION C HA R GE S WERE ACTUALLY PAID BY IT. 6 . IN THE RESULT, APPEAL OF THE R E VE N UE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 14 TH NOVEMBER, 2014 SD/ - SD/ - ( ASHA VIJAYARAGHAVAN ) ( P.M.JAGTAP ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT/ - 14 TH NOVEMBER 2014 I TA NO. 1318 /H YD/20 1 4 M/S. BUILDING BLOCKS PROJECTS INDIA PVT. LTD. HYDERABAD 6 COPY FORWARDED TO: 1. M/S. BUILDING BLOCKS PROJECTS INDIA PVT. LTD., FLAT NO.A - 101, MAHESHWARI TOWERS, ROAD NO.1, BANJARA HILLS, HYDERABAD 2 . DY. COMMISSIONER OF INCOME - TAX, CIRCLE 1(3), HYDERABAD 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) I I, HYDERABAD COMMISSIONER OF INCOME - TAX - I , HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S