M/s. Raj Builders, Ahmedabad V. The Jt.CIT, Range-9, Ahmedabad

ITA 152/AHD/2017

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9794 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 21-11-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 18-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N K GOYAL
• Assessee Lawyers: M J SHAH
• Keywords: Commercial expediency
• Section: 201; 143(2); 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH BEFORE: SHR I AMARJIT SINGH , ACCOUNTANT MEMBER AND MS. MADHUMITA ROY , JUDICIAL MEMBER M/S. RAJ BUILDERS NISHAN ROYAL, OPP. ANMOL BUNGLOWS, GST ROAD, NEW RANIP, AHMEDABAD - 380061 PAN: AAMFR2238O (APPELLANT) VS THE IT O , JT. CIT, RANGE - 9, PRATYAKSH KAR BHAVAN, AHMEDABAD (RESPONDENT) REVENUE BY : S H RI N. K. GOYAL , SR. D . R. ASSESSEE BY: SHRI M.J. SHAH , A.R. DATE OF HEARING : 21 - 11 - 2 019 DATE OF PRONOUNCEMENT : 19 - 12 - 2 019 / ORDER P ER : AMARJIT SINGH, ACCO UNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2011 - 12 , ARI SES FROM ORDER OF THE CIT(A) - 10, AHMEDABAD DATED 1 8 - 11 - 2 016 , IN PROCEEDINGS UNDER SECTION 1 4 3(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. THE C.I.T.(APPEALS) ERRED IN UPHOLDING THE DISALLOWANCE OF EXPENDITURE OF RS.2,99,832/ - BEING AUDA BETTERMENT CHARGES PAID BY THE ASSESSEE FIRM. 2. THE C.I.T.(APPEALS) FURTHER ERRED IN UPHOLDING THE DISALLOWANCE OF COMMISSION EXPENSES OF RS .8,75,000/ - PAID BY THE ASSESSEE FIRM. I T A NO . 152 / A HD/20 17 A SS ES SMENT YEAR 2011 - 12 I.T.A NO. 152 /AHD/20 17 A.Y. 2011 - 12 PAGE NO M/S. RAJ BUILDERS VS. JT.CIT 2 3. THE FACT IN BRIEF IS THAT RETURN OF INCOME DECLARING INCOME OF RS. 30 ,96,7 5 0/ - WAS FILED ON 28 TH SEP, 2011. THE CASE WAS SELECTED FOR SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT ON 21ST SEP, 2012. DURIN G THE COURSE OF ASSES SMENT, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS CLAIMED RS. 2 , 99 ,832 / - AS AUDA EXPENSE S . ON FURTHER VERIFIC ATION, THE ASSESSING OFFICER OBSERVED THAT AUDA EXPENSES WAS PAID BY SHRI RAJENDRA M. PATEL ON 27 TH MAY, 10. THE ASSES SEE FIRM WAS NOT EXI S TED AT THAT PARTICULAR TIME. THE ASSESSEE FIRM WAS CONST ITUTED BY PARTNERSHIP DEED ON 10 TH JUNE, 2010. THE ASSESSEE F IRM HAS PURCHASED THE LAND ON 6 TH JULY, 2010 FROM 9 PARTIES AT A PRICE OF RS. 5.2 CRORE PURCHASED BY THE 9 PARTIES F OR A CONSIDERATION OF RS. 5 CRORE . SINCE THE AFORESAID EXPENDITURE WAS NO T INCURRED BY THE ASSESSEE FIRM, T HEREFORE, THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF THE EXPENDITURE AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE GROUND NO. 2 (DISALLOWANC E ON COMMISSION) 4 . DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER ALSO NOTICED THAT ASSESSEE HAS CLAIMED COMMISSION EXPENSES OF RS. 8.75 LACS IN THE P & L A/C. ON FURTHER VERIFICATION, THE ASSESSING OFFICER NOTICED THAT PAYMENT OF RS. 8.75 LACS W AS MADE BY SHRI AMITABHBHAI P. PATEL AS BROKERAGE/DALALI ON 31 - 03 - 2011 FOR LAN D TRANSACTION OF RS. 5,00,00,000 / - . THE BROKERAGE COMMISSION WAS PAID FOR THE TRANSACTION OF PURCHASE OF LAND AT RS. 5 CRORE AND THE 9 INDIVIDUAL HOLDERS HAVE PURCHASED THE LAN D FROM AGRICULTURISTS FOR A PRICE OF RS. 5 CRORE VIDE BANAKHAT DATED 10 TH FEB, 2010. THE COMMISSION CHARGE WAS PAID AT THE TIME OF PURCHASING OF THE LAND BY 9 INDIVIDUAL PERSONS AT RS. 5 CRORES. SUBSEQUENTLY, THIS LAND WAS PURCHAS ED BY THE FIRM AT RS. 5.2 CRORE FROM THE 9 INDIVIDUALS ON 06 - 07 - 2010. WITHOUT REITERATING THE FACTS AS I.T.A NO. 152 /AHD/20 17 A.Y. 2011 - 12 PAGE NO M/S. RAJ BUILDERS VS. JT.CIT 3 ELABORATED ABOVE WHILE ADJUDICATING THE GROUND NO. 1 OF THE ASSESSEE , THE ASSESSING OFFICER HAS CONCLUDE D THAT T H E ASSESSEE FIRM WAS NOT EXISTED ON THE DATE OF PAYMENT OF COMMI SSION AND THE SAME AMOUNT PERTAINED TO THE BUYERS OF THE LAND FROM WHOM THE ASSESSEE FIRM HAD PURCHASED THE LAND AT RS. 5.2 CRORE ON 06 - 07 - 2010. CONSEQUENTLY, THE ASSESSING OFFICER HAS DI SALLOWED THE CLAIM AND ADDED TO THE TOTAL INCOME OF THE ASSESSSEE. 5 . AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. 6 . WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED THE MATERIAL. IT IS UNDISPUTED FACT THAT ASSESSEE FIRM WAS CONSTITUTED ON 10 TH JUNE, 2010. THE ASSESSEE HAS PURCHASED LAND AT RS. 5.2 CRORE ON 6 TH JULY, 2010 F ROM 9 INDIVIDUAL PERSONS WHO HAVE PUR C HA S ED THIS LAND AT COST OF R S. 5 CORES. THE AUDA CHARGES WAS PAID ON 27 TH MAY, 2010 BY SHRI RAJENDRA M. PATEL ONE OF THE PERSONS OUT OF 9 PA R S ONS WHEN THE FIRM WAS NOT EXI S TED. WE HAVE ALSO GONE THROUGH THE CASE LAWS REFERRED BY THE ASSESSEE I.E. IN THE CASE O F SA BUILDERS LTD. VS. ACIT(A) CH ANDIGARH (2007) 158 TAXMANN.COM 74 (SC) AND IN THE CASE OF CIT VS. DHANRAJGIRJI RAJA NARSINGIRJI (19 73 ) 9 1 ITR 544 (SC) PERTAINING TO INCURRING OF EXPENSES FOR COMMERCIAL EXPEDIENCY. WE FIND THAT FACTS IN THE CASE OF THE ASSESSEE ARE DISTINGUISHABLE F R O M THE FACTS OF THE CASE AS REFERRED BY THE LEANED COUNSEL. IN THE CASE OF THE ASSESSEE, THE ASSESSE WAS NOT EXI S TED WHEN AUDA CHARGES WAS PAID ON 27 TH MAY, 2010 BY SHRI RAJENDRA M. PATEL ONE OF THE PERSONS OUT OF 9 PARTIES FROM WHOM THE ASSESSEE HAS PURCHASED THE L AND ON 6 TH JULY , 2010. THE ASSESSEE FIRM HAS COME INTO EXISTENCE ONLY ON 10 TH JUNE, 2010. TH ERE IS NO RELEVANT MATERIAL I.T.A NO. 152 /AHD/20 17 A.Y. 2011 - 12 PAGE NO M/S. RAJ BUILDERS VS. JT.CIT 4 OR AGREEMENT WHICH DEMONSTRATE S THAT THE IMPUGNED CHARGES TO BE PAID BY THE ASSESSEE EVEN WH EN THE ASSESSEE FIRM WAS NOT EXIS TED. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE THE DECISION OF LD. CIT(A). ACCORDINGLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 6 .1 . REGARDING SECOND GROUND OF APPEAL, I T IS UNDISPUTED FACT THAT COMMISSION OF RS. 8.75 LACS WAS PAID FOR TRANSACTION OF L AND AT RS. 5 C R ORE BY THE 9 INDIVIDUAL PERSONS VIDE SALE DEED DATED 10 TH FEB, 201 0. THE ASSESSEE FIRM WAS NOT EXI S TED AT THAT TIME. AS REPORTED ABOVE I N THIS ORDER, THE ASSESSE FIRM H AS CO ME INTO EXISTENCE ON 10 T H JUNE, 2010 AND THE ASSESSEE FIRM HAS PURCHASED THE LAND FROM 9 INDIVIDUAL PERSONS ON 6 TH JULY, 2010 AT RS. 5 .2 CRORE. WI THOUT REITERATING THE FACTS AS REPORTED ABOVE WHILE ADJUDICATING THE GROUND NO. 1 ON THE SAME REASONS, W E DO NOT FIND ANY SUBSTANCE IN THE SECOND GROUND OF APPEAL OF THE ASSESSEE AS THERE IS NO RELEVANT MATERIAL/EVIDENCES WHICH SUBSTANTIATE HOW THE COMMISS ION CHARGES PAID BY THE ERSTWHILE OWNER OF THE LAND PERTAINED TO THE ASSESSEE FIRM WHEN IT WAS NOT EXI S TED AT ALL. THEREFORE, WE DO NOT FIND ANY INFERENCE IN THE DECISION OF LD. CIT(A). ACCORDINGLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALSO DISMISSED . 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 19 - 12 - 201 9 SD/ - SD/ - ( MADHUMITA ROY ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT ME MBER I.T.A NO. 152 /AHD/20 17 A.Y. 2011 - 12 PAGE NO M/S. RAJ BUILDERS VS. JT.CIT 5 AHMEDABAD : DATED 19 /12 /2019 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,