DCIT, New Delhi V. M/s. Vansidhar Pealtors Pvt. Ltd., New Delhi

ITA 1606/DEL/2013

• Counselvise Citation: 160620114 RSA 2013
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2007-2008
• Appeal Filed On: 19-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S MEENA
• Assessee Lawyers: V MOHAN; VED JAIN S H A K AGGARWAL
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: H NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SHRI J.S.REDDY, ACCOUNTANT MEMBER I.T.A .NO.-1606/DEL/2013 (ASSESSMENT YEAR-2007-08) DCIT, VS M/S VANSIDHAR REALTORS PVT. LTD., CENTRAL CIRCLE-1, ROOM NO-322, N-49, (1 ST FLOOR), 3 RD FLOOR, ARA CENTRE, CONNAUGHT PLACE, JAHNDEWALAN EXTN., NEW DELHI. NEW DELHI-01. PAN-AACCV1749E (APPELLANT) (RESPONDENT) APPELLANT BY : SH.R.S.MEENA, DR RESPONDENT BY : SH. VED JAIN, S H. A.K.AGGARWAL & SH. V.MOHAN, CA ORDER PER DIVA SINGH, JM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 14.01.2013 OF CIT(A)-III, NEW DELHI PERTAINING TO 2007-08 ASS ESSMENT YEAR ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.19,80,000/ - (BEING 1/5 TH OF THE TOTAL EXPENDITURE OF RS.9,99,00,000/-) MADE BY THE ASSESSING OFFICER FOR THE VIOLATION OF THE PROVISIO NS OF SEC. 40A(3) OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN HOLDING THAT AS AND WHEN THE ADVANCE G IVEN TO FARMERS FOR PURCHASE OF LAND IS TREATED AS PART OF STOCK IN TRADE/WORK INB PROGRESS, THE VALUE OF SAID STOCK IN TRADE/WORK IN PROGRESS SHOULD BE REDUCED BY 1/5 TH OF THE TOTAL CASH PAYMENTS MADE DURING FINANCIAL YEAR 2006-07. I.T.A .NO.-1606/DEL/2013 2 3. THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TEN ABLE ON FACTS AND IN LAW. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND A NY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE O F THE HEARING OF THE APPEAL. 2. RIGHT AT THE OUTSET LD. AR FILING COPY OF THE ORDER PASSED BY THE CO- ORDINATE BENCH DATED 07.12.2012 IN THE CASE OF ACIT VS M/S VANSIDHAR PROJECT PVT. LTD IN ITA NO.-1973/DEL/2012 FOR 2007-08 ASSES SMENT YEAR SUBMITTED THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSE E WHEREIN IDENTICAL GROUNDS OF THE REVENUE HAS BEEN DISMISSED. 2.1. HOWEVER, SINCE THE PRESENT APPEAL HAS BEEN FIL ED BY THE DEPARTMENT, LD. CIT DR MR. R.S.MEENA WAS REQUIRED TO ADDRESS THE IS SUE. LD. CIT DR STATED THAT THE CIT(A) HAS TAKEN COGNIZANCE OF THIS ORDER AS THE ASSESSEE HAD PLACED RELIANCE UPON THE SAME. HOWEVER IT WAS HIS CONCERN THAT AS AND WHEN THE ASSESSEE CLAIMS IT AS AN EXPENDITURE, THE AO SHOULD BE DIRECTED TO TAKE COGNIZANCE OF THE SAME AND TRACK SHOULD NOT BE LOST SIGHT OF THIS FACT. THE LD. AR RELIES UPON THE IMPUGNED ORDER AND THE ORDER OF THE CO-ORDINATE BENCH IN ASSESSEES SISTER CONCERN. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS SEEN THAT ON ADDITION OF RS.19,80,00 0/- WAS MADE BY THE AO ON ACCOUNT OF THE FACT THAT THE PAYMENTS AMOUNTING TO RS.99,00,000/- WERE FOUND TO BE MADE IN CONTRAVENTION OF PROVISIONS OF SECTION 4 0A(3). IT IS SEEN THAT THE ASSESSEE STATED THAT IT HAD MADE A PAYMENT OF RS.99 ,00,000/- IN CASH AS BAYANA AND BALANCE PAYMENT WAS MADE BY CHEQUE TO DIFFERENT AGRICULTURISTS. THE AO HELD THAT THE PROVISION OF 40A(3) WERE ATTRACTED AN D CONSEQUENTLY DISALLOWED 20% OF THE CASH PAYMENT. 3.1. THE ARGUMENTS ADVANCED ON BEHALF OF THE ASSES SEE WAS THAT IT HAD NOT CLAIMED IT AS AN EXPENDITURE AS IT WAS MERELY PAID AS ADVANCE TO VARIOUS FARMERS I.T.A .NO.-1606/DEL/2013 3 FROM WHOM AGRICULTURAL LAND WAS YET TO BE PURCHASED . THE PAYMENTS WERE STATED TO BE MADE OUTSIDE THE BANKING HOURS AND THE PAYMEN TS WERE MADE TO THOSE PERSONS TO WHOM PAYMENTS WERE ALREADY MADE THROUGH ACCOUNT PAYEE CHEQUE AND THE ASSESSEE PRIOR TO MAKING THESE TRANSACTIONS HAD NO TRANSACTION WITH THESE AGRICULTURISTS. THE PAYMENTS WERE STATED TO BE MAD E DUE TO BUSINESS COMPULSION AS PAYING BAYANA BY CHEQUE WAS NOT PRACTICABLE. 3.2. CONSIDERING THESE SUBMISSIONS, THE CIT(A) CAME TO THE FOLLOWING CONCLUSION:- 6.2. IT IS FURTHER NOTICED THAT A SIMILAR ISSUE HA D ARISEN IN APPELLANTS SISTER COMPANY CASE NAMELY VANSIDHAR PR OJECTS P. LTD. IN ASSESSMENT YEAR 2007-08 AND MY PREDECESSOR VIDE HIS ORDER DATED 06.02.2012 HAD GIVEN A FINDING THAT :- PAYMENT MADE AS ADVANCES FOR PURCHASE OF LAND WHIC H DOES NOT FORM PART OF PROFIT AND LOSS ACCOUNT, WOULD NOT QUA LIFY FOR DISALLOWANCE WITHIN MEANING OF SECTION 40A(1) READ WITH 40A(3). THE DISALLOWANCE UNDER SECTION 40A(3) CAN BE MADE ONLY WHEN THE COST OF LAND IS DEBITED AS WORK-IN-PROGRESS/STOCK I N TRADE AND THE PROFIT AND LOSS ACCOUNT. THE ABOVE VIEW OF THE CIT(A) WAS ALSO UPHELD BY ITA T VIDE THEIR ORDER DATED 07.12.2012, IN ITA NO.1973/DEL/2012. SINCE IN THE PRESENT CASE THE ADVANCE GIVEN FOR PUR CHASE OF LAND DOES NOT FORM PART OF PROFIT & LOSS ACCOUNT AND HAS NOT BEEN CLAIMED AS EXPENDITURE IN THE YEAR UNDER CONSIDERAT ION, THEREFORE BY RELYING ON ITATS ORDER DELIVERED IN APPELLANTS SI STER CONCERN NAMELY VANSIDHAR PROJECTS P. LTD., I AM ALSO OF THE CONSIDERED VIEW THAT THE PROVISIONS OF SECTION 40A(3) WOULD NOT APP LY IN THE APPELLANTS CASE. HENCE THE ADDITION OF RS.19,80,00 MADE BY THE AO IN THE PRESENT CASE DESERVES TO BE DELETED. THERE IS NO QUESTION OF DISALLOWANCE IN THE YEAR UNDER CONSIDERATION, HOWEVER AS AND WHEN T HE CLAIM OF EXPENDITURE WILL BE MADE BY THE APPELLANT, THE AO I S FREE TO DECIDE ABOUT DISALLOWANCE TO BE MADE IN ACCORDANCE WITH LA W. THE APPELLANT THUS GETS A RELIEF OF RS.19,80,000 ON THI S GROUND. I.T.A .NO.-1606/DEL/2013 4 4. CONSIDERING THE AFORE-MENTIONED PECULIAR FACTS A ND CIRCUMSTANCES, WE FIND NO GOOD REASON TO INTERFERE WITH THE FINDING ARRIVE D AT IN THE IMPUGNED ORDER AS ADMITTEDLY THE ADVANCE DOES NOT FORM PART OF THE P& L OF THE ASSESSEE AND HAS NOT BEEN CLAIMED AS AN EXPENDITURE BY THE ASSESSEE AS S UCH THERE IS NO OCCASION TO MAKE A DISALLOWANCE IN THE YEAR UNDER CONSIDERATION . IT IS SEEN THAT THE CIT(A) HAS OBSERVED THAT AS AND WHEN THE CLAIM OF EXPENDIT URE WILL BE MADE, THE AO IS FREE TO DECIDE ABOUT DISALLOWANCE TO BE MADE IN ACC ORDANCE WITH LAW. IN THE CIRCUMSTANCES, WE DONOT SEE ANY NEED FOR MAKING ANY OTHER OBSERVATION AS THE ABOVE-MENTIONED FINDING HAS BEEN UPHELD BY US. ACCO RDINGLY THE GROUND OF THE DEPARTMENT IS DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 28 TH OF OCTOBER, 2013. SD/- SD/- (J.S.REDDY) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 28/10/2013 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT RE GISTRAR ITAT NEW DELHI