Mr. Laxman Singh Rawat, New Delhi V. ACIT, New Delhi

ITA 1668/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81619 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 06-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 22-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL ARORA
• Keywords: Business income; Salary income; Additional evidence; Cost of acquisition; Corroborative evidences; Valuation report
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI I.C. SUDHIR : JUDICIAL MEMBER ITA NO. 1668/DEL/2013 ASSTT. YR: 2008-09 LAXMAN SINGH RAWAT, VS. ACIT CIRCLE 33(1), M/S RBD INFRASTRUCTURE PVT. LTD., NEW DELHI. A-1/51, SAFDARJUNG ENCLAVE, NEW DELHI-110029. PAN: AAFPM 2407 C AND ITA NO. 2256/DEL/2013 ASSTT. YR: 2008-09 ACIT CIRCLE 33(1), VS. LAXMAN SINGH RAWAT, NEW DELHI. M/S RBD INFRASTRUCTURE PVT. LTD., A-1/51, SAFDARJUNG ENCLAVE, NEW DELHI-110029. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI SUNIL ARORA & REVENUE BY : MS. RUCHIKA JAIN CA SHRI S.N. BHATIA DR DATE OF HEARING : 13-08-2014 DATE OF ORDER : ____-08-2014. O R D E R PER S.V. MEHROTRA, A.M: : THESE CROSS APPEALS, PREFERRED BY THE ASSESSEE AS WELL AS THE REVENUE, ARE DIRECTED AGAINST THE ORDER DATED 30-01-2013 PA SSED BY THE LD. CIT(A)- XXVI, NEW DELHI IN APPEAL NO. 403/2010-11, RELATIN G TO A.Y. 2008-09. ITA NOS. 1668 & 2256/DEL/2013 LAXMAN SINGH RAWAT VS. ACIT 2 2. BRIEF FACTS OF THE CASE ARE THAT IN THE RELEVANT ASSESSMENT YEAR THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CONSULTANCY SERVICES AS WELL AS INCOME FROM SALARY, CAPITAL GAINS AND INCOME FROM O THER SOURCES. HE HAD FILED HIS RETURN DECLARING TOTAL INCOME OF RS. 16,3 5,210/-. THE ASSESSMENT WAS COMPLETED AT A TOTAL INCOME OF RS. 91,16,520/- , INTER ALIA, MAKING ADDITION ON ACCOUNT OF : (I) NON-GENUINE CONSULTANCY RS. 19,30,000/- (II) BOGUS COMMISSION RS. 16,87,161/- (III) DENYING DEDUCTION U/S 54 RS. 38,27,438 2.1. LD. CIT(A) PARTLY ALLOWED THE ASSESSEES APPEA L. 2.2. BEING AGGRIEVED WITH THE ORDER OF LD. CIT(A), BOTH THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE US. ASSESSEES APPEAL (ITA NO. 1668/DEL/2013) : 3. THE SHORT CONTROVERSY IN ASSESSEES APPEAL IS, WHETHER, ASSESSEE IS ENTITLED TO DEDUCTION U/S 54 IN RESPECT OF SECOND R ESIDENTIAL UNIT PURCHASED BY HIM OR NOT. BRIEF FACTS APROPOS THIS ISSUE ARE T HAT AS PER THE RETURN, THE ASSESSEE HAD SHOWN LONG TERM CAPITAL GAINS ON SALE OF PROPERTY AMOUNTING TO RS. 16,13,247/- AS EXEMPT. 3.1. THE ASSESSEE EXPLAINED THAT HE HAD SOLD ONE RE SIDENTIAL HOUSE PROPERTY LOCATED AT HOUSE NO. 52, SECTOR 28, FARIDABAD FOR A SUM OF RS. 42 LACS. HE DEPOSITED A SUM OF RS. 27 LACS IN THE CAPITAL GAIN SCHEME ACCOUNT WITH PUNJAB & SIND BANK, KAROL BAGH, NEW DELHI. THE SAID SUM WAS UTILIZED FOR PURCHASE OF RESIDENTIAL HOUSE PROPERTY VIZ. FLAT NO . 3-D, RAJ GRIHA APARTMENTS, SALAN FOR RS. 11,00,000/-; AND RESIDENT IAL FLAT AT DOON APARTMENT, VILLAGE GULLARWALA, BADDI FOR RS. 12,50, 000/-. ACCORDINGLY, IT ITA NOS. 1668 & 2256/DEL/2013 LAXMAN SINGH RAWAT VS. ACIT 3 WAS CLAIMED THAT THE CAPITAL GAINS ARISING FROM THE TRANSFER OF THE OLD ASSET AT FARIDABAD WERE EXEMPT U/S 54. THE ASSESSING OFFICER , AFTER CONSIDERING THE ASSESSEES REPLY AND THE PROVISIONS OF SECTION 54 C ONCLUDED THAT THE EXEMPTION IS AVAILABLE ONLY IN RESPECT OF ONE RESID ENTIAL HOUSE WHEREAS ASSESSEE HAD INVESTED THE CAPITAL GAINS IN PURCHA SE OF TWO ASSETS. HE, THEREFORE, DISALLOWED THE ASSESSEES CLAIM OF EXEMP TION U/S 54. 3.2. LD. CIT(A) RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF K.C. KAUSHIK VS. P.B. RANA 185 ITR 499 HELD THAT ASSESSEE COULD CLAIM COST OF ONLY ONE OF THE FLATS PURCHASED/ CON STRUCTED BY HIM AS EXEMPT. THEREFORE, THE EXEMPTION HAD TO BE RESTRICTED TO ON E HOUSE ONLY. THEREFORE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING EXEMPTION IN RESPECT OF BOTH THE RESIDENTIAL HOUSES PURCHASED BY THE ASSESS EE. HE, ACCORDINGLY, DIRECTED THE ASSESSING OFFICER TO ALLOW THE EXEMPTI ON IN RESPECT OF RESIDENTIAL HOUSE PURCHASED BY THE ASSESSEE AT BADDI FOR RS. 1 2,50,000/-, WHICH WAS HIGHER THAN THE COST OF FLAT AT SOLAN. 4. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT EXEM PTION U/S 54 IS ADMISSIBLE FOR BOTH THE RESIDENTIAL HOUSES AS HELD BY MUMBAI BENCH OF THE ITAT IN THE CASE OF MEHER R. SURTI V. ITO [2013] 40 TAXMANN.COM 138 (MUMBAI TRIB.) (ITA NOS. 531 & 1186(MUM) OF 2013 DATED 4-9-2013), WHEREIN IN PARAS 36 & 37 THE TRIBUNAL HAS OBSERVED AS UNDER: 36. ON THE OTHER HAND THE LEARNED AUTHORIZED REPRE SENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT IN VIEW OF THE V ARIOUS DECISIONS OF THE HIGH COURT, A DEDUCTION UNDER SECT ION 54 IS ELIGIBLE EVEN FOR PURCHASE OF MORE THAN ONE HOUSE. HE HAS RELIED UPON THE FOLLOWING DECISIONS: ITA NOS. 1668 & 2256/DEL/2013 LAXMAN SINGH RAWAT VS. ACIT 4 (I) IN THE MATTER OF CIT V. SMT. JYOTHI K. MEHTA [2011] 12 TAXMANN.COM.440/201 TAXMAN 79 (MAG.)(KAR); (II) CIT V. SMT. K.G. RUKMINIAMMA [2011] 331 ITR 211/196 TAXMAN 87 (2010) 8 TAXMANN.COM 121 (KAR); (III) CIT V. D. ANANDA BASAPPA [2010] 320 ITR (ST.) 19 (FRSC); (IV) CIT V. JEO B. FERNANDES [2010] 322 ITR (ST.) 8 (FRSC); AND (V) CIT V. SMT. RASHMI KHANNA [2010] 322 ITR (ST.) 9 (FRSC); AND (VI) CIT V. D. ANANDA BASAPPA [2009] 309 ITR 329/180 TAXMAN 4 (KARN). 37. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. UNDISPUTEDLY THE ASSES SEE HAS DEPOSITED RS. 1.25 CRORE IN THE CAPITAL GAIN ACCOUN T WITHIN THE PRESCRIBED PERIOD AND FURTHER THE SAID AMOUNT HAS B EEN INVESTED IN ANOTHER FLAT. THE ISSUE IS NOW COVERED BY THE VARIOUS DECISIONS OF THE HONBLE HIGH COURTS AS RELIED UPON BY THE LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. ACCORDINGLY, THERE IS NO REASON TO INTERFERE WITH THE IMPUGNED O RDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) QUA THIS ISSUE . 5. LD. DR RELIED ON THE ORDER OF CIT(A). 6. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE RECORD OF THE CASE. WE FIND THAT THIS ISSUE NO MORE RES INTEGRA IN VIEW OF VARIOUS DECISIONS REFERRED BY THE ITAT IN THE CASE OF MEHER R. SURTI (SUPRA). 6.1. FURTHER, WE FIND THAT AMENDMENT AHS BEEN BROUG HT IN SECTION 54 TO LIMIT THE EXEMPTION U/S 54 TO ONE RESIDENTIAL UNIT, WHICH IS APPLICABLE FROM ITA NOS. 1668 & 2256/DEL/2013 LAXMAN SINGH RAWAT VS. ACIT 5 A.Y. 2015-16. THEREFORE, FOR THE YEAR UNDER CONSIDE RATION THE ASSESSEE WAS ENTITLED FOR EXEMPTION U/S 54 IN RESPECT OF MORE TH AN ONE FLAT. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ITA NO. 2256/DEL/2013 ( REVENUES APPEAL) :- 7. FOLLOWING GROUNDS ARE RAISED: 1. THE CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS. 16,19,400/- MADE BY AO ON ACCOUNT OF DISALLOWANCE OF COST OF IMPROVEMENT. 2. THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 19,30,000/- MADE BY AO ON ACCOUNT OF DISALLOWANCE OF CONSULTANCY CHARGES. 3. THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 18,87,161/- MADE BY AO ON ACCOUNT OF DISALLOWANCE OF COMMISSION EXPENSES. 4. THE CIT(A) HAS ERRED IN ADMITTING THE ADDITIONAL EVIDENCES UNDER RULE 46A WHICH WERE NOT PRODUCED BE FORE THE AO DESPITE BEING PROVIDED SEVERAL OPPORTUNITIE S ON 6-12- 2010, 16-12-2010, 24-12-2010 AND 29-12-2010. 8. FIRST WE TAKE UP GROUND NO. 4, WHICH IS IN REGAR D TO ADDITIONAL EVIDENCE ADMITTED BY THE LD. CIT(A) UNDER RULE 46A. 8.1. BEFORE LD. CIT(A) THE ASSESSEE HAD FILED APPLI CATION DATED 30-6-2011 UNDER RULE 46A FOR ADMISSION OF DOCUMENTS AS ADDITI ONAL EVIDENCE ALONG WITH THE PAPER BOOK CONTAINING WRITTEN SUBMISSIONS. IT WAS SUBMITTED THAT SINCE SUFFICIENT OPPORTUNITY TO FILE THE DOCUMENTS WAS NOT AFFORDED, THEREFORE, THE SAME WERE FILED AS ADDITIONAL EVIDEN CE UNDER RULE 46A. ITA NOS. 1668 & 2256/DEL/2013 LAXMAN SINGH RAWAT VS. ACIT 6 8.2. LD. CIT(A) FORWARDED THE APPLICATION TO ASSESS ING OFFICER FOR EXAMINATION OF THE ADDITIONAL EVIDENCE AND CALLED F OR HIS REMAND REPORT. THE ASSESSING OFFICERS REMAND REPORT DATED 23-10-2012 HAS BEEN REPRODUCED IN PARA 4.2 OF LD. CIT(A)S ORDER IN WHICH HE PRIMARIL Y OBJECTED THE ADMISSION OF ADDITIONAL EVIDENCE, INTER ALIA, OBSERVING THAT ASSESSING OFFICER DID NOT REFUSE TO ADMIT THE SAID EVIDENCE AND THE SUFFICIEN T OPPORTUNITY WAS PROVIDED TO ASSESSEE TO PRODUCE THE EVIDENCE. ON MERITS, HE REITERATED THE FINDINGS OF ASSESSING OFFICER ON ALL THE ISSUES. LD. CIT(A) PRO VIDED A COPY OF THE REMAND REPORT TO ASSESSEE WHO FILED HIS REJOINDER DATED 29 -11-2012, REPRODUCED IN PARA 4.3 OF LD. CIT(A)S ORDER. LD. CIT(A) AFTER CO NSIDERING ALL THE REPLIES CONCLUDED THAT THE SUBSTANTIAL ASSESSMENT PROCEEDIN GS IN THIS CASE WERE STARTED ON 6-12-2010 WHEN THE ASSESSING OFFICER HAD REQUIRED THE ASSESSEE TO FILE VARIOUS DETAILS AND THE ASSESSMENT WAS COMPLET ED ON 29-12-2010. IN BETWEEN ONLY TWO OPPORTUNITIES WERE AFFORDED TO THE ASSESSEE. HE, THEREFORE, POINTED OUT THAT THE ASSESSEE WAS NOT PROVIDED SUFF ICIENT OPPORTUNITY TO ADDUCE THE NECESSARY EVIDENCE AND THEREFORE ADMITTE D THE SAME. 9. HAVING HEARD BOTH THE PARTIES, WE DO NOT FIND AN Y REASON TO INTERFERE WITH THE FINDING OF LD. CIT(A) AND THEREFORE WE WIL L CONSIDER THE ADDITIONAL EVIDENCE FILED BY ASSESSEE BEFORE LD. CIT(A), WHICH WERE TAKEN INTO CONSIDERATION BY LD. CIT(A) FOR ADJUDICATING VARIOU S GROUNDS TAKEN BEFORE HIM. 10. APROPOS GROUND NO. 1, IN REGARD TO THE CAPITAL GAINS, ON SALE OF PROPERTY, HOUSE NO. 52, SECTOR 28, FARIDABAD, THE ASSESSEE HAD CLAIMED COST OF IMPROVEMENT. IN COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PRODUCE COPY OF PURCHASE D EED OF THE PROPERTY SOLD ITA NOS. 1668 & 2256/DEL/2013 LAXMAN SINGH RAWAT VS. ACIT 7 AND ORIGINAL BILLS AND VOUCHERS FOR IMPROVEMENTS CL AIMED. THE ASSESSEE, INTER ALIA, EXPLAINED THAT HE HAD TAKEN A LOAN OF R S. 13 LACS FROM LIC HOUSING FINANCE LTD. AND THE SAID AMOUNT WAS UTILIZ ED FOR CARRYING OUT CONSTRUCTION OF THE RESIDENTIAL HOUSE AT FARIDABAD. COPY OF LOAN OFFER LETTER FROM LIC HOUSING FINANCE LTD. FOR THE LOAN SANCTION ED WAS ALSO FILED. THE ASSESSEE ALSO PRODUCED BILLS OF EXPENSES IN THIS RE GARD. 10.1. THE ASSESSING OFFICER DID NOT ACCEPT THE ASS ESSEES CONTENTION, INTER ALIA, OBSERVING THAT ASSESSEE HAD FAILED TO PRODUCE THE COPY OF PURCHASE DEED AS WELL AS THE ORIGINAL VOUCHERS FOR IMPROVEMENT CL AIMED. HE, ACCORDINGLY, DISALLOWED THE ASSESSEES TOTAL CLAIM OF RS. 16,73, 110/- ON THIS COUNT. THE ASSESSING OFFICER WHILE COMPUTING LONG TERM CAPITAL GAINS ONLY ALLOWED RS. 1,90,000/- BEING THE PURCHASE COST OF THE PROPERTY ON 18-6-1995 AND DISALLOWED THE BALANCE CLAIM OF ASSESSEE. 10.2. BEFORE LD. CIT(A) THE ASSESSEE SUBMITTED THE DOCUMENTARY EVIDENCE IN THE FORM OF VALUATION REPORT BY REGISTERED VALU ER CERTIFYING THE COST OF CONSTRUCTION OF THE RESIDENTIAL HOUSE PROPERTY; OCC UPANCY CERTIFICATE ISSUED BY HUDA; LOAN OFFER LETTER FROM LIC HOUSING FINANCE LTD. IN RESPECT OF LOAN OF RS. 13 LACS TAKEN BY THE ASSESSEE FOR CONST RUCTION OF THE PROPERTY. LD. CIT(A) POINTED OUT THAT THOUGH IT IS TRUE THAT THE ASSESSEE MIGHT NOT BE ABLE TO SUBMIT ALL THE DOCUMENTS BUT THE ASSESSING AUTHO RITY SHOULD ALSO HAVE APPLIED HIS MIND TO THE OTHER DOCUMENTARY EVIDENCES AVAILABLE ON RECORD AND ARRIVE AT THE BEST JUDGMENT. HE POINTED OUT THAT BY NO STRETCH OF IMAGINATION THE COST OF RESIDENTIAL FLAT MEASURING 500 SQ. YDS. IN AN AREA OF FARIDABAD COULD BE TAKEN AT RS. 1,90,000/-. CONSIDERING THE L OAN DOCUMENTS FROM LIC HOUSING FINANCE LTD., VALUERS CERTIFICATE LD. CIT( A) ACCEPTED THAT THE COST ITA NOS. 1668 & 2256/DEL/2013 LAXMAN SINGH RAWAT VS. ACIT 8 OF IMPROVEMENT SHOULD BE TREATED AT RS. 16,19,400/- AS AGAINST THE ASSESSEES CLAIM OF RS. 18,63,110/-. 11. HAVING HEARD BOTH THE PARTIES WE DO NOT FIND AN Y REASON TO INTERFERE WITH THE FINDING OF LD. CIT(A) BECAUSE OF THE DOCUM ENTARY EVIDENCES PRODUCED BY THE ASSESSEE IN THE FORM OF LOAN FROM L IC HOUSING FINANCE LTD.; OCCUPANCY CERTIFICATE FROM HUDA AND REGISTERE D VALUERS REPORT. THE RESULT, IS THAT GROUND IS DISMISSED. 12. BRIEF FACTS APROPOS GROUND NOS. 2 & 3 ARE THAT FROM P&L A/C, ASSESSING OFFICER NOTICED THAT ASSESSEE HAD DEBITED RS. 19,30,000/- ON ACCOUNT OF CONSULTANCY CHARGES AND RS. 32,87,161/- AS COMMISSION PAID. THE ASSESSEE EXPLAINED THAT DURING AY 2008-09 IT EARNED CONSULTANCY INCOME OF RS. 60,11,330/- FROM THE BUSINESS OF REAL ESTATE. T HE ASSESSEE ENTERED INTO AN AGREEMENT WITH M/S SKIL HIMACHAL INFRASTRUCTURE & TOURISM LIMITED TO PROVIDE A PARCEL OF LAND APPROXIMATELY 150 BIGHAS @ RS. 5,50,000/- AMOUNTING APPROXIMATELY RS. 8.25 CRORES NEAR KALKA- SHIMLA RAIL TRACT AND HIGHWAY AXIS. THE ASSESSEE EXPLAINED THAT IN ORDER TO FINALISE THE DEAL HE MET WITH MANY PERSONS LIKE PROFESSIONALS AND OTHER PERSONS, WHO HAD THE KNOWLEDGE ABOUT SUCH PLACE AND HAVING INFLUENCE OVE R THE LOCAL RESIDENTS. IN THE CONSIDERATION OF THEIR SERVICES ASSESSEE PAID T HEM COMMISSION AND CONSULTANCY CHARGES. THE ASSESSEE POINTED OUT THAT SOME PAYMENTS HAVE BEEN MADE DIRECTLY BY THE BUYER M/S SKIL HIMACHAL INFRASTRUCTURE & TOURISM LTD. TO THE PARTIES AS PER DETAIL ENCLOSED AND THE SAID PAYMENT HAD BEEN ADJUSTED FROM AMOUNTS DUE TO ASSESSEE. SIMILAR LY, THE SAID PAYMENTS ON ASSESSEES BEHALF HAD BEEN CREDITED BY ASSESSEE TO THE ACCOUNT OF M/S SKIL HIMACHAL INFRASTRUCTURE & TOURISM LTD. THE ASSESSIN G OFFICER OBSERVED THAT ASSESSEE HAD PAID CONSULTANCY TO MR. SURENDER PAL A ND MR. SACHIN SRIDHAR ITA NOS. 1668 & 2256/DEL/2013 LAXMAN SINGH RAWAT VS. ACIT 9 BUT THE ASSESSEE NEITHER PROVIDED ANY AGREEMENT BET WEEN THE PARTIES AND HIMSELF NOR PROVIDED ANY DOCUMENT TO SHOW WHETHER T HE PAYMENTS WERE MADE IN ELATION TO EARNING THE BUSINESS INCOME. HE, ACCORDINGLY, MADE THE ADDITION OF RS. 19,30,000/- ON ACCOUNT OF CONSULTAN CY CHARGES. AS REGARDS ASSESSEES CLAIM OF COMMISSION EXPENSES, THE ASSESS ING OFFICER DID NOT ACCEPT THE ASSESSEES CONTENTION AND POINTED OUT TH AT THE ASSESSEES CLAIM WAS NOT BORNE OUT FROM THE EVIDENCE PRODUCED BY ASS ESSEE. HE POINTED OUT THAT ASSESSEE HAD FAILED TO EXPLAIN HOW THE COMMISS ION EXPENSES DEBITED BY HIM IN HIS P&L A/C WERE PAID TO THE PARTIES BY M/S SKIL HIMACHAL INFRASTRUCTURE & TOURISM LTD. THE CONFIRMATIONS OF THOSE PARTIES TO WHOM M/S SKIL HIMACHAL INFRASTRUCTURE & TOURISM LTD. HAD MADE PAYMENTS DID NOT MENTION THE ACCOUNTS OF THE ASSESSEE BUT RATHER CONFIRMED THE ACCOUNTS OF SKIL. HE ACCORDINGLY DISALLOWED THE SUM OF RS. 1 6,87,161/- TREATING THE SAME AS BOGUS COMMISSION. 12.1. BEFORE LD. CIT(A) THE ASSESSEE CLARIFIED THAT THE ASSESSING OFFICER HAD DISALLOWED THE EXPENSES AS UNDER: S. NO. NAME OF PARTY PARTICULARS AMOUNT 1. MR. SURRENDER PAL CONSULTANCY & ADVISORY SERVICES IN THE MATTER OF LA ND ACQUISITION IN HIMACHAL PRADESH 9,65,000/- 2. MR. SACHIN SRIDHAR CONSULTANCY & ADVISORY SERVICES IN THE MATTER OF LA ND ACQUISITION IN HIMACHAL PRADESH 9,65,000/- TOTAL CONSULTANCY 3. M/S ARUN MITAL & ASSOCIATES (ARCHITECH) COMMISSION PAID IN THE MATTER OF LAND ACQUISITION IN HIMACHAL PRADESH 1,34,760/- 4. M/S STARLIT INFRASTRUCTURE LTD. COMMISSION PAID IN THE MATTER OF LAND ACQUISITION IN HIMACHAL PRADESH 14,41,017/- 5. MR. SANT KUMAR SHARMA COMMISSION PAID IN THE MATTER OF LAND ACQUISITION IN HIMACHAL PRADESH 55,742/- 6. MR. RAVINDER KUMAR SHARMA (CA) COMMISSION PAID IN THE MATTER OF LAND ACQUISITION IN HIMACHAL PRADESH 55,642/- TOTAL COMMISSION 16,87,161/- ITA NOS. 1668 & 2256/DEL/2013 LAXMAN SINGH RAWAT VS. ACIT 10 12.2. LD. CIT(A) AFTER CONSIDERING THE DETAILED SUB MISSIONS OF ASSESSEE, AS REPRODUCED AT PAGE 14 OF HIS ORDER, DELETED THE DIS ALLOWANCE OF CONSULTANCY CHARGES FOR THE FOLLOWING REASONS: (I) THE CLAIM OF THE ASSESSEE HAS BEEN FOUND TO BE GENU INE IN THE LIGHT OF VARIOUS SUPPORTING EVIDENCES IN THE FORM OF CONF IRMATIONS DETAILING THE TRANSACTIONS FILED BY THE PARTIES INC LUDING THEIR I TR, COPIES OF BILLS AND BANK STATEMENTS, REFLECTING RECEIPT OF CONSULTANCY CHARGES. (II) THE PARTIES HAVE ALSO SWORN THE FACT OF RECEIVING C ONSULTANCY CHARGES FROM THE ASSESSEE ON AFFIDAVIT. THEREFORE, NO DOUBT OVER THE GENUINENESS OF THE TRANSACTION. 12.3. AS REGARDS THE DISALLOWANCE OF COMMISSION EXP ENSES, LD. CIT(A) DELETED THE DISALLOWANCE OF RS. 16,87,161/- FOR THE FOLLOWING REASONS. (I) THE PAYMENTS WERE MADE BY M/S SKIL HIMACHAL INFRAST RUCTURE & TOURISM LTD. DIRECTLY TO THE VARIOUS PARTIES INSTEA D OF THE ASSESSEE. (II) COMMISSION PAID TO THE PARTIES WAS AGAINST SOME LAN D CONSOLIDATION CONSULTANCY PROJECT CARRIED OUT BY TH E ASSESSEE FOR M/S SKIL HIMACHAL INFRASTRUCTURE & TOURISM LTD. (III) ON ASSESSEES INSTRUCTION THE PAYMENT OF COMMISSION WAS MADE BY M/S SKIL HIMACHAL INFRASTRUCTURE & TOURISM LTD. TO VARIOUS PARTIES NAMELY M/S STARLIT INFRASTRUCTURE LTD., M/S ARUN KUMAR & ASSOCIATES (ARCHITECT), SANT KUMAR SHARMA, RAVINDER KUMAR SHARMA (CA). THE AMOUNT WAS DEDUCTED BY M/S SKIL HI MACHAL INFRASTRUCTURE & TOURISM LTD. OUT OF CONSULTANCY IN COME DUE TO ASSESSEE. THIS CONTENTION OF ASSESSEE HAD BEEN VERI FIED THROUGH VARIOUS DOCUMENTARY EVIDENCES FILED BY THE PARTIES CONFIRMING ITA NOS. 1668 & 2256/DEL/2013 LAXMAN SINGH RAWAT VS. ACIT 11 RECEIPT OF COMMISSION INCOME FROM ASSESSEE, SH. LAX MAN SINGH RAWAT, THEIR ITR COPIES, BANK STATEMENTS, BILL COPI ES ETC. (IV) M/S SKIL HIMACHAL INFRASTRUCTURE & TOURISM LTD. HAS ALSO DULY CONFIRMED THE FACT OF MAKING PAYMENT TO THE PARTIES ON BEHALF OF ASSESSEE. IT IS COMMON PRACTICE THAT A PERSON INSTE AD OF RECEIVING PAYMENTS DUE FROM ONE PARTY ASKS TO MAKE PAYMENT ON HIS BEHALF TO ANOTHER PARTY. THE COMMISSION PAYMENTS MADE BY A SSESSEE WERE DULY CONFIRMED BY ALL PARTIES. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE PERUSED THE RECORD OF THE CASE. THE FACTUAL FINDINGS RECORDED BY LD. C IT(A), ON THE BASIS OF EVIDENCES FILED BEFORE HIM, HAVE NOT BEEN CONTROVER TED. THE ASSESSEE HAD EARNED CONSULTANCY INCOME OF 60,11,330/- FROM THE B USINESS OF REAL ESTATE. IN ORDER TO FINALISE THE DEAL, THE ASSESSEE MET WITH M ANY PERSONS LIKE PROFESSIONALS AND OTHER PERSONS, WHO HAD THE KNOWLE DGE ABOUT SUCH PLACE AND INFLUENCE OVER THE LOCAL RESIDENTS. LD. COUNSEL IN COURSE OF HEARING CLARIFIED THAT IN HIMACHAL PRADESH, SALE AND PURCHA SE OF LAND CANNOT TAKE PLACE WITHOUT THE INTERVENTION OF HIMACHAL PEOPLE A ND THEREFORE THE ASSESSEE HAD TO TAKE CONSULTANCY AND ADVISORY SERVICES IN TH E MATTER OF LAND ACQUISITION FROM MR. SURINDER PAL AND MR. SACHIN SH RIDHAR. THE NECESSARY CONFIRMATIONS ALONG WITH INCOME-TAX PARTICULARS WER E FILED BEFORE THE ASSESSING OFFICER IN RESPECT OF MR. SACHIN SHRIDHAR FOR PAYMENT OF RS. 9,65,000/-. NECESSARY CONFIRMATION ALONG WITH AFFID AVIT, BANK STATEMENT AND ACKNOWLEDGEMENT OF THE ITR FROM MR. SACHIN SHRIDHAR WAS ALSO FILED. SIMILARLY, IN RESPECT OF MR. SURINDER PAL, ALL EVID ENCES WERE FILED. THEREFORE, THERE WAS NO BASIS FOR MAKING ANY DISALLOWANCE. ITA NOS. 1668 & 2256/DEL/2013 LAXMAN SINGH RAWAT VS. ACIT 12 13.1. AS REGARDS THE COMMISSION EXPENSES, A SUM OF RS. 14,41,070/- WAS PAID TO M/S STARLIT INFRASTRUCTURE LTD. FOR THE SER VICES RENDERED BY THEM DURING FY 2007-08. COPY OF THE CONFIRMATION ALONG W ITH BILLS, AFFIDAVIT AND INCOME-TAX RETURN FOR AY 2008-09 WAS ALSO FILED. TH E SERVICES OF M/S STARLIT INFRASTRUCTURE LTD. WERE TAKEN FOR PURCHASE AND CO NSOLIDATION OF LAND. PAYMENT OF COMMISSION WAS MADE DIRECTLY ON ASSESSEE S INSTRUCTIONS BY M/S SKIL HIMACHAL INFRASTRUCTURE & TOURISM LTD. TO M/S STARLIT INFRASTRUCTURE LTD. THE SAID PARTY HAD CHARGED SERVICE TAX AND HAD ALSO PAID NECESSARY INCOME-TAX ON THE AID INCOME. CONFIRMATIONS FROM M/ S SKIL HIMACHAL INFRASTRUCTURE & TOURISM LTD. WAS ALSO FILED. THE O THER PAYMENTS WERE TO ARCHITECT WHICH COULD NOT BE DISPUTED IN CASE OF RE AL ESTATE DEAL, AS THE SAME WAS PAID FOR PREPARATION OF DETAILED ARCHITECTURAL AND UTILITY DRAWINGS. COPIES OF THE BILLS WERE ALSO FILED. 13.2. AS REGARDS THE PAYMENT TO MR. SANT KUMAR SHAR MA OF RS. 55,742/-, THE COPY OF CONFIRMATIONS COULD NOT BE PROVIDED AS HE DIED ON 9-6-2010. HOWEVER, ASSESSEE FILED COPY OF HIS RETURN OF INCOM E FOR A.Y. 2008-09. 13.3. IN REGARD TO PAYMENT TO SHRI RAVINDER KUMAR S HARMA OF RS. 55,642/-, ASSESSEE FILED COPY OF CONFIRMATION, BILL & INCOME TAX RETURN. 13.4. CONSIDERING THE OVERWHELMING EVIDENCE ON RECO RD, WE DO NOT FIND ANY REASON TO DOUBT THE GENUINENESS OF ASSESSEES C LAIM AS ALSO THE PURPOSE FOR WHICH THE SERVICES WERE TAKEN BY THE ASSESSEE F OR THE CONSULTANCY INCOME RECEIVED FROM M/S SKIL HIMACHAL INFRASTRUCTURE & TO URISM LTD. ACCORDINGLY, WE SEE NO REASON TO INTERFERE IN THE O RDER OF CIT(A) ON THIS COUNT. GROUNDS ARE DISMISSED. ITA NOS. 1668 & 2256/DEL/2013 LAXMAN SINGH RAWAT VS. ACIT 13 14. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED AND THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 22-08-2014. SD/- SD/- ( I.C. SUDHIR ) ( S.V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22-08-2014. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR