M/s Business Park Promoters Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 1732/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90866 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 26-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANURADHA MISHRA
• Assessee Lawyers: V S RASTOGI
• Keywords: Business expenditure; Loose papers
• Section: 40A(3); 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A: NEW DELHI BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.1404/DEL/2013 (ASSESSMENT YEAR : 2006-07) ACIT, CENTRAL CIRCLE 23, VS. M/S. BUSINESS PARK PR OMOTERS (P) LTD., NEW DELHI. M 11, MIDDLE CIRCLE, CONNAUGHT CIRCUS, NEW DELHI 110 001. (PAN : AAACB5014A) ITA NO.1732/DEL/2013 (ASSESSMENT YEAR : 2006-07) M/S. BUSINESS PARK PROMOTERS (P) LTD., VS. ACIT, CE NTRAL CIRCLE 23, M 11, MIDDLE CIRCLE, NEW DELHI. CONNAUGHT CIRCUS, NEW DELHI 110 001. (PAN : AAACB5014A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V.S. RASTOGI, AR REVENUE BY : SMT. ANURADHA MISHRA, CIT DR DATE OF HEARING : 13.04.2015 DATE OF PRONOUNCEMENT : 20.04.2015 O R D E R PER SHRI GEORGE GEORGE K, JM: 2 ITA NO.1404 & 1732/DEL/2013 THESE ARE CROSS APPEALS DIRECTED AGAINST THE ORDER OF THE CIT (A) XXXIII, NEW DELHI DATED 24.12.2012. THE RELEVANT ASSESSMEN T YEAR IS 2006-07. 2. WE SHALL FIRST ADJUDICATE THE REVENUES APPEAL. ITA NO.1404/DEL/2013 (REVENUES APPEAL) 3. IN REVENUES APPEAL, THE FOLLOWING EFFECTIVE GRO UNDS ARE RAISED :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.40,22, 546/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST ON PDC S PAID OUT OF BOOKS OF ACCOUNT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.60,76, 555/- MADE BY THE ASSESSING OFFICER IN VIEW OF THE PROVISIONS OF SECTION 37(1) OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF ADDITIONAL P AYMENT IN VIOLATION OF STAMP DUTY ACT, 1899. GROUND NO.1 4. BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLL OWS. DURING ASSESSMENT PROCEEDINGS, ASSESSING OFFICER NOTICED THAT THE ASS ESSEE COMPANY IS ONE OF THE GROUP COMPANY OF BPTP GROUP. THE ASSESSEE HAD PURC HASED SEVERAL TRACT OF LAND IN THE NCR (NATIONAL CAPITAL REGION). THE ASS ESSEE COMPANY HAS MADE ONLY PART PAYMENT OF SALE CONSIDERATION TO THE SELL ER AT THE TIME OF EXECUTING SALE DEED AND BALANCE PAYMENT IS MADE BY WAY OF POST DAT ED CHEQUES (PDCS). DURING THE ASSESSMENT, THE A.O. OBTAINED DETAILS OF SUCH PDCS GIVEN AT THE TIME OF REGISTRATION TO THE SELLER AND DATE OF ENCASHMEN T. THE A.O. APPLIED RATE OF 15% INTEREST PER ANNUM PAID FOR THE PERIOD FROM SAL E DEED TO DATE OF ENCASHMENT, ON THE AMOUNT OF PDCS ON THE BASIS OF S EIZED MATERIAL. THE A.O. 3 ITA NO.1404 & 1732/DEL/2013 GAVE THE FINDINGS IN THE ASSESSMENT ORDER THAT TOTA L SUCH INTEREST PAYABLE COMES TO RS.40,22,546/- ON PDCS AND SUCH INTEREST IS PAI D IN CASH OUTSIDE OF BOOKS OF ACCOUNT. THEREFORE, SUCH INTEREST IS ADDED AS UNAC COUNTED/UNEXPLAINED EXPENSES. 5. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFOR E THE FIRST APPELLATE AUTHORITY. THE CIT(A) AFTER EXAMINING THE SEIZED P APERS/DOCUMENTS DIRECTED TO RECOMPUTED THE INTEREST ON PDCS. THE CIT(A) WAS OF THE VIEW THAT INTEREST ON PDCS IS TO BE CALCULATED AFTER SIX MONTHS FROM THE DATE OF THE ISSUE OF THE PDCS. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEF ORE US. 6. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THE ISSUE IN QUESTION IS COVERED BY THE ORDER OF THE TR IBUNAL IN THE GROUP CASE OF THE ASSESSEE NAMELY M/S IAG PROMOTERS AND DEVELOPERS P VT. LTD. IN ITA NO.1674/DEL/2013 & 1752/DEL/2013 VIDE ORDER DATED 31.10.2014 FOR THE A.Y. 2008-09. THE LD. D.R. RELIED ON THE ASSESSMENT ORD ER. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE GROUND RAISED BY THE REVENUE IS MISCONCEIVED BE CAUSE THE CIT(A) HAS NOT DELETED THE ADDITION OF RS.40,22,546/-. THE CIT(A) HAS ONLY DIRECTED THE A.O. TO RECOMPUTED THE INTEREST ON POST DATED CHEQUES AF TER SIX MONTHS FROM THE DATE OF ISSUE OF PDCS. IN THE GROUP CASE AN IDENTICAL/S IMILAR ORDER OF THE CIT(A) WAS CONFIRMED BY THE CO-ORDINATE BENCH OF THE TRIBU NAL IN THE CASE OF M/S IAG PROMOTERS AND DEVELOPERS PVT.LTD. (SUPRA). TH E RELEVANT FINDING OF THE HONBLE CO-ORDINATE BENCH OF THE TRIBUNAL READS AS FOLLOWS. 4 ITA NO.1404 & 1732/DEL/2013 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND PERUSED RELEVANT MATERIAL PLACED BEFORE US. AT THE OUTSET, THE GROUND RAISED BY THE REVENUE IS MISCONCEIVED BECAUSE LD.CI T(A) HAS NOT DELETED THE ADDITION OF RS.5,06,625/- BUT HAS ONLY DIRECTED TO RECALCULATE THE INTEREST. WE HAVE CAREFULLY GONE T HROUGH THE ORDER OF THE LD.CIT(A) AND ALSO THE SUBMISSIONS OF BOTH T HE PARTIES AND WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD .CIT(A). AFTER EXAMINING THE LOOSE PAPERS SEIZED AT THE TIME OF SE ARCH AT THE ASSESSEES PREMISES, IT WAS NOTICED THAT INTEREST I S PAID ON THE PDCS ONLY DURING THE PERIOD OF EXTENSION OF PDCS AN D, THEREFORE, HE DIRECTED THE A.O. TO RECOMPUTED THE INTEREST ON PDCS AT THE TIME OF EXTENSION OF THE PDCS. HE HAS FURTHER OBSE RVED THAT IF IT IS NOT POSSIBLE TO WORK OUT THE EXTENSION OF PDCS IN E ACH CASE, THEN THE A.O. IS DIRECTED TO RECOMPUTED INTEREST ON PDCS AFTER SIX MONTHS FROM THE DATE OF ISSUE OF THE PDCS. THEREFO RE, THE GROUND OF APPEAL OF THE REVENUE THAT THE CIT(A) DELETED TH E ADDITION OF RS.5,06,625/- MADE BY THE A.O. ON ACCOUNT OF INTERE ST ON PDCS IS FACTUALLY INCORRECT AND CONTRARY TO THE ORDER OF THE CIT(A). THE CIT(A) DIRECTED TO RECALCULATE THE INTEREST ON PDCS AND THERE WAS A SOUND LOGIC FOR SUCH DIRECTION. HIS DIRECTION IS BASED ON MATERIAL FOUND AND SEIZED AT THE TIME OF SEARCH. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY JUSTIFICATION TO INTERFER E WITH THE ORDER OF LD.CIT(A) IN THIS REGARD AND ACCORDINGLY, WE REJ ECT GROUND NO.1 OF THE REVENUES APPEAL. 8. IN VIEW OF THE CO-ORDINATE BENCH ORDER OF THE TR IBUNAL IN THE GROUP CONCERN OF THE ASSESSEE IN THE CASE OF M/S IAG PROM OTERS AND DEVELOPERS PVT. LTD. (SUPRA), WE HOLD THAT THE CIT(A)S ORDER IS CO RRECT AND NO INTERFERENCE IS CALLED FOR. IT IS ORDERED ACCORDINGLY. GROUND NO.2 9. THE AO HAD MADE A DISALLOWANCE OF RS.60,76,555/- BEING ADDITIONAL PAYMENT MADE FOR THE PURCHASE OF LAND. THE ASSESSE E COMPANY PURCHASED THE LAND FROM FARMER AND LAND OWNER AND TRANSFERRED THE SAME TO ONE OF FLAGSHIP COMPANY OF BPTP GROUP, NAMELY, M/S. COUNTRY WIDE PR OMOTERS (P) LTD. 5 ITA NO.1404 & 1732/DEL/2013 (CWPPL) UNDER COLLABORATION AGREEMENT FOR DEVELOPME NT AND RECEIVED RS.35,000/- PER ACRE FROM CWPPL WHICH WAS OVER AND ABOVE THE COST OF LAND. IN PARA 3.1 OF THE ASSESSMENT ORDER, IT IS MENTIONE D THAT BPTP GROUP HAD MADE MORE THAN RS.45.02 CRORES TO THE VENDORS OF LAND WH ICH WAS OVER AND ABOVE THE SALE CONSIDERATION AND THESE PAYMENTS HAD BEEN MADE MUCH AFTER THE EXECUTION OF SALE DEED. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY MADE THE FOLLOWING ADDITIONAL PAYMENTS :- NAME OF THE PAYEE AMOUNT (RS.) S/D IN RESPECT OF WHICH PAID PREM CHAND 18,35,615 1666 DT. 06-05-2005 DHARAM VEER 16,93,125 1667 DT. 06-05-2005 KARAN SINGH & OTHERS 10,47,815 3655 DT. 09-06-20 05 RANVEER 6,41,285 4424 DT. 27-06-2005 NARVEER 8,58,715 4423 DT. 24-06-2005 THE AO HELD THAT EVEN IF THE ADDITIONAL PAYMENT IS CONSIDERED FOR ACQUISITION OF LAND, THE SAME IS NOT ALLOWABLE U/S 37 (1) OF THE A CT AS THE SAID PAYMENT IS IN VIOLATION OF STAMP DUTY ACT. 10. THE ASSESSEE CHALLENGED THE ADDITION MADE BEFOR E THE CIT (A). IT WAS SUBMITTED BEFORE THE CIT (A) THAT NO DEDUCTION HAS BEEN CLAIMED WITH REGARD TO THE ADDITIONAL PAYMENT FOR THE PURCHASE OF LAND AND HENCE, NO DISALLOWANCE COULD BE MADE. THE CIT (A) DID NOT ACCEPT THIS CON TENTION OF THE ASSESSEE. HE, HOWEVER, GAVE CERTAIN DIRECTION TO QUANTIFY THE DIS ALLOWANCE MADE. WHILE 6 ITA NO.1404 & 1732/DEL/2013 GIVING EFFECT TO THE DIRECTIONS OF THE CIT (A), THE ENTIRE AMOUNT OF RS.60,76,555/- WAS ALLOWED. REVENUE BEING AGGRIEVE D IS IN APPEAL BEFORE US. 11. AT THE VERY OUTSET, LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT ASSESSEE HAS NOT CLAIMED THE EXPENSES AS A DEDUCTION AND AO IS N OT JUSTIFIED IN DISALLOWING THE SAME. IT WAS FURTHER SUBMITTED BY THE LD. COUN SEL THAT SIMILAR DISALLOWANCE WAS MADE IN THE CASE OF GROUP CONCERN, NAMELY M/S. WESTLAND DEVELOPERS PVT. LTD. FOR ASSESSMENT YEAR 2006-07 WHICH WAS PARTLY C ONFIRMED BY THE CIT (A). THE TRIBUNAL, ON FURTHER APPEAL, VIDE ORDER DATED 2 2.08.2014 IN ITA NO.1712/DEL/2013 (COPY ENCLOSED AT PAGES 34 TO 68 O F THE PAPER BOOK FILED BY THE ASSESSEE) DELETED THE ADDITION CONFIRMED BY THE CIT (A). IT WAS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE THAT SINCE THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS OF M/S. WESTLAND DEVELOPERS PVT. LTD. (SUPRA), THE ORDER OF CO-ORDINATE BENCH OF THE TRIBUNAL IN CASE OF M/S. W ESTLAND DEVELOPERS PVT. LTD. MAY BE FOLLOWED. THE LD. DR WAS UNABLE TO CON TROVERT THE SUBMISSIONS MADE BY THE LD. AR. 12. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE CASE OF GROUP CONCERN, NAMELY, M/S. WESTLAND DE VELOPERS PVT. LTD., THE TRIBUNAL VIDE ITS ORDER DATED 22.08.2014 IN ITA NO. 1752/DEL/2013, ON IDENTICAL FACTS AND CIRCUMSTANCES, HAS HELD AS FOLLOWS :- 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL AVAILABLE ON RECORD. THE CASE LAW RELIED U PON BY THE PARTIES HAS BEEN TAKEN INTO CONSIDERATION. ON A CON SIDERATION OF THE SAME WE ARE OF THE VIEW THAT SINCE IN THE FACTS OF THE PRESENT CASE THE MATERIAL ISSUE IS THAT THE SAID EXPENDITUR E WAS NEVER 7 ITA NO.1404 & 1732/DEL/2013 CLAIMED AS ASSESSEE'S BUSINESS EXPENDITURE THE OCCA SION TO MAKE A DISALLOWANCE OF THE SAME DOES NOT ARISE. ON THIS FA CT THERE IS NO DISPUTE AS ADMITTEDLY THE EXPENDITURE WAS NOT CLAIM ED AS AN EXPENSE BY THE ASSESSEE AND CONSEQUENTLY HAS NOT BE EN ROUTED THROUGH ITS P&L A/C. IN THE CIRCUMSTANCES, THE OCCA SION TO MAKE AN ADDITION OF THE SAME BY WAY OF A DISALLOWANCE IN THESE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE DOES NOT ARISE. THE REASONING AND FINDING GIVEN WHILE CONSIDERING THE ARGUMENTS Q UA GROUND NO-4 WOULD FULLY APPLY HERE ALSO. THE DIFFERENCE TH AT HERE THE ENTIRE AMOUNT IS ADDED U/S 37 AS OPPOSED TO PART OF THE EXPENDITURE DISALLOWED U/S 40A(3) IS NOT SO MATERIA L AS THE FINDING IS ARRIVED AT TAKING COGNIZANCE OF THE MATE RIAL FACT THAT HEREIN ALSO NO SUCH CLAIM OF EXPENDITURE HAS BEEN M ADE. THE FACT THAT THE ADDITIONAL PAYMENTS WERE WARRANTED IN ORDE R TO AVOID POTENTIAL DISPUTES AMONGST THE CLAIMANTS OF THE LAN D HOLDING WHICH HAVE BEEN PASSED THROUGH TO THE LAND HOLDERS FROM G ENERATION TO GENERATION WHEREIN THERE MAY BE INFORMAL ARRANGEMEN TS OF OWNERSHIP AND OR THE PAYMENTS WERE FOR COMMERCIAL E XPEDIENCY TO FACILITATE PEACEFUL POSSESSION AND REGISTRATION OF THE LAND HOLDING; WHERE BY THE TIME REGISTRY WAS MADE THE LA NDHOLDERS FELT A HIGHER PAYMENT WAS NECESSITATED DUE TO INCREASE I N VALUE ARE ISSUES WHICH ARE NOT REQUIRED TO ITA NOS.1532 & 175 6/DEL/2013 7 BE ADDRESSED IN THE PRESENT PROCEEDINGS. GROUND N O-3 ON THE FACTS AVAILABLE ON RECORD CONSIDERING THE JUDICIAL PRECEDENT REFERRED TO IN DETAIL WHILE DECIDING GROUND NO-4 HA S TO BE DECIDED IN FAVOUR OF THE ASSESSEE. 13. FURTHER SIMILAR DISALLOWANCE HAS BEEN DELETED B Y THE TRIBUNAL IN OTHER GROUP CASES, NAMELY, (I) M/S. GLITZ BUILDERS AND PR OMOTERS PVT. LTD. ITA NOS.1747/DEL/2013 & 1406/DEL./2013 DATED 02.01.201 5 FOR AY 2006-07 AND (II) M/S. ISG ESTATE PVT. LTD. ITA NOS.1532/DEL./ 2013 & 1756/DEL/2013 DATED 23.01.2015 FOR AY 2006-07. 14. SINCE THE FACTS IN THE PRESENT CASE ARE IDENTIC AL TO THE FACTS CONSIDERED BY THE TRIBUNAL IN THE CASE OF M/S. WESTLAND DEVELOPER PVT. LTD. (SUPRA), WE HOLD 8 ITA NO.1404 & 1732/DEL/2013 THAT CIT (A) IS JUSTIFIED IN DELETING THE ADDITION OF RS.60,76,555/-. IT IS ORDERED ACCORDINGLY. ITA NO.1732/DEL/2013 (ASSESSEES APPEAL) 15. IN ASSESSEES APPEAL, SIX GROUNDS ARE RAISED. HOWEVER, IN COURSE OF HEARING, THE LD. AR DID NOT PRESS GROUNDS NO.1, 2, 2.1, 5 AND 6, HENCE, THESE GROUNDS ARE DISMISSED AS NOT PRESSED. THE SURVIVIN G GROUNDS, NAMELY, GROUNDS NO.3, 3.1, 3.2, 4 AND 4.1 READ AS FOLLOWS :- 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN NOT ACCEPTING THE APPELLANT'S C ONTENTION THAT ADDITIONAL PAYMENTS HAVING NOT BEEN CLAIMED AS DEDU CTION BY APPELLANT, NO DISALLOWANCE COULD HAVE BEEN MADE IN THE HANDS OF THE APPELLANT. 3.1 THAT WITHOUT PREJUDICE THE CIT(A) ERRED IN UPHO LDING THE DISALLOWANCE OF ADDITIONAL PAYMENTS MADE TO THE REC IPIENTS WHO WERE NOT THE OWNERS OF LAND AND TO THE PAYMENT MADE IN CASH. 3.2 THAT WITHOUT PREJUDICE THE CIT(A) ERRED IN NOT HIMSELF QUANTIFYING THE ADDITION TO BE MADE. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE U/S 40A(3) IN RESPECT OF WHICH NO DEDUCTION WAS CLAIMED BY THE AP PELLANT. 4.1 THAT EVEN ON MERITS THE DISALLOWANCE WAS NOT JU STIFIED. WE SHALL TAKE UP FOR ADJUDICATION THE ISSUES GROUND WISE AS UNDER. GROUND NOS.3, 3.1 & 3.2 16. THE AO HAD MADE A DISALLOWANCE OF RS.60,76,555/ - U/S 37(1) OF THE ACT ON ACCOUNT OF ADDITIONAL PAYMENT FOR PURCHASE OF LA ND. THE ASSESSEE HAS 9 ITA NO.1404 & 1732/DEL/2013 CHALLENGED BEFORE THE CIT (A) THAT THE DEDUCTION OF PURCHASE OF LAND HAVING NOT BEING CLAIMED BY THE ASSESSEE, NO DISALLOWANCE COUL D BE MADE. THE CIT (A) DID NOT ACCEPT THIS CONTENTION, HOWEVER, HE GAVE CE RTAIN DIRECTIONS TO QUANTIFY THE DISALLOWANCE MADE AND WHILE GIVING EFFECT TO TH E ORDER OF THE CIT (A), THE ENTIRE AMOUNT OF RS.60,76,555 ADDED WAS DELETED. T HE CIT (A) HAVING REJECTED THE ASSESSEES CONTENTION THAT NO DISALLOWANCE IS C ALLED FOR SINCE NO DEDUCTION IS CLAIMED, THE ASSESSEE IS IN APPEAL. THE LD. DR WAS DULY HEARD. 17. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE CIT (A) HAS ALLOWED THE ENTIRE CLAIM OF THE ASSESSE E AND HENCE, THERE IS NO GRIEVANCE ARISING FOR THE ASSESSEE. MOREOVER, FOR OUR REASONING IN PARA 12 TO 14 OF THIS ORDER, THESE GROUNDS OF THE ASSESSEES APPE AL NEED NOT BE ADJUDICATED. IT IS ORDERED ACCORDINGLY. GROUND NOS.4 & 4.1 18. BRIEF FACTS IN RELATION TO THE ABOVE GROUND ARE AS FOLLOWS. THE ASSESSEE COMPANY HAS MADE CASH PAYMENT FOR ACQUIRING CERTAIN LAND. THE TOTAL CASH PAYMENT WAS RS.41,27,344/-. THE A.O. INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT DISALLOWED 20% OF RS.41,27,344/- AMOUNTING TO RS.8,25,469/-. 19. THE ASSESSEE BEING AGGRIEVED FILED THE APPEAL B EFORE THE CIT(A). THE CIT(A) CONFIRMED THE ORDER OF THE A.O. THE RELEVAN T FINDING OF THE CIT(A) READS AS FOLLOWS :- 10 ITA NO.1404 & 1732/DEL/2013 7.6 FINDINGS :- I HAVE CONSIDERED THE ASSESSMENT ORDER, ARGUMENT OF LD.A.R. TO DECIDE THE ISSUE OF DISALLOWABILITY U/S 40A(3) POIN TED OUT BY LEARNED AR, IT IS PROPER TO EXAMINE THE TERMS OF CO LLABORATION AGREEMENT AND FACTS OF THE CASE. THE APPELLANT PUR CHASES THE LAND FROM VARIOUS FARMERS/LAND OWNERS IN ITS OWN NAME BY ENTERING INTO SALE DEED. REGISTRATION IS DONE IN THE NAME O F ASSESSEE. THE PAYMENT IS MADE BY APPELLANT. AS PER THE COLLABORA TION AGREEMENT, THE ASSESSEE COMPANY WOULD ACQUIRE THE L AND AND TRANSFER 100% OF ITS DEVELOPMENT RIGHT TO M/S CWPPL . THE APPELLANT COMPANY IS SHOWN AS OWNER OF THE LAND. I N LIEU OF TRANSFERRING THE DEVELOPMENT RIGHT, THE APPELLANT C OMPANY GETS COST OF LAND PLUS RS.35,000 PER ACRE FOR CWPPL. TH IS BEING THE CASE, WHAT IS TRANSFERRED IS THE DEVELOPMENT RIGHT, THE OWNERSHIP REMAINS WITH ASSESSEE. THEREFORE, IT IS DIFFICULT TO ACCEPT THE LD.ARS CONTENTION THAT THE COST OF LAND IS REIMBUR SED BY CWPPL. IF THE LAND WOULD HAVE BEEN SOLD TO CWPPL, VIEW MIG HT HAVE BEEN THAT THE APPELLANT IS ONLY WORKING AS AN AGENT OF C WPPL AND EXPENDITURE PERTAINS TO CWPPL AND THE APPELLANT IS ONLY RECEIVING THE COST OF LAND AS REIMBURSEMENT OF EXPE NDITURE. I AGREE WITH THE FINDING OF AO THAT OWNERSHIP CONTINU ES WITH THE APPELLANT AND ONLY DEVELOPMENTAL RIGHT IS TRANSFERR ED TO CWPPL. IN THAT SCENARIO, THE APPELLANT COMPANY CAN BE SAFE LY TERMED AS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF REAL ESTA TE. WHAT HE RECEIVES I.E. COST OF LAND AND RS.35,000 PER ACRE I N RECEIPT IN ITS HAND FOR THE TRANSFER OF DEVELOPMENT RIGHT AND THE PAYMENT FOR PURCHASE OF LAND IS ITS EXPENDITURE. ON THESE FACT S IN MY OPINION THE PAYMENT MADE TO LAND OWNER IS EXPENSE IN APPELL ANTS HAND AND ENTIRE RECEIPTS INCLUDING COST OF LAND PLUS RS. 35,000 PER ACRE IS REVENUE RECEIPT IN ITS HAND. AS COST OF LAND IS AN EXPENDITURE IN APPELLANTS HAND, SECTION 40A(3) IS APPLICABLE, AS THE EXPENDITURE HAS BEEN INCURRED. THIS EXPENDITURE IS NOT CLAIMED EXPLICITLY IN ITS P&L A/C AS THE RECEIPT AND PAYMENT TO THE SAME EXTE NT GETS SQUARED UP TO THE EXTENT OF COST OF LAND. THIS AC COUNTING TREATMENT CANNOT OVER RIDE THE TRUE NATURE OF TRANS ACTION. IT IS SETTLE LAW THAT THE PROVISION OF I.T.ACT WOULD PREV AIL OVER THE SYSTEM OF ACCOUNTING. RELIANCE IS PLACED ON HONBL E S.C. DECISION IN THE CASE OF TUTICORIN ALKALIES CHEMICALS AND FER TILISERS LTD. VS. CIT (1997) 227 ITR 172. 20. THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFOR E US. 11 ITA NO.1404 & 1732/DEL/2013 21. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSES SEE SUBMITTED THAT THE ISSUE IN QUESTION IS COVERED IN FAVOUR OF THE ASSES SEE BY THE ORDERS OF THE TRIBUNAL IN THE CASE OF GLITZ BUILDERS AND PROMOTE RS PVT.LTD. 1747/DEL/2013 DT. 2.1.2015 FOR THE A.Y. 2006-07 AND IN THE CASE OF WE STLAND DEVELOPERS PVT.LTD. IN ITA 1752/DEL/2013 VIDE ORDER DT. 22.8.2014 FOR T HE A.Y. 2006-07. THE LD.D.R. WAS UNABLE TO CONTROVERT THE SUBMISSIONS MA DE BY THE LD.AUTHORISED REPRESENTATIVE. 22. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE TRIBUNAL IN THE GROUP CASES OF THE ASSESSEE ON IDENTICAL FACTS HAVE HELD THAT THE PAYMENT MADE FOR ACQUISITION OF LAND WAS NOT CL AIMED AS A DEDUCTION AND HENCE THE PROVISIONS OF S.40A(3) OF THE ACT IS NOT APPLICABLE. THE RELEVANT FINDING OF THE HONBLE TRIBUNAL IN THE CASE OF GLIT Z BUILDERS AND PROMOTERS PVT. LTD. (SUPRA) READS AS FOLLOWS :- THE ABOVE FACTS STATED BY THE LEARNED COUNSEL DURI NG ASSESSMENT PROCEEDINGS HAVE NOT BEEN FOUND TO BE INCORRECT OR NON GENUINE. AS PER THE COLLABORATION AGREEMENT, THE ASSESSEE WA S TO PURCHASE THE LAND FOR AND ON BEHALF OF CWPPL AND WHATEVER WA S THE PURCHASE PRICE INCLUDING THE ADDITIONAL PAYMENT WAS DEBITED TO CWPPL AND THE ASSESSEE ONLY RECEIVED FIXED REMUNERA TION I.E. RS.35,000/- PER ACRE. THUS, WE AGREE WITH THE CONT ENTION OF THE LEARNED COUNSEL THAT THE ASSESSEE HAS NOT CLAIMED A NY DEDUCTION IN RESPECT OF COST OF THE PURCHASE OF THE LAND, WHETHE R ORIGINAL OR ADDITIONAL PAYMENT. WHEN THE COST OF THE LAND AS W ELL AS ADDITIONAL PAYMENT IS NOT CLAIMED BY THE ASSESSEE A S DEDUCTION, THE QUESTION OF ANY DISALLOWANCE U/S 40A(3) OR OTHE RWISE IN THE CASE OF THE ASSESSEE DOES NOT ARISE. WE, THEREFORE , DELETE THE ENTIRE DISALLOWANCE MADE BY THE A.O. U/S 40A(3) AS WELL AS ADDITIONAL PAYMENT. 12 ITA NO.1404 & 1732/DEL/2013 23. A SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE TR IBUNAL IN THE CASE OF WESTLAND DEVELOPERS PVT.LTD. (SUPRA). IN VIEW OF T HE COORDINATE BENCH ORDERS OF THE TRIBUNAL, WE HOLD THAT INCOME TAX AUTHORITI ES ARE NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT AND DIS ALLOW A SUM OF RS.8,25,469/-. HENCE GROUND NOS. 4 AND 4.1 RAISED BY THE ASSESSEE ARE ALLOWED. 24. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 20 TH DAY OF APRIL, 2015. SD/- SD/- (T.S. KAPOOR) (GEORGE GEORGE K.) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 20 TH DAY OF APRIL, 2015 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXXIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.