Glitz Builders and Promoters Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 1747/DEL/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8807 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 09-12-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 26-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAI
• Assessee Lawyers: V S RASTOGI
• Section: 40A(3); 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH C CC C : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND PRESIDENT AND PRESIDENT AND PRESIDENT AND SHRI SHRI SHRI SHRI H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU, JUDICIAL , JUDICIAL , JUDICIAL , JUDICIAL MEMBER MEMBER MEMBER MEMBER ITA NO ITA NO ITA NO ITA NO. .. .1747/DEL/2013 1747/DEL/2013 1747/DEL/2013 1747/DEL/2013 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2006 2006 2006 2006- -- -07 0707 07 M/S GLITZ BUILDERS AND M/S GLITZ BUILDERS AND M/S GLITZ BUILDERS AND M/S GLITZ BUILDERS AND PROMOTERS PVT.LTD., PROMOTERS PVT.LTD., PROMOTERS PVT.LTD., PROMOTERS PVT.LTD., M MM M- -- -11, MIDDLE CIR 11, MIDDLE CIR 11, MIDDLE CIR 11, MIDDLE CIRCLE, CLE, CLE, CLE, CONNAUGHT CIRCUS, CONNAUGHT CIRCUS, CONNAUGHT CIRCUS, CONNAUGHT CIRCUS, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. PAN : AABCG9331N. PAN : AABCG9331N. PAN : AABCG9331N. PAN : AABCG9331N. VS. VS. VS. VS. ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -23, 23, 23, 23, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO ITA NO ITA NO ITA NO.1406/DEL/2013 .1406/DEL/2013 .1406/DEL/2013 .1406/DEL/2013 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2006 2006 2006 2006 - -- - 07 0707 07 ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -23, 23, 23, 23, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S GLITZ BUILDERS AND PROMOTERS M/S GLITZ BUILDERS AND PROMOTERS M/S GLITZ BUILDERS AND PROMOTERS M/S GLITZ BUILDERS AND PROMOTERS PVT.LTD., PVT.LTD., PVT.LTD., PVT.LTD., M MM M- -- -11, MIDDLE CIRCLE, 11, MIDDLE CIRCLE, 11, MIDDLE CIRCLE, 11, MIDDLE CIRCLE, CONNAUGHT CIRCUS, CONNAUGHT CIRCUS, CONNAUGHT CIRCUS, CONNAUGHT CIRCUS, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. PAN : AABCG9331N. PAN : AABCG9331N. PAN : AABCG9331N. PAN : AABCG9331N. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V.S. RASTOGI, AR. REVEN UE BY : SHRI VIKRAM SAHAI, SR.DR. ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : :: : THESE APPEALS BY THE ASSESSEE AND THE REVENUE ARE DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XXXIII, NEW DEL HI DATED 28 TH DECEMBER, 2012 FOR THE AY 2006-07. ITA-1747 & 1406/D/2013 2 2. GROUND NO.1 & 2 OF THE ASSESSEES APPEAL ARE WIT H REGARD TO VALIDITY OF ISSUE OF NOTICE UNDER SECTION 153C OF T HE INCOME-TAX ACT, 1961. THESE GROUNDS WERE NOT PRESSED AT THE TIME O F HEARING BEFORE US. ACCORDINGLY, THE SAME ARE REJECTED AS SUCH. 3. GROUND NOS.3 & 4 OF THE ASSESSEES APPEAL READ A S UNDER:- 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN NOT ACCEPTING THE APPELLANTS CONTENTION THAT ADDITIONAL PAYMENTS HAV ING NOT BEEN CLAIMED AS DEDUCTION BY APPELLANT, NO DISALLOWANCE COULD HAVE BEEN MADE IN THE HANDS OF T HE APPELLANT. 3.1 THAT WITHOUT PREJUDICE THE CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE OF ADDITIONAL PAYMENTS MADE TO THE RECIPIENTS WHO WERE NOT THE OWNERS OF L AND 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 APPELLANT. 4.1 THAT EVEN ON MERITS THE DISALLOWANCE WAS NOT JUSTIFIED. 4. WHILE, THE ONLY GROUND RAISED IN THE APPEAL OF T HE REVENUE READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.13,06,377/-, MADE BY THE ASSESSING OFFICER IN VI EW OF THE PROVISIONS OF SECTION 37(1) OF THE INCOME TAX A CT, 1961 ON ACCOUNT OF ADDITIONAL PAYMENT IN VIOLATION OF STAMP DUTY ACT, 1899. ITA-1747 & 1406/D/2013 3 5. AT THE TIME OF HEARING BEFORE US, IT IS SUBMITTE D BY THE LEARNED COUNSEL THAT DURING THE YEAR UNDER CONSIDERATION, T HE ASSESSEE COMPANY ACQUIRED VARIOUS LANDS FROM FARMERS/VILLAGE RS FOR AND ON BEHALF OF M/S COUNTRYWIDE PROMOTERS (P) LTD. (HEREI NAFTER REFERRED TO AS CWPPL). AS PER THE COLLABORATION AGREEMENT BETWEEN THE ASSESSEE AND CWPPL, CWPPL WAS TO DEVELOP THE LAND AND SELL I T TO THE BUYERS. THE ASSESSEE WAS ONLY ENTITLED TO CONSOLIDATED FEE OF `35,000/- PER ACRE. IN PURSUANCE TO ABOVE COLLABORATION AGREEMEN T, THE ASSESSEE ACQUIRED THE LAND AND THE COST OF THE PURCHASE OF L AND WAS DEBITED TO THE ACCOUNT OF CWPPL WHICH MADE THE PAYMENT THERE F OR. THAT IN RESPECT OF SOME LAND, THE ASSESSEE WAS REQUIRED TO MAKE ADDITIONAL PAYMENT DUE TO SOME DISPUTE RAISED BY THE NEAR RELA TIVES OF THE PERSON WHO EXECUTED THE SALE DEED. THE ASSESSING O FFICER DISALLOWED SUCH ADDITIONAL PAYMENT ON THE GROUND THAT THE GENU INENESS OF THE ADDITIONAL PAYMENT IS NOT ESTABLISHED. ACCORDINGLY , THE TOTAL ADDITIONAL PAYMENT OF `13,06,377/- WAS DISALLOWED. HE ALSO DI SALLOWED THE SUM OF `4,59,999/- UNDER SECTION 40A(3). ON APPEAL, LE ARNED CIT(A) SUSTAINED THE DISALLOWANCE UNDER SECTION 40A(3). H OWEVER, IN RESPECT OF ADDITIONAL PAYMENT TO THE OWNER OF THE LAND, HE PARTLY ALLOWED THE ASSESSEES APPEAL WITH THE FOLLOWING DIRECTION:- IN VIEW OF THE ABOVE ADDITIONAL PAYMENT MADE TO TH E OWNER OF THE LAND OR TO HIS BROTHER, FATHER, SONS & THEIR SPOUSES, WHO HAVE GOT SOME LEGAL CLAIM OVER SUCH LA ND BY WAY OF ACCOUNT PAYEE CHEQUE IS HEREBY ALLOWED AS AN EXPENSE U/S 37 AND ADDITIONAL PAYMENT MADE TO OTHER PAYMENTS ARE NOT SUPPORTED BY ANY LEGAL RIGHT OVER THE LAND AND SIMILARLY PAYMENT MADE IN CASH TO THE OWNER OF LAND IS CONFIRMED AS, THERE ARE INSTAN CES OF NOT CONFORMING THE RECEIPT BY FEW SELLER AS STATED SUPRA. THEREFORE, THE GROUND IS PARTLY ALLOWED. 6. THE ASSESSEE, AGGRIEVED WITH THE DISALLOWANCE SU STAINED UNDER SECTION 40A(3) AND PART DISALLOWANCE IN RESPECT OF ADDITIONAL PAYMENT, ITA-1747 & 1406/D/2013 4 IS IN APPEAL WHILE THE REVENUE IS IN APPEAL IN RESP ECT OF RELIEF ALLOWED ON ACCOUNT OF ADDITIONAL PAYMENT. 7. IT IS SUBMITTED BY THE LEARNED COUNSEL THAT ANY PAYMENT WHICH HAS NOT BEEN CLAIMED BY THE ASSESSEE AS AN EXPENDIT URE CANNOT BE DISALLOWED. HE STATED THAT THE ASSESSEE PURCHASED THE LAND FOR AND ON BEHALF OF CWPPL AND ANY PAYMENT FOR THE PURCHASE OF LAND OR FOR ADDITIONAL PAYMENT HAS BEEN DEBITED TO THE ACCOUNT OF CWPPL. THEREFORE, WHEN NO DEDUCTION IS CLAIMED BY THE ASSE SSEE FOR PURCHASE OF LAND OR FOR ADDITIONAL PAYMENT, THE DISALLOWANCE UNDER SECTION 40A(3) OR FOR ADDITIONAL PAYMENT CANNOT BE MADE IN THE HANDS OF THE ASSESSEE. 8. LEARNED DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF THE ASSESSING OFFICER. HE STATED THAT THE ASSESSEE HAS PURCHASED THE LAND AND HANDED OVER THE SAME TO CWPPL. THUS, IT IS A C ASE OF PURCHASE AND SALE OF LAND BY THE ASSESSEE TO CWPPL. MERELY BECAUSE THE ASSESSEE HAS NOT PASSED THE ENTRY OF PURCHASE AND S ALE OF THE LAND IN ITS BOOKS OF ACCOUNT AND ONLY ACCOUNTED FOR THE REM UNERATION FROM THE SALE OF LAND, APPLICATION OF SECTION 40A(3) CANNOT BE AVOIDED. HE, THEREFORE, SUBMITTED THAT THE ORDER OF ASSESSING OF FICER SHOULD BE SUSTAINED. 9. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND PERUSED RELEVANT MATERIAL PLACED BEFORE US. TH E ASSESSEE HAS PRODUCED THE COLLABORATION AGREEMENT BEFORE THE ASS ESSING OFFICER AND HAS SUBMITTED AS UNDER:- BASED ON THE AFORESAID AGREEMENT THE ASSESSEE PURCHASED LAND FOR WHICH THE (M/S COUNTRYWIDE PROMOTERS PVT.LTD.) HAS REIMBURSED ALL COSTS AND EXPENSES WITH RESPECT TO THE ACQUISITION OF THE SAI D LAND ITA-1747 & 1406/D/2013 5 AND ALSO IN CONFORMITY WITH THE COLLABORATION AGREEMENT THE ASSESSEE HAS RECEIVED FEES CALCULATED @ RS.35,000/- PER ACRE, WHICH IS DULY CREDITED TO THE PROFIT AND LOSS ACCOUNT AS THE INCOME. 10. THE ABOVE FACTS STATED BY THE LEARNED COUNSEL D URING ASSESSMENT PROCEEDINGS HAVE NOT BEEN FOUND TO BE IN CORRECT OR NON- GENUINE. AS PER THE COLLABORATION AGREEMENT, THE A SSESSEE WAS TO PURCHASE THE LAND FOR AND ON BEHALF OF CWPPL AND WH ATEVER WAS THE PURCHASE PRICE INCLUDING THE ADDITIONAL PAYMENT WAS DEBITED TO CWPPL AND THE ASSESSEE ONLY RECEIVED FIXED REMUNERATION I .E. `35,000/- PER ACRE. THUS, WE AGREE WITH THE CONTENTION OF THE LE ARNED COUNSEL THAT THE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION IN RESPE CT OF COST OF THE PURCHASE OF THE LAND, WHETHER ORIGINAL OR ADDITIONA L PAYMENT. WHEN THE COST OF THE LAND AS WELL AS ADDITIONAL PAYMENT IS NOT CLAIMED BY THE ASSESSEE AS DEDUCTION, THE QUESTION OF ANY DISALLOW ANCE UNDER SECTION 40A(3) OR OTHERWISE IN THE CASE OF THE ASSESSEE DOE S NOT ARISE. WE, THEREFORE, DELETE THE ENTIRE DISALLOWANCE MADE BY T HE ASSESSING OFFICER UNDER SECTION 40A(3) AS WELL AS ADDITIONAL PAYMENT. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED WHEREAS THE APPEAL OF THE REVENUE IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 2 ND JANUARY, 2015. SD/- SD/- ( (( ( H. H.H. H. S. SIDHU S. SIDHU S. SIDHU S. SIDHU ) )) ) (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 02.01.2015 VK. ITA-1747 & 1406/D/2013 6 COPY FORWARDED TO: - 1. APPELLANT : M/S GLITZ BUILDERS AND PROMOTERS PVT.LTD., M/S GLITZ BUILDERS AND PROMOTERS PVT.LTD., M/S GLITZ BUILDERS AND PROMOTERS PVT.LTD., M/S GLITZ BUILDERS AND PROMOTERS PVT.LTD., M MM M- -- -11, MIDDLE CIRCLE, CONNAUGHT CIRCUS, 11, MIDDLE CIRCLE, CONNAUGHT CIRCUS, 11, MIDDLE CIRCLE, CONNAUGHT CIRCUS, 11, MIDDLE CIRCLE, CONNAUGHT CIRCUS, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. 2. RESPONDENT : AS ASAS ASSISTANT COMMISSIONER OF INCOME TAX, SISTANT COMMISSIONER OF INCOME TAX, SISTANT COMMISSIONER OF INCOME TAX, SISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -23, NEW DELHI. 23, NEW DELHI. 23, NEW DELHI. 23, NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR