Opus Reallity Development LTd., New Delhi V. ACIT, New Delhi

ITA 1885/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6661 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 07-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 02-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Keywords: Related party transaction; Earning of tax free income; Corroborative evidences; Commercial expediency; Sham transactions; Capital expenditure
• Section: 143(3); 14A; 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E : NEW DELHI BEFORE SHRI G.D. AGARWAL , VICE PRESIDENT , AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ITA NO. 1885 /DEL /20 1 3 ASSESSMENT YEAR : 20 0 9 - 1 0 OPUS REALITY DEVELOPMENT LTD VS. THE A.C. I.T . 404, ROOTS TOWER, DISTRICT CENTRE CIRCLE - 13 ( 1 ) LAXMI NAGAR, DELHI NEW DELHI PAN : AAAC O 9775 H [APPELLANT] [RESPONDENT] DATE OF HEARING : 07 . 1 2 . 201 5 DATE OF PRONOUNCEMENT : 29 . 0 2 .2016 APPELLANT BY : SHRI VINAY KUMAR, CA RESPONDENT BY : SHRI P. DAM KANUNJNA, SR. DR ORDER PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - X V I , DELHI, DATED 2 1 / 0 1 /20 1 3 IN APPEAL NO. 344 /11 - 12 FOR A.Y 200 9 - 1 0 . 2. GROUND NOS. 1, 4 AND 5 RAISED BY THE ASSESSEE IN THIS APPEAL ARE GENERAL IN NATURE AND NEED NO ADJUDICATION FROM OUR SIDE. 2 ITA NO. 1885 /DEL/2013 2 THE REMAINING GROUND NOS. 2 AND 3 OF THE ASSESSEE READ AS FOLLOWS: 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT (A) HAS GROSSLY ERRED IN CONCURRING WITH THE ASSESSING OFFICER IN MAKING AN ADDITION OF RS.7.68.500/ - U/S 14 A OF THE INCOME TAX ACT, 1961 READ WITH RULE 8D OF THE INCOME TAX RULES, 1962, ALLEGEDLY EXPENDITURE MADE FOR EARNING DIVIDEND (TAX FREE) INCOME, THOUGH NOT EARNED TILL DATE. THE ADDITION SO MADE IS LIABLE TO BE DELETED IN TOTO, AS THE ADDITION MADE IS PURELY ON AN ESTIMATED BASIS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT (A) HAS GROSSLY ERRED IN UPHOLDING THE REJECTION OF THE CLAIM OF RS. 1,00,39,564/ - IN CONCURRENCE WITH ASSESSING OFFICER BY HOLDING THAT THE PAYMENTS MADE TOWARDS PROFESSIONAL CHARGES FOR ITS PROPOSED CONSTRUCTION PROJECT, WHICH COULD NOT UNDERTAKEN DUE TO ECONOMIC UNCERTAINTIES. THE ADDITION SO MADE IS BAD IN LAW AND LIABLE TO BE DELETED IN TOTALITY. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSEE COMPLETED ASSESSMENT PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961 [FOR SHORT, 'THE ACT'] AT A TOTAL INCOME OF RS. 2,20,27,668/ - AS AGAINST THE RETURNED INCOME OF RS. 1,12,19,604/ - AS DECLARED BY THE ASSESSEE. THE AO MADE TWO DISALLOWANCES VIZ., DISALLOWANCE U/S 3 ITA NO. 1885 /DEL/2013 3 14A OF THE ACT AND DISALLOWANCE ON PROFESSIONAL FEES PAID TO M/S OPUS PROPERTY LTD . WHICH IS A COMPANY OF THE SAME GROUP QAS PER THE AO . AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) WHICH WAS ALSO DISMISSED ON BOTH THE COUNTS. NOW, EMPTY HANDED, THE ASSESSEE IS BEFORE THE TRIBUNAL WITH THE TWO MAIN GROUNDS AS REPRODU CED HEREINABOVE. GROUND NO. 2 4. THE LD. AR, PLACING RELIANCE ON THE RECENT DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF HOLCIM INDIA LTD. VS. CIT 272 CTR 282 [DELHI] SUBMITTED THAT WHEN THE ASSESSEE HAS NOT EARNED EXEMPT DIVIDEND INCOME, THEN NO DISALLOWANCE U/S 14A OF THE ACT CAN BE MADE. THE LD. AR FURTHER DREW OUR ATTENTION TOWARDS THE ASSESSMENT ORDER PARA 3.2 AND SUBMITTED THAT THE ASSESSEE IN ITS REPLY D ATED 08.12.2011 SUBMITTED DURING THE ASSESSMENT PROCEEDINGS CLEARLY STATED THAT THE ASSESSEE COMPANY NEITHER CLAIMED ANY EXEMPT INCOME NOR EARNED ANY INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME BUT THIS FACT HAS BEEN IGNORED BY THE AUTHORITIES BELO W. THEREFORE, IN VIEW OF THE DECISION OF THE HON'BLE HIGH COURT OF DELHI, THE ADDITION SHOULD BE DIRECTED TO BE DELETED. 4 ITA NO. 1885 /DEL/2013 4 5. THE LD. DR STRONGLY SUPPORTED THE ACTION OF THE AO AND THE CONCLUSION. HOWEVER, HE COULD NOT CONTROVERT THIS FACT THAT NEITHER THE ASSESSEE HAS EARNED ANY EXEMPT INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME NOR THE ASSESSEE COMPANY HAS CLAIMED EX E MPT INCOME IN THE A.Y UNDER CONSIDERATION. 6. ON CAREFUL CONSIDERATION OF THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CA SE OF HOLCIM INDIA LTD [SUPRA] WE OBSERVE THAT THE HON'BLE JURISDICTIONAL HIGH COURT, AFTER CONSIDERING ALL THE AVAILABLE JUDGMENTS OF VARIOUS HON'BLE HIGH COURTS AVAILABLE AT THE TIME OF RENDERING THE DECISION, HELD THAT SECTION 14A OF THE ACT CANNOT BE I NVOKED WHEN NO EXEMPT INCOME WAS EARNED BY THE ASSESSEE. IN THE PRESENT CASE, UNDISPUTEDLY THE ASSESSEE HAS NOT EARNED DIVIDEND INCOME DURING THE PERIOD UNDER CONSIDERATION. THEREFORE, GROUND NO. 2 OF THE ASSESSEE IS CLEARLY COVERED IN ITS FAVOUR BY THE JUDGMENT OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF HOLCIM INDIA LTD. [SUPRA]. ACCORDINGLY GROUND NO. 2 OF THE ASSESSEE IS ALLOWED AND THE AO IS DIRECTED TO DELETE THE ADDITION. 5 ITA NO. 1885 /DEL/2013 5 GROUND NO. 3 7. APROPOS GROUND NO. 3 , WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE RELEVANT MATERIAL PLACED ON RECORD BEFORE US , INTER ALIA, TWO PAPER BOOKS FILED ON 14.1.2015 AND 19.11.2015 PLACED BEFORE THE TRIBUNAL . THE LD. AR SUBMITTED THAT THE AO DISMISSED THE CLAIM OF THE ASSESSEE WITH REGARD TO PROFESSIONAL FEES PAID ONLY ON TWO ALLEGATIONS I.E. M/S OPUS PROPERTY LTD THE RECIPIENT IS A COMPANY OF THE SAME GROUP AND SECONDLY, THE ASSESSEE HAS NOT BEEN ABLE TO JUSTIFY THE BUSINESS EXPEDIENCY OF THE SAID EXPENSES WITH ANY EVI DENCE. THE LD. AR HAS DRAWN OUR ATTENTION TOWARDS ASSESSEE S PAPER BOOK PAGES 55 TO 59 AND SUBMITTED THAT THERE WAS AN AGREEMENT BETWEEN THE ASSESSEE AND M/S OPUS PROPERTY LTD WHICH WAS EXECUTED ON 31.12.2008. THE LD. AR FURTHER SUBMITTED THAT THE ASSESS EE COMPANY APPOINTED M/S OPUS PROPERTY LTD FOR PROJECT CONSULTANCY FOR EDUCATION CITY, MEDI - CITY AND WELLNESS CENTRE VIDE LETTER DATED 31.12.2008 WHEREIN IT WAS EXPLICITLY STATED THAT NO ADDITIONAL FEES WOULD BE PAID ON THESE REPORTS AS THE ASSESSEE HAVE A LREADY AGREED TO PAY MONTHLY CONSULTANCY WHICH ALSO INCLUDES EXPENSES TOWARDS SPECIAL REPORTS AS AND WHEN ASKED BY THE ASSESSEE. 6 ITA NO. 1885 /DEL/2013 6 8. THE LD. AR ALSO DREW OUR ATTENTION TOWARDS ASSESSEE S PAPER BOOK DATED 14.1.2015 AT PAGE 9 AND SUBMITTED THAT DURING THE A SSESSMENT PROCEEDINGS THE ASSESSEE VIDE LETTER DATED 5.12.2011 SUBMITTED ALL DETAILS REGARDING PAYMENTS TO M/S OPUS PROPERTY LTD AND RELEVANT DOCUMENTS. THE LD. AR ALSO DREW OUR ATTENTION TOWARDS PAGE 5 8 OF THE PAPER BOOK DATED 1 4.0 1.2015 AND SUBMITTED TH AT THE REPORT WAS SUBMITTED BY M/S OPUS PROPERTY LTD. ON 1 5 .2.2009. THE LD. AR VEHEMENTLY CONTENDED THAT ALL THE ALLEGED PAYMENTS HAVE BEEN MADE AFTER DEDUCTION OF SERVICE TAX AND TDS AND THROUGH BANKING CHANNELS. THEREFORE, IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE , THE ALLEGATIONS OF THE AO THAT THE PAYMENT WAS MADE UNDER SHAM TRANSACTIONS IS BASELESS. 9 . R E PLYING TO THE ABOVE, THE LD. DR STRONGLY CONTENDED THAT THE ASSESSEE DID NOT FILE ANY REPLY DURING THE ASSESSMENT PROCEEDINGS AND MERELY BECAUSE TDS HAS BEEN DEDUCTED AND PAYMENTS HAVE BEEN MADE THROUGH BANKING CHANNE L DO NOT TAG THE PAYMENTS AS SA CROSA NC T AND SELF PROVEN. THE MAIN REQUIREMENTS TO ESTABLISH SUCH CLAIM IS THAT THERE MUST BE BUSINESS EXPEDIENCY FOR MAKING SUCH HUGE PAY MENTS AND FURTHERMORE PAYMENTS SHOULD BE MADE AGAINST A GENUINE 7 ITA NO. 1885 /DEL/2013 7 TRANSACTION AND TOWARDS SERVICES ACTUALLY RENDERED BY THE RELATED RECIPIENT COMPANY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE LD. DR ALSO POINTED OUT THAT AS PER PARA 7.2 OF THE IMPUGNED ORDER OF THE LD. CIT(A), IT WAS RIGHTLY CONCLUDED THAT THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE OF ANY PROPERTY UNDER DEVELOPMENT DURING THE PERIOD OR PROPOSED PROPERTY DEVELOPMENT I N FUTURE. THE LD. DR VEHEMENTLY POINTED OUT THAT IN THE ABSENCE OF EVIDENCE OF PROPERTY DEVELOPMENT OF THAT PERIOD AND SUBSEQUENT PROPERTY DEVELOPMENT, THE BUSINESS EXPEDIENCY OF SAID PAYMENTS TO RELATED CONCERN M/S OPUS REALITY DEVELOPMENT IS NOT PROVED. THE LD. DR ALSO POINTED OUT THAT THE PROPOSITION LAID DOWN BY THE HON'BLE SUPREME COURT HAS RELIED BY THE LD. AR IN THE CASE OF CIT VS. DALMIA CEMENT P. LTD REPORTED IN 254 ITR 377 [DEL] REQUIRES THAT ONCE IT IS ESTABLISHED THAT THERE IS NEXUS BETWEEN TH E EXPENDITURE AND PURPOSE OF THE BUSINE SS, THE REVENUE CANNOT JUSTIFIABLY CLAIM TO PUT ITSELF IN THE ARMCHAIR OF THE BUSINESS MAN . A S PER THIS , DICTA IT IS PRIME DUTY OF THE ASSESSEE TO SHOW BUSINESS EXPEDIENCY FOR MAKING PAYMENTS IN QUESTION AND IN THE PR ESENT CASE THE ASSESSEE HAS MISERABLY FAILED IN SHOWING BUSINESS EXPEDIENCY FOR MAKING SUCH PAYMENTS TO A RELATED GROUP COMPANY . 8 ITA NO. 1885 /DEL/2013 8 10. THE LD. DR ALSO PLACED HIS OBJECTION REGARDING CONSIDERATION OF ASSESSEE S SECOND PAPER BOOK AND POINTED OUT THAT EXCEPT PAPERS AT PAGES 138 TO 205 , WHICH IS THE FEASIBILITY STUDY REPORT ABOUT EDUCATION CLUSTER, OTHER DOCUMENTS IN ASSESSEE S PAPER BOOK DATED 19/11/2015 WERE NOT SUBMITTED BEFORE AUTHORITIES BELOW AND THE LD. AR WANTS TO MAKE OUT A NEW CASE BY FURNISHING THESE DOCUMENTS AT THIS SECOND APPELLATE STAGE AND THE SAME CANNOT BE ALLOWED BY THE TRIBUNAL AS PR PROVISIONS OF THE ACT AND RELEVANT RULES . THE LD. DR ALSO VEHEMENTLY CONTENDED THAT EXCEPT LETTER DATED 31.12.2008 THERE IS NO EARLIER OR SUBSEQUENT COMMUNICATI ON BETWEEN THE ASSESSEE AND OPUS PROPERTY LTD TO SHOW GENUINENESS OF THE TRANSACTION. THE LD. DR ALSO POINTED OUT THAT THE FEASIBILITY REPORT HAS BEEN PREPARED BY JONES LONG LASSALE MEGHRAJ BUT THERE IS NO CONTRACT, AGREEMENT OR COMMUNICATION TO SHOW THAT WHY THE REPORTS WERE PREPARED BY THE JONES LONG LASSALE A N D PAYMENT WA S MADE TO M/S OPUS PROPERTY LTD. THE LD. DR ALSO POINTED OUT THAT IN THE LETTER DATED 31.12.2008 IT HAS BEEN ME NTIONED THAT THERE WILL BE NO ADDITIONAL FEE PAID FOR THESE REPORTS, AS WE HAVE AGREED TO PAY YOU MAKING CONSUL TANCY BUT NO DOCUMENT SHOWING SUCH CONTRACT OR AGREEMENT BETWEEN ASSESSEE AND M/S OPUS PROPERTY LTD HAS BEEN PLACED 9 ITA NO. 1885 /DEL/2013 9 BEFORE THE AUTHORITIES BELOW WHEREIN MONTHLY PAYMENT OF RS. 30,00,000/ - P.M. WAS AGREED TO PAY BETWEEN THE ASSESSEE AND THE RECIPIENT M/S OPUS PROPERTY LTD, HENCE IT S A BASELESS SHAM TRANSACTION WITH A RELATED COMPANY WHICH CANNOT BE ALLOWED. 11. THE LD. DR ALSO DREW OUR ATTENTION T O WARDS OPERATIVE PARA 7.1 AND 7.2 OF THE FIRST APPELLATE IMPUGNED ORDER AND CONTENDED THAT ONE CANNOT JUSTIFY THE PAYMENTS IF ANY SUM OF MONEY HAS BEEN PAID TO A RELATED COMPANY WITHOUT ANY AGREEMENT OR BASIS WITHOUT ESTABLISHING THE FACT THAT THE PAYMENTS HAVE BEEN MADE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE . HE ALSO CONTENDED THAT AS PER LETTER DATED 15.2.2009 OF OPUS PROPERTIES LTD , T HE ALLEGED REPORTS ON EDUCATION AND MEDICAL - CUM - WELLNESS CLUSTERS WERE SUBMITTED AS ON 15 .2.2009 BUT THE APPELLANT COMPANY CONTINUED TO MAKE PAYMENT @ RS. 33,70,800/ - AS PER INVOICE DATED 25.1.2009, RS. 33,59,764/ - AS PER INVOICE DATED 25.2.2009 AND RS. 33,09,000/ - AS PER INVOICE DATED 25.3.2009. IF REPORT WAS SUBMITTED ON 15.2.2009, THEN THE RE WAS NO JUSTIFICATION IN MAKING CONTINUOUS PAYMENTS TO M/S OPUS PROPERTIES LTD AFTER SUBMISSION OF REPORT UNLESS THE BASIS OF SUCH PAYMENT IS SUPPORTED BY OTHER DOCUMENTARY EVIDENCE OR SELF 10 ITA NO. 1885 /DEL/2013 10 SPEAKING FACTS. THE LD. DR ALSO POINTED OUT IN THE INVOICE IT H AS BEEN MENTIONED THAT CONSULTANCY CHARGES AS PER AGREEMENT BUT E X CEPT LETTER DATED 31.12.2009 NO AGREEMENT COULD BE FURNISHED BY THE ASSESSEE TILL DATE TO SHOW BASIS OF THE SHAM PAYMENT TO A RELATED GROUP COMPANY. 12. THE LD. DR ALSO POINTED OUT THAT IN RESPECT OF IMPUGNED PAYMENTS FOR ALLEGE D PROFESSIONAL SERVICES , FOR EDUCATION AND MEDICITY, THE APPELLANT HAS FAILED TO FURNISH ANY EVIDENCE OF ANY PROPERTY UNDER DEVELOPMENT DURING THE PERIOD OR PROPOSED PROPERTY DEVELOPMENT IN FURTHER AND IN ABSENCE OF E VIDENCE OF PROPERTY DEVELOPMENT OF PERIOD AND SUBSEQUENT PROPERTY DEVELOP MENT, BUSINESS EXPEDIENCY OF SAID PAYMENTS TO RELATED CONCERN IS ALSO NOT PROVED AS PER REQUIREMENT OF SECTION 37 OF THE ACT. THE LD. DR SUBMITTED THAT THE PAYMENTS MADE TO M/S OBERO I SOOD & KAPOOR CA WAS MADE FOR PROPOSED CONSTRUCTION PROJECTS NOT FOR EDUCATION CITY AND MEDICITY CUM WELLNESS CENTRE, THEREFORE, ALLOWANCE OF THE SAME DOES NOT IN ANY MANNER SUPPORT THE CLAIM OF THE ASSESSEE. 11 ITA NO. 1885 /DEL/2013 11 13. THE LD. DR VEHEMENTLY CONTENDED THAT THE ASSESSEE HAS NOT ONLY FAILED TO SUBMIT OR FURNISH THE EVIDENCE OF BUSINESS EXPEDIENCY OF SAID PAYMENTS BUT ALSO FAILED TO JUSTIFY THE PAYMENTS TO RELATED CONCERN IN ABSENCE OF ANY AGREEMENT AND BASIS OF PAYMENT . THE LD. DR LASTLY POINTED OUT THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE PRIMARY ONUS AS REQUIRED U/S 37 OF THE ACT TO FURNISH EVIDENCES OF BASIS OF PAYMENTS AND EVIDENCE OF BUSINESS EXPEDIENCY OF SAID PAYMENTS THAT TOO TO A GROUP CONCERN COMPANY. 14. THE LD. A R ALSO PLACED REJOINDER TO T HE ABOVE SUBMISSION OF T HE LD. DR AND SUBMITTED TH A T THE ASSESSEE HAS PLACED CERTIFICATION ON THE FAC E OF THE FIRST PAPER BOOK THAT ONLY ITEM NO. 5 AT PAGES 138 TO 205 WAS SUBMITTED AND REST OF THE PAPER BOOK CONTAINS FRESH EVIDENCE TO BE RELIED UPON BY TH E ASSESSEE COMPANY. THE LD. A R PLACING RELIANCE ON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. DALMIA CEMENT (P) LTD REPORTED IN 121 TAXMAN 706 [DELHI] AND THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SA BUILDE RS VS. CIT 158 TAXMAN 74 [SC] CONTENDED THAT THE COMMERCIAL EXPEDIENCY OF AN EXPENDITURE HAS TO BE DECIDED BY THE ASSESSEE 12 ITA NO. 1885 /DEL/2013 12 AS A BUSINESSMAN AND REVENUE AUTHORITIES ARE NOT ALLOWED TO SIT ON THE SEAT OF THE ASSESSEE FOR THIS PURPOSE. NO OTHER ARGUMENTS HA V E BEEN PLACED BY BOTH THE PARTIES BEFORE US. 15. AT THE VERY OUTSET, WE NOTE THAT THE LD. AR DURING THE ARGUMENTS HAS NOT REFER R ED T O AND NOT PLACED RELIANCE ON ANY DOCUMENTS EXCEPT FEASIBILITY STUDY REPORT AVAILABLE AT PAGES 138 TO 20 5 IN SECOND PAPER BOOK FILED BY THE ASSESSEE ON 19.11.2015. HENCE, OBJECTION OF THE LD. DR IS IMPLIEDLY ACCEPTED BY THE LD. AR BY HIS FAIR CONDUCT IN THIS REGARD AND NO FURTHER DELIBERATIONS ARE REQUIRED IN THIS REGARD AS OTHER DOCUMENT CANNOT BE CONSIDERE D AT SECOND APPELLATE STAGE WHICH WERE NOT SUBMITTED BEFORE THE AUTHORITIES BELOW DURING THE ASSESSMENT AND FIRST APPELLATE PROCEEDINGS, OTHERWISE IT WOULD AMOUNT TO ALLOW ING THE ASSESSEE TO MAKE A NEW CASE WHICH IS NOT PERMISSIBLE . SECONDLY, FROM THE OPE RATIVE PART OF THE IMPUGNED FIRST APPELLATE ORDER, WE OBSERVE THAT THE LD. CIT(A) DENIED RELIEF T O THE ASSESSEE BY UPHOLDING THE CONCLUSION OF THE AO WITH THE FOLLOWING OBSERVATIONS AND FINDINGS: GROUND NO. 3 OF APPEAL RELATES TO DISALLOWANCE OF PROFESSIONAL CHARGE O F RS. 1,00,39,564/ - PAID BY APPELLANT TO OPUS PROPERTIES LTD. AS PER AUDIT REPORT TRANSACTION WITH 13 ITA NO. 1885 /DEL/2013 13 RELATED PARTIES AT SL 10 OF NOTES OF ACCOUNT SHOWS PAYMENT OF RS.1,00,39,564/ - BY THE APPELLANT COMPANY TO OPUS PROPERTIES LTD. THEREFO RE, THERE CANNOT BE ANY DISPUTE THAT BOTH THE APPELLANT COMPANY AND OPUS PROPERTIES LTD ARE RELATED CONCERNS. THE APPELLANT CLAIMS TO HAVE PAID THE SAID FEE TO OPUS PROPERTIES LTD. ON THE BASIS OF LETTER DT. 31/12/2008 WHICH SAYS: FURTHER TO CLARIFY THAT THERE WILL BE NO ADDITIONAL FEE PAID FOR THESE REPORTS, AS WE HAVE AGREED TO PAY YOU MONTHLY CONSULTANCY, WHICH INCLUDES EXPENSES TOWARDS SPECIAL REPORTS AS AND WHEN ASKED BY US . THE LETTER REQUIRES OPUS PROPERTIES LTD TO PROVIDE OPINION ON EDUCATION CITY AND MEDICITY CUM WELLNESS CENTERS. THE LETTER DOES NOT SPECIFY ON WHAT BASIS PAYMENT SHALL BE MADE, FOR WHAT PERIOD AND FOR HOW MANY MONTHS THE PAYMENT SHALL BE MADE. IT CANNOT BE THAT THE PAYMENT WILL BE MADE PERPETUALLY EVERY MONTH. THE LETTER REFER TO AS WE HAVE A GREED BUT NO AGREEMENT COULD BE FURNISHED BY THE APPELLANT. ONE CANNOT JUSTIFY PAYMENT OF ANY SUM OF MONEY WITHOUT ANY BASIS. FURTHER AS PER LETTER DT. 15/02/2009 OF OPUS PROPERTIES LTD. THE J ALLEGED REPORTS ON EDUCATION AND WELLNESS CLUSTERS WERE SUBMIT TED AS ON 15/02/2009. HOWEVER, THE APPELLANT COMPANY CONTINUED TO MAKE PAYMENTS @ RS.33,70,800/ - AS PER INVOICE DT. 25/01/2009, RS.33,59,764/ - AS PER INVOICE DT. 25/02/2009 AND RS.33,09,000/ - AS PER INVOICE DT. 25/03/2009. IF THE REPORTS ARE SUBMITTED ON 1 5/02/2009, THERE IS NO JUSTIFICATION FOR CONTINUING TO MAKE THE MONTHLY PAYMENTS TO OPUS 14 ITA NO. 1885 /DEL/2013 14 PROPERTIES LTD. AS PER INVOICE DT. 25/02/2009 AND 25/03/2009 EVEN AFTER THE SUBMISSION OF REPORT. THE INVOICE DT. 25/01/2009, 25/02/2009 & 25/03/2009 ALSO REFERS TO C ONSULTANCY CHARGES AS PER AGREEMENT FOR THE MONTH OF JAN 2009/FEB 2009 AND MARCH 2009 RESPECTIVELY. HOWEVER, NO AGREEMENT COULD BE FURNISHED BY THE APPELLANT. IN THE ABSENCE OF ANY AGREEMENT AND IN TIRE ABSENCE ANY BASIS, THE PAYMENTS OF RS. 1,00,39,569/ - TO OPUS PROPERTIE S LTD, A RELATED PARTY CANNOT B E JUSTIFIED. ' 7.2 THE APPELLANT COMPANY IS ENGAGED IN THE BUSINESS OF PROPERTY DEVELOPMENT AND SHARE TRADING. HOWEVER, IN RESPECT OF THE PAYMENTS FOR THE ALLEGED PROFESSIONAL SERVICES FOR EDUCATION CITY AND MEDICITY, THE APPELLANT HAS FAILED TO FURNISH ANY EVIDENCE OF ANY PROPERTY UNDER DEVELOPMENT DURING THE PERIOD OR PROPOSED PROPERTY DEVELOPMENT IN FUTURE. IN THE ABSENCE OF EVIDENCE OF PROPERTY DEVELOPMENT OF THAT PERIOD AND SUBSEQUENT PROPERTY DEVELOPMENT , THE BUSINESS EXPEDIENCY OF THE SAID PAYMENTS TO RELATED CONCERN IS ALSO NOT PROVED. FURTHER SUBMISSION OF THE APPELLANT THAT A.O. HAD DISALLOWED TECH N O FEASIBILITY REPORT CHARGES WHILE FINANCIAL FEASIBILITY CHARGES TO M/S UBEROI SOOD & KAPOOR, CA, WERE A LLOWED. THE ABOVE SUBMISSION OF THE APPELLANT IS WITHOUT ANY MERIT BECAUSE THE PAYMENTS MADE TO RELATED PARTY OPUS PROPERTIES LTD. CANNOT BE EQUATED WI TH THE PAYMENT OF RS.5,79,216/ - MADE TO M/S UBEROI SOOD & KAPOOR, CA. AS PER THE BILL THE PAYMENTS TO M/S UBEROI SOOD & KAPOOR, CA WAS MADE FOR PROPOSED CONSTRUCTION PROJECT AND NOT FOR EDUCATION CITY AND MEDICITY CUM WELLNESS CENTRE. 15 ITA NO. 1885 /DEL/2013 15 FURTHER, ALLOWANCE OF PAYMENT TO M/S UBERO I SOOD & KA POOR, CA CANNOT JUSTIFY THE PAYMENTS TO RELATED CONCERN M/S OPUS PROPERT IES LTD WHEN THERE IS SPECIFIC FINDING . THEREFORE, THE APPELLANT HAS NOT ONLY FAILED TO FURNISH THE EVIDENCE OF BUSINESS EXPEDIENCY OF THE SAID PAYMENT S BUT ALSO FAILED JUSTIFY THE PAYMENT TO RELATED CONCERN IN THE ABSENCE OF ANY AGREEMENT AND BASIS OF PA YMENT. THE APPELLANT HAS FAILED TO DISCHARGE THE PRIMARY ONUS TO FURNISH EVIDENCES OF BASIS OF PAYMENTS AND EVIDENCES OF BUSINESS EXPEDIENCY OF THE SAID PAYMENTS. IN VIEW OF THE ABOVE THE ADDITION OF RS. 1,00,35,564/ - MADE BY THE A.O. IS JUSTIFIED A ND AS S UCH IT IS CONFIRMED. THE APPEAL FAILS IN THIS GROUND. 16. FIRSTLY, WE FIND IT APPROPRIATE TO TAKE RESPECTFUL COGNIZANCE OF THE DECISIONS OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. DALMIA CEMENT (P) LTD [SUPRA] WHEREIN IT WAS HELD THAT WHEN IT IS ESTABLISHED THAT THERE IS A NEXUS BETWEEN EXPENDITURE AND PURPO S E OF BUSINESS, REVENUE CANNOT JUSTIFIABLY CLAIM TO PUT ITSELF IN THE ARM CHAIR OF A BUSINESS MAN OR POSITION OF BOARD OF DIRECTORS AND ASSUME SAID ROLE TO DECIDE HOW MUCH IS REASONABLE EXPENDITURE HAVING REGARD TO CIRCUMSTANCE OF TH E CAS E . IN THE ORDER, THEIR LORDSHIPS SPEAKING FOR HON'BLE JURISDICTIONAL HIGH COURT ALSO HELD THAT THE JURISDICTION OF REVENUE AUTHORITIES IS CONFINED TO DECIDE REALITY OF EXPENDITURE, NAMELY, WHETHER THE AMOUNT CLAIMED AS DEDUCTION IS FACTUALLY AS 16 ITA NO. 1885 /DEL/2013 16 LAID DOWN AND WHETHER IT IS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. FURTHER, IT WOULD ALSO BE NECESSARY TO CONSIDER THE RATIO OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SA BUILDERS [SUPRA] WHEREIN IT WAS HELD THAT IT IS NECESSARY THAT THE TRIBUNAL AND OTHER AUTHORITIES I.E. , REVENUE AUTHORITIES , SHOULD EXAMINE THE CLAIM OF THE ASSESSEE AS TO WHETHER THE AMOUNT ADVANCED OR GIVEN TO THE RELATED SISTER CONCERN WAS OUT OF COMMERCIAL EXPEDIENCY . IN THIS DECISION, THE HON'BLE SUPREME COURT HAS ALSO REFERRED TO THE EARLIER DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. DALMIA CEMENT [BHARAT] LTD REPORTED A 254 ITR 377 [DELHI] WHEREIN THE SAID PROPOSITION WAS RENDERED AND IT WAS ALSO HELD THAT IT MUST NOT, HOWEVER, SUFFER FROM THE VICE OF COLLUSIVENESS OR COLOURABLE DEVICE. 17. NOW WE PROCEED TO DECIDE THE CONTROVERSY BEFORE US IN THE INSTANT APPEAL IN THE LIGHT OF PROPOSITIONS AS RESPECTFULLY NOTED ABOVE. FIRSTLY, WE MAY POINT OUT THAT THE LD. AR TO SUPPORT THE CLAIM OF THE ASSESSEE HAS CONTENDED THAT THE EXPENDITURE CLAIMED HA S BEEN PAID THROUGH BANKING CHANNELS AFTER DEDUCTION OF SERVICE TAX AND TDS BUT IN THIS REGARD WE ARE IN AGREEMENT 17 ITA NO. 1885 /DEL/2013 17 WITH THE CONTENTIONS OF THE LD. DR THAT ONLY BECAUSE PAYMENT OF EXPENDITURE HAS BEEN INCURRED THROUGH BANKING CHANNEL AFTER DEDUCTION OF SERV ICE TAX AND TDS IPSO FACTO DOES NOT MAKE THE PAYMENTS SACROSANCT , SELF PROVEN AND ALLOWABLE. WHILE DECIDING THE ALLOWABILITY OF ANY CLAIM OF EXPENDITURE IT SHOULD BE KEPT IN MIND THAT IN ADDITION TO TH E FACTS OF MODE OF PAYMENT AND TDS, THE FACTS OF BUSIN ESS EXPEDIENCY AND INCURRING OF EXPENSE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE HAVE TO BE EXAMINED AND LOOKED IN TO BY THE REVENUE AUTHORITIES. OTHERWISE, IF THE ONLY STANDARD OF PAYMENT THROUGH BANKING CHANNELS AFTER DEDUC TION OF SERVICE TAX AND TDS IS ACCEPTED FOR ALLOWABILI T Y OF CLAIM OF EXPENSE, THEN OTHER PARAMETERS AND STANDARD FIXED BY SECTION 37 SUCH AS BUSINESS EXPEDIENCY AND WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE WOULD GO AND WOULD BECOM E ITOSE WHICH IS NOT CERTAINLY THE INTENTION OF THE LEGISLATURE AND RELEVANT PROVISIONS OF THE ACT AND THE SAID PROPOSITION LAID DOWN BY THE HON'BLE SUPREME COURT AND HON'BLE HIGH COURT OF DELHI. HENCE, WE PROCEED TO ADJUDICATE FURTHER ON THE OTHER RELE VANT ABOVE NOTED POINTS NECESSARY FOR TESTING ALLOWABILI T Y OF THE EXPENSES SPECIALLY IN A PECULIAR CIRCUMSTANCES WHEN THE SAME HAS BEEN PAID TO RELATED CONCERNS. 18 ITA NO. 1885 /DEL/2013 18 18. SECONDLY, THE LD. AR HAS CONTENDED THAT ONLY ONE DIRECTOR IN BOTH THE CONCERNS I . E, PAYER ASSESSEE AND PAYEE OPUS PROPERTIES LTD HAVING ON L Y 0.02% STAKE IN THE APPELLANT COMPANY IN ANY WAY DOES NOT TANTAMOUNT TO RELATED CONCERN OR SAME GROUP COMPANY BY ANY STRETCH OF IMAGINATION. ON CAREFUL CONSIDERATION OF THIS CONTENTION, WE ARE IN AGREEME NT WITH THE FINDINGS OF THE LD. CIT(A) RECORDED IN PARA 7.1 OF THE IMPUGNED ORDER, THAT AS PER AUDIT REPORT TRANSACTION WITH RELATED PARTIES AT SL. NO. 10 OF NOTES TO ACCOUNTS SHOWS IMPUGNED PAYMENT BY THE ASSESSEE TO OPUS PROPERTIES LTD. THEREFORE, CO NTENTION OF THE ASSESSEE IN THIS REGARD IS DISMISSED AND WE HOLD THAT IN THE LIGHT OF AUDIT REPORT OF THE ASSESSEE FOR THE PERIOD UNDER CONSIDERATION WHEN IN THE AUDIT REPORT TRANSACTION WITH RELATED PARTIES AT SL. NO. 10 OF NOTES TO ACCOUNTS AND THE IMPUG NED CLAIM OF EXPENDITURE HAS BEEN MENTIONED IN THE ARRAY OF TRANSACTION WITH RELATED CONCERNS/PART I ES THEN THE ASSESSEE CANNOT TAKE A NEW OR DIFFERENT STAND IN THIS REGARD. THUS, THIS CONTENTION OF THE ASSESSEE BEING FACTUA LL Y INCORRECT IS DISMISSED. 19 ITA NO. 1885 /DEL/2013 19 19. NEXT QUESTION POSED BY THE LD. AR RELYING ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SA BUILDERS VS. CIT [SUPRA] AND THE DECISION OF THE HON'BLE HIGH COURT IN THE CASE OF CIT VS. DALMIA CEMENT (P) LTD [SUPRA], THAT THE BUSINESS EXPEDIE NCY HAS TO BE DECIDED BY THE ASSESSEE AND THE REVENUE AUTHORITIES ARE NOT EMPOWERED TO DECIDE THE SAME AS THEY CANNOT SIT ON THE ARM CHAIR OF THE ASSESSEE. OBVIOUSLY, THIS IS A PERPETUAL AND UNFETTERED RIGHT OF AN ASSESSEE TO DECIDE THE BUSINESS EXPEDIENC Y AND THIS RIGHT HAS BEEN APPROVED BY THE HON'BLE SUPREME COURT IN THE DICTA RENDERED IN THE JUDGMENT IN THE CASE OF SA BUILDERS [SUPRA] WHEREIN IT WAS HELD AS FOLLOWS: 30. THE HIGH COURT AND THE OTHER AUTHORITIES SHOULD HAVE EXAMINED THE PURPOSE FOR WHIC H THE ASSESSEE ADVANCED THE MONEY TO ITS SISTER CONCERN, AND WHAT THE SISTER CONCERN DID WITH THIS MONEY, IN ORDER TO DECIDE WHETHER IT WAS FOR COMMERCIAL EXPEDIENCY, BUT THAT HAS NOT BEEN DONE . 3 4. WE AGREE WITH THE VIEW TAKEN BY THE DELHI HIGH COURT IN CIT V. DALMIA CEMENT (BHARAT) LTD. [2002] 254 1 I R 377 2 THAT ONCE IT IS ESTABLISHED THAT THERE WAS NEXUS BETWEEN THE EXPENDITURE AND THE PURPOSE OF THE BUSINESS (WHICH NEED NOT NECESSARILY BE THE BUSINESS OF THE ASSESSEE ITSELF), THE REVENUE CANNOT JUSTIFIABLY CLAIM TO PUT ITSELF IN THE ARM - CHAIR OF THE BUSINESSMAN OR IN THE POSITION OF THE BOARD OF DIRECTORS AND ASSUME THE ROLE TO DECIDE HOW MUCH IS REASONABLE EXPENDITURE HAVING REGARD TO THE 20 ITA NO. 1885 /DEL/2013 20 CIR CUMSTANCES OF THE CASE. NO BUSINESSMAN CAN BE COMPELLED TO MAXIMIZE ITS PROFIT. THE INCOME TAX AUTHORITIES MUST PUT THEMSELVES IN THE SHOES OF THE ASSESSEE AND SEE HOW A PRUDENT BUSINESSMAN WOULD ACT. THE AUTHORITIES MUST NOT LOOK AT THE MATTER FROM THEIR OWN VIEW POINT BUT THAT OF A PRUDENT BUSINESSMAN. AS ALREADY STATED ABOVE, WE HAVE TO SEE THE TRANSFER OF THE BORROWED FUNDS TO A SISTER CONCERN FROM THE POINT OF VIEW OF COMMERCIAL EXPEDIENCY AND NOT FROM THE POINT OF VIEW WHETHER THE AMOUNT WAS ADVANCED FOR EARNING PRO FITS ?'' 20. THE SAME VIEW HAS BEEN TAKEN BY THE HON'BLE HIGH COURT IN THE CASE OF CIT VS. DALMIA CEMENT (P) LTD. [SUPRA] AS RELIED BY THE ASSESSEE WHEREIN IT WAS HELD THAT ONCE IT IS ESTABLISHED THAT THERE IS A NEXUS BETWEEN EXPENDITURE AND PURPOSE OF BUSINESS, REVENU E CANNOT JUSTIFIABLY CLAIM TO PUT ITSELF IN THE ARMCHAIR OF A BUSINESSMAN IN A POSITION OF BOARD OF DIRECTORS TO ASSUME SUCH ROLE TO DECIDE HOW MUCH IS THE REASONABLE EXPENDITURE HAVING REGARD TO OTHER CIRCUMSTANCES OF THE CASE. BUT FROM THE LANGUAGE USED BY THE LEGISLATION IN THE RELEVANT PROVISIONS OF THE ACT IT IS CLEAR THAT THE PRIMARY ONUS IS ON THE ASSESSEE TO ESTABLISH THE BUSINESS EXPEDIENCY AND ALSO THIS FACT THAT THE EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. IN THE DECISION OF SA BUILDERS [SUPRA] THE HON'BLE SUPREME COURT REFERRED TO THE DECISION OF THE HON'BLE HIGH COURT 21 ITA NO. 1885 /DEL/2013 21 OF DELHI IN THE CASE OF CIT VS. DALMIA CEMENT LTD [SUPRA] WHEREIN THEIR LORDSHIPS SPEAKING FOR HON'BLE JURISDICTIONAL HIGH COURT LAID DOWN CERTAIN PRINCIPLES TO EVALUATE AND ASSESS THE ISSUE OF BUSINESS EXPEDIENCY AND TEST OF ALLOWABILITY OF CLAIM OF THE ASSESSEE LOGICALLY EXAMINE THE CLAIM OF THE ASSESSEE FROM THE ANGLE OF WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINE SS OF THE ASSESSEE. THE RELEVANT PARA, BEING WORD OF WISDOM AND LIGHT HOUSE OF OUR PATH OF DISPENSING JUSTICE IS BEING RESPECTFULLY REPRODUCED AS FOLLOWS: FOR THE ALLOWANCE UNDER SECTION 37(1) , THE FOLLOWING CONDITIONS ARE TO BE SATISFIED, I.E.: (A) THERE MUST BE EXPENDITURE, (B) SUCH EXPENDITURE MUST NOT BE OF THE NATURE DESCRIBED IN SECTIONS 30 TO 36 , (C) THE EXPENDITURE MUST NOT BE IN THE NATURE OF CAPITAL EXPENDITURE OR PERSONAL EXPENSES OF THE ASSESSED, (D) THE EXPENDITURE MUST HAVE BEEN LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS OR PROFESSION. THE WORD 'WHO LLY' REFERS TO THE QUANTUM OF EXPENDITURE, WHILE THE WORD 'EXCLUSIVELY' REFERS TO THE MOTIVE, OBJECTIVE AND PURPOSE OF THE EXPENDITURE . AN EXPENDITURE TO WHICH ONE CANNOT APPLY AN EMPIRICAL OR SUBJECTIVE STANDARD IS TO BE JUDGED FROM THE POINT OF VIEW OF A BUSINESSMAN AND IT IS RELEVANT TO CONSIDER HOW THE BUSINESSMAN HIMSELF TREATS A PARTICULAR ITEM OF EXPENDITURE. THE TERM 'COMMERCIAL 22 ITA NO. 1885 /DEL/2013 22 EXPEDIENCY' IS NOT A TERM OF ART. IT MEANS EVERYTHING THAT SERVES TO PROMOTE COMMERCE AND INCLUDES EVERY MEANS SUITABLE TO THAT END. IN APPLYING THE TEST OF COMMERCIAL EXPEDIENCY, FOR DETERMINING WHETHER THE EXPENDITURE WAS WHOLLY AND EXCLUSIVELY LAID OUT FOR THE PURPOSE OF THE BUSINESS THE REASONABLENESS OF THE EXPENDITURE HAS TO BE JUDGED FROM THE POINT OF VIEW OF THE BUSIN ESSMAN AND NOT THE REVENUE (SEE CIT V. WALCHAND AND CO. (P .) LTD. ; J. K. WOOLLEN MANUFACTURERS V. CIT ; ALUMINIUM CORPORATION OF INDIA LTD. V. CIT AND CIT V. PANIPAT WOOLLEN AND GENERAL MILLS CO. LTD . BUT IT MUST NOT SUFFER FROM THE VICE OF COLLUSIVENESS OR COLOURABLE DEVICES. [EMPHASIS RESPECTFULLY SUPPLIE D BY US BY UNDERLINING.] 21. NO W WE PROCEED TO EVALUATE THE IMPUGNED ORDER OF THE LD. CIT(A) IN THE LIGHT OF ABOVE PROPOSITIONS OF THE HON'BLE SUPREME COURT AND HON'BLE JURISDICTIONAL HIGH COURT. IN THE PRESENT CASE FROM VIGILANT AND CAREFUL READING OF RELEVANT PARAS 7.1 AND 7.2 WE OBSE RVE THAT THE ASSESSEE CLAIMED TO HAVE BEEN PAID SAID CONSULTANCY FEE TO OPUS PROPERTIES LTD SOLELY ON THE BASIS OF LETTER DATED 31.12.2008. THE RELEVANT CONTENTS OF THE SAID LETTER [AVAILABLE AT PAGE 57 OF ASSESSEE S PAPER BOOK] ARE AS FOLLOWS: FURTHER TO CLARIFY THAT THERE WILL BE NO ADDITIONAL FEE PAID FOR THESE REPORTS AS WE HAVE AGREED TO PAY YOUR MONTHLY 23 ITA NO. 1885 /DEL/2013 23 CONSULTANCY FEES WHICH INCLUDES EXPENSES TOWARDS SPECIAL REPORTS AS AND WHEN ASKED BY US. 22. THIS LETTER HAS BEEN WRITTEN BY THE ASSESS EE COMPANY TO M/S OPUS PROPERTIES LTD WITH A HEADING OF LETTER OF INTENT WHICH REQUIRES THE ADDRESSEE M/S OPUS PROPERTIES LTD TO PROVIDE OPINION ON EDUCATION CITY AND MEDICITY CUM WELLNESS CENTRES AND THE SAME CANNOT BE ACCEPTED AS AN AGREEMENT AS CONTEN DED BY THE LD. AR IN THE SUBMISSIONS PLACED BEFORE US AND NOTED ABOVE . IT ALSO NOTED BY US THAT THE LETTER DOES SPECIFY ON WHAT BASIS AND IN WHAT QUANTUM OR HOW MUCH PAYMENT AS LUMPSUM OR MONTHLY BASIS WOULD BE MADE FROM WHICH TIME UP TO WHICH TIME OR DUR ATION. IN OTHER WORDS, THE SAID LETTER DOES NOT EXPLAIN ON WHAT BASIS PAYMENT SHALL BE MADE FOR WHAT PERIOD AND FOR HOW MANY MONTHS THE PAYMENT SHALL BE MADE. THIS LETTER DOES NOT SPECIFY THAT THE PAYMENT WILL BE MADE PERPETUALLY EVERY MONTH . THUS IN THE ABSENCE OF CLEAR MANDATE ABOUT CONSIDERATION THE SAME CANNOT BE ACCEPTED AS VALID AGREEMENT OR CONTRACT . WE ARE ALSO IN AGREEMENT WITH THE OBSERVATIONS OF THE LD. CIT(A) THAT THE SAID LETTER REFER TO AS WE HAVE AGREED BUT NO AGREEMENT COULD BE FURNISHE D BY THE ASSESSEE AND THE ASSESSEE CANNOT JUSTIFY THE PAYMENT OF ANY SUM OR AMOUNT WITHOUT ANY BASIS. 24 ITA NO. 1885 /DEL/2013 24 23. THE LD. COUNSEL OF THE ASSESSEE COULD NOT CONTROVERT THIS OBSERVATION OF THE FIRST APPELLATE AUTHORITY THAT AS PER LETTER DATED 15.2.2009 OF OPUS PR OPERTIES LTD THE REPORT WAS SUBMITTED AS ON 15.2.2009 BUT THE ASSESSEE CONTINUED TO MAKE PAYMENTS SUBSEQUENTLY AS PER INVOICES RAISED BY M/S OPUS PROPERTIES AND THERE IS NO JUSTIFICATION FOR CONTINUING TO MAKE THE MONTHLY PAYMENTS TO OPUS PROPERTIES AS PE R INVOICE DATED 25.2.2009 AND 25.3.2009 EVEN AFTER SUBMISSION OF REPORT. IT IS ALSO PERTINENT TO NOTE THAT WE ARE UNABLE TO UNDERSTAND THE STAND OF THE ASSESSEE AS THERE WAS NO MONTHLY AGREED PAYMENT THEN WHY THE PAYMENTS WERE MADE FOR THREE CONSECUTIVE M ONTHS ONLY AND THERE WERE NO EARLIER OR SUBSEQUENT MONTHLY PAYMENTS AS CONSULTANCY SPECIALLY WHEN THE ASSESSEE COULD NOT ESTABLISH THAT SOME OTHER SERVICES WERE ALSO PROVIDED AGAINST HE SAID MONTHLY PAYMENTS AND IF THERE W ERE PAYMENTS ONLY FOR THE SAID REP ORTS THEN WHY THERE WERE MONTHLY PAYMENTS WITHOUT ANY BASIS OR AGREEMENTS THAT TOO , TO A RELATED GROUP COMPANY. 24. IN VIEW OF THE ABOVE NOTED FACTS NO AGREEMENT OR BASI S COULD BE FURNISHED BY THE ASSESSEE TO SUPPORT THE LETTER OF INTENT DATED 31.12.2008 AND ABOUT BASIS OF SO CALLED AGREED 25 ITA NO. 1885 /DEL/2013 25 CONSIDERATION AND IN THE ABSENCE OF ANY BASIS THE PAYMENT OF MORE THAN ONE CRORE TO A RELATED GROUP COMPANY CANNOT BE JUSTIFIED AND I T CLOUDS THE TRUTHFULNESS OF THE TRANSACTION OF ALLEGED PAYMENT OF CONSULTANCY FEES. AT THE COST OF REPETITION WE MAY AGAIN POINT OUT THAT THE LETTER DATED 31.12.2008 WITH A HEADING OF LETTER OF INTENT CANNOT BE TREATED AS A VALID AGREEMENT OR ENFORCEABL E CONTRACT IN ABSENCE OF ANY STIPULATIONS REGARDING QUANTUM OF CONSIDERATION AS REQUIRED BY SECTION 25 O F CONTRACT AC T, 1872 AND THE SAME IS VOID WITHOUT ANY MENTION THEREIN ABOUT THE AGREED CONSIDERATION. W HEN SO CALLED WRITTEN AGREEMENT IS NOT VALID IN A BSENCE OF CONSIDERATION, THEN THE ASSESSEE CANNOT TAKE ANY ALTERNATIVE STAND IN THE ABSENCE OF ANY SUPPORTING EVIDENCE OR DOCUMENT. 2 5 . IT IS ALSO RELEVANT TO MENTION HERE THAT AS PER THE CONTENTIONS OF THE LD. AR THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROPERTY DEVELOPMENT AND SHARE TRADING BUT I N RESPECT OF PAYMENTS FOR ALLEGED PROFESSIONAL SERVICES FOR EDUCATION CITY AND MEDI - CITY - CUM - WELLNESS CENTRE THE ASSESSEE HAS MISERABLY FAILED TO FURNISH THE EVIDENCE OF ANY PROPERTY UNDER DEVELOPMENT DURING T HE PERIOD OR PROPOSED PROPERTY DEVELOPMENT IN FUTURE 26 ITA NO. 1885 /DEL/2013 26 AND IN THE ABSENCE OF SUCH RELEVANT EVIDENCE THE BUSINESS EXPEDIENCY OF SAID IMPUGNED PAYMENTS TO A RELATED GROUP COMPANY CANNOT BE HELD AS VALIDLY PROVED OR ESTABLISHED AS IT HAS ALREADY NOTED BY US THA T THE ASSESSEE DID NOT FURNISH SUCH RELEVANT EVIDENCE BEFORE THE AUTHORITIES BELOW. THUS, WE ARE IN FULL AGREEMENT WITH THE CONCLUSION OF THE LD. CIT(A) THAT THE ASSESSEE COULD NOT DISCHARGE ITS PRIMARY ONUS TO ESTABLISH AND PROVE THE BUSINESS EXPEDIENCY OF ALLEGED HUGE CONSULTANCY FEE PAYMENT TO A RELATED GROUP COMPANY WHICH IS A LEGAL REQUIREMENT AS PER PROPOSITION RENDERED BY THE HON'BLE SUPREME COURT IN THE CASE OF SA BUILDERS [SUP R A]. TO SUM UP, ON THE BASIS OF FOREGOING DISCUSSION, WE HAVE NO ALTERN ATIVE BUT TO UPHOLD THE CONCLUSION OF THE LD. CIT(A) THAT THE ASSESSEE NOT ONLY FAILED TO FURNISH EVIDENCE OF BUSINESS EXPEDIENCY BUT ALSO FAILED TO JUSTIFY THE HUGE PAYMENT TO A RELATED CONCERN IN THE ABSENCE OF ANY BASIS OR AGREEMENT. IN SUCH A SITUATIO N, THE ASSESSEE ALSO FAILED TO ESTABLISH TH AT THE EXPENDITURE HAVE BEEN LAI D OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE AS MANDATED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. DALMIA CEMENT [BHARA T] LTD [SUPRA] IN THE RELEVANT OPERATIVE PART AS REPRODUCED HEREINABOVE. 27 ITA NO. 1885 /DEL/2013 27 2 6 . AT THE COST OF REPETITION WE MAY POINT OUT THAT THE BUSINESS EXPEDIENCY HAS TO BE DECIDED BY THE ASSESSEE AND REVENUE AUTHORITIES ARE NOT EMPOWERED TO TAKE SEAT OF THE ASSESSEE IN THIS REGARD BUT THE PRIMARY ONUS TO ESTABLISH AND PROVE THE BUSINESS EXPEDIENCY LIES ON THE SHOULDERS OF THE ASSESSEE AND IN THE PRESENT CASE THE A SSESSEE HAS TOTALLY FAILED IN PROVING AND ESTABLISHING THE SAME. AT THE SAME TIME, WE NOTE THAT THE AO AS W E LL AS THE LD. CIT(A) SUCCESSFULLY ESTABLISH THAT THE ALLEGED PAYMENTS HAVE BEEN MADE BY THE ASSESSEE TO A RELATED COMPANY WITHOUT ANY BUSINESS EXPE DIENCY AND THUS THE SAME SUFFERS FROM VICE OF COLLUSIVENESS AND COLORABLE DEVICE WHICH FALLS UNDER THE EXCEPTION CARVED OUT BY THEIR LORDSHIPS IN THE LAST LINE OF THE OPERATIVE PARA AS REPRODUCED ABOVE IN THE DECISION OF DALMIA CEMENT [BHARAT] LTD [SUPRA] . THE ASSESSEE S GROUND NO. 2 BEING DEVOID OF MERITS IS DISMISSED. 28 ITA NO. 1885 /DEL/2013 28 2 7 . IN THE RESULT, T HE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED ON GROUND NO. 2 AND PARTLY DISMISSED ON GROUND NO. 3 . THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 29 . 0 2 .201 6 . SD/ - SD/ - ( G.D. AGARWAL ) (C.M. GARG) VICE PRESIDENT JUDICIAL MEMBER DATED: 29 TH FEBRUARY , 2016. VL/ COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI