ACIT, New Delhi V. M/s. Vansidhar Projects Pvt. Ltd., New Delhi

ITA 1973/DEL/2012

• Counselvise Citation: 197320114 RSA 2012
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 05-12-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 27-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS SUSHMA SINGH
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H : NEW DELHI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER ITA NO.1973/DEL/2012 ASSESSMENT YEAR : 2007-08 ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, NEW DELHI. VS. M/S VANSHIDAR PROJECTS PVT.LTD., N-49, FIRST FLOOR, CONNAUGHT PLACE, NEW DELHI 110 001. PAN : AACCV1747L. (APPELLANT) (RESPONDENT) APPELLANT BY : MRS.SUSHMA SINGH, CIT-DR. RESPONDENT BY : SHRI VED JAIN, CA. ORDER PER JOGINDER SINGH, JM : THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 6 FEBRUARY, 2012 PASSED BY THE LEARNED FIRST APPELLATE AUTHORITY, DELHI. THE ONLY GROUND ARGUED BY MRS.SUSHMA SINGH, LEARNED CIT-DR IS THAT ON THE FACT S AND IN THE CIRCUMSTANCES AND IN LAW, THE LEARNED CIT(A) ERRED IN DELET ING THE DISALLOWANCE OF RS.38,40,000/- MADE U/S 40A(3) OF THE ACT. IT WAS SUBMITTED THAT THE ASSESSEE MADE THE PAYMENT IN CASH WHICH WAS TO BE MADE T HROUGH 2 ITA-1973/DEL/2012 CHEQUE, THEREFORE, THERE IS A CONTRAVENTION TO THE PROVISIONS OF S ECTION 40A(3). IT WAS ALSO PLEADED THAT EVEN ON ASKING BY THE ASSESSING OFFICER, NO JUSTIFICATION FOR CASH PAYMENT WAS ADDUCED BY THE ASSESSEE. THUS, THE ADDITION WAS ARGUED TO BE RIGHTLY MADE BY THE ASSESSING OFFICER. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE SHRI VED JAIN DEFENDED THE IMPUGNED ORDER BY SUBMITTING THAT THE PAYMENTS WERE MADE IN CAS H AS ADVANCE (BAYANA) TO FARMERS AGAINST PURCHASE OF LAND AND THE PAYME NTS WERE MADE BEYOND THE BANKING HOURS. CHEQUES WERE ALSO CLAIMED TO BE MA DE TO THE SAME PERSONS. THE CRUX OF THE ARGUMENT IS THAT SUCH LOANS AN D ADVANCES WERE NOT CLAIMED BY THE ASSESSEE DURING THE RELEVANT PERIOD AN D AT THE APPROPRIATE STAGE, WHEN CLAIM WILL BE MADE BY THE ASSESSEE , THE DEPARTMENT IS FREE TO DECIDE AS PER LAW. 2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. THE FACTS IN BRIEF ARE THAT THE ASSESSEE COMPA NY GAVE ADVANCES FOR PURCHASE OF AGRICULTURAL LAND IN DISTRICT PANCHKULA A MOUNTING TO RS.9,44,87,748/-, OUT OF WHICH, RS.7,52,87,748/- WERE PAID THROUGH ACCOUNT PAYEE CHEQUE AND REMAINING AMOUNT OF RS.1,92,00,000/- WERE PA ID IN CASH TO VARIOUS FARMERS FROM WHOM AGRICULTURAL LAND WAS TO BE PURCHASED. SOME PAYMENTS WERE MADE IN CASH AS ADVANCE (BAYANA). THE CLAIM OF T HE ASSESSEE IS THAT SUCH CASH PAYMENT HAS NOT BEEN CLAIMED AS EXPENDITURE AND IS RATHER AN ADVANCE TO THE FARMERS AND SUCH PAYMENT WAS MADE DUE TO BUSIN ESS 3 ITA-1973/DEL/2012 COMPULSIONS. IT WAS SPECIFICALLY CLAIMED BY SHRI JAIN THAT NO DEDUCT ION OF SUCH EXPENSES HAS BEEN CLAIMED DURING THE YEAR UNDER CONSIDERATION, THEREFORE, THERE IS NO QUESTION OF DISALLOWANCE AND AS AND WHEN CLAIM WILL BE MADE, THE DEPARTMENT IS FREE TO DECIDE IN ACCORDANCE WITH LAW. THERE IS A CATEGORICAL FINDING (PAGE 12) IN THE IMPUGNED ORDER THAT THE LEARN ED CIT(A) EXAMINED THE AUDIT REPORT FOR FY 2006-07 ALONGWITH THE BALAN CE SHEET AS ON 31.3.2007 WITH ITS SCHEDULES AND THE PROFIT & LOSS ACCOUNT AND IT WAS FOUND FROM THE SAME THAT THE AMOUNT OF RS.9,44,87,748/- WAS SHOWN A S LOANS AND ADVANCES IN SCHEDULE-II UNDER THE HEAD CURRENT ASSETS, LOANS A ND ADVANCES AND THERE WAS NO STOCK IN TRADE EITHER APPEARING IN THE BALANCE SHEET OR PROFIT AND LOSS ACCOUNT AS ON 31.3.2007, MEANING THEREBY, ADVANCES PA ID TO THE LAND OWNERS FOR PURCHASING THE LAND HAVE NOT RESULTED IN ANY STOCK IN TRADE/WORK IN PROGRESS FOR THE YEAR UNDER CONSIDERATION, THEREFORE, ON THAT PARTICULAR DATE, IT WOULD NOT QUALIFY FOR DISALLOWANCE AS EXPENSE S OR PAYMENT WITHIN THE MEANING OF SECTION 40A(1) READ WITH SECTION 40A( 3) OF THE ACT. IN SUCH A SITUATION, WE ARE IN AGREEMENT WITH THE ARGUMENT O F THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE CLAIM OF EXPENDITURE/PAYMENT H AS TO FORM PART OF THE PROFIT & LOSS ACCOUNT IN THE FIRST PLACE BEFORE THE QUESTION OF ITS DISALLOWANCE ARISES. WE ARE ALSO IN AGREEMENT WITH THE FINDI NG OF THE LEARNED CIT(A) THAT THE ADVANCE GIVEN TO THE FARMERS FOR ACQUISITION OF LA ND DOES NOT FORM PART OF STOCK IN TRADE AS ON 31.3.2007. THEREFORE, THE PROV ISION OF SECTION 40A(3) WOULD NOT APPLY. EVEN IN THE IMPUGNED ORDER, THE RE IS A 4 ITA-1973/DEL/2012 MENTION THAT AS AND WHEN THE INVESTMENT MADE BY WAY OF ADVA NCES TO THE FARMERS, FOR PURCHASE OF LAND, WILL BE TREATED AS PART OF WORK IN PR OGRESS/STOCK IN TRADE, IT WILL BE DECIDED IN ACCORDANCE WITH LAW. MEANING THEREBY, THE RELIEF HAS BEEN GRANTED WITH THE RIDER. IN SUCH A SITUAT ION, WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN IN THE IMPUGNED ORDER, CONSEQUENTLY, IT IS AFFIRMED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 7 DECEMBER, 2012. SD/- SD/- (B.C.MEENA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 07.12.2012 VK. COPY FORWARDED TO: - 1. APPELLANT : ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, NEW DELHI. 2. RESPONDENT : M/S VANSHIDAR PROJECTS PVT.LTD., N-49, FIRST FLOOR, CONNAUGHT PLACE, NEW DELHI 110 001. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR