ITO, New Delhi V. M/s. Philana Builders & Developers Pvt. Ltd., New Delhi

ITA 2122/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7093 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 08-08-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 09-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER I.T.A. NO.2122/DEL/2014 A.Y. : 2007-08 INCOME TAX OFFICER, WARD 14(2), ROOM NO. 209, 2 ND FLOOR, CR BUILDING, I.P. ESTATE, NEW DELHI VS. M/S PHILANA BUILDERS & DEVELOPERS PRIVATE LIMITED, I-E, NAAZ CINEMA COMPLEX, JHANDEWALAN EXTN., NEW DELHI (PAN:AAECP3348P) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. FR MEENA, SR. DR ASSESSEE BY : SH. R.S. SINGHVI, CA DATE OF HEARING : 08-08-2016 DATE OF ORDER : 05-09-2016 ORDER PER H.S. SIDHU, JM REVENUE HAS FILED THE APPEAL AGAINST THE ORDER DA TED 21.1.2014 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XVI I, NEW DELHI PERTAINING TO ASSESSMENT YEAR 2007-08 ON THE FOLLOW ING GROUND:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE PENALTY U/S. 2 71(1)(C) ITA NO.2122/DEL/2014 2 AMOUNTING RS. 32,12,599/- IMPOSED BY THE AO HOLDING THAT THERE IS NO FURNISHING OF INACCURATE PARTICULARS OF INCOME OR DELIBERATE ATTEMPT TO CONCEAL INCOME BY THE ASSESSE E IGNORING THE FACT THAT THE GENUINENESS OF EXPENDITU RE CLAIMED BY THE ASSESEE CANNOT BE ESTABLISHED. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ABOVE SAI D PENALTY IGNORING THE FACT THAT ADDITION MADE BY THE AO WAS CONFIRMED BY THE FIRST APPELLATE AUTHORITY. 3. THE APPELLANT CRAVES TO BE ALLOWED TO ADD ANY FRESH GROUND OF APPEAL AND / OR DELETE OR AMEND ANY OF THE GROUN DS OF APPEAL. 2. THE FACTS NARRATED BY THE REVENUE AUTHORITIES AR E NOT DISPUTED BY BOTH THE PARTIES, THEREFORE, THE SAME ARE NOT REPEATED H ERE FOR THE SAKE OF CONVENIENCE. 3. LD. DR RELIED UPON THE ORDER OF THE AO. 4. ON THE OTHER HAND, LD. A.R. OF THE ASSESSEE RELI ED UPON THE ORDER OF THE LD. CIT(A) AND HAS STATED THAT LD. CIT(A) HAS PASSE D A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE. FURTHER, LD. A.R. OF THE ASSESSEE STATED THAT QUANTUM ON WHICH THE PENALTY HAS BEEN IMPOSED , HAS ALSO BEEN DELETED BY THE ITAT IN ITA NO. 1949/DEL/2011 (AY 2007-08) VIDE ORDER DATED 11.2.2016. HE HAS ALSO FILED THE COPY OF THE SAID TRIBUNALS ORDER DATED 11.2.2016. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. WE FIND THAT LD. CIT(A) HAS ELABORATELY ADJUDICAT ED THE ISSUE VIDE PARA NO. 6.4 ITA NO.2122/DEL/2014 3 TO 6.14 VIDE HIS ORDER DATED 21.1.2014. THE RELEVAN T PARAS NO. 6.4 TO 6.14 ARE REPRODUCED AS UNDER:- 6.4. IN APPELLATE PROCEEDINGS, THE APPELLANT STATE D THAT THE APPELLANT HAS ACTUALLY PURCHASED LAND DURING THE YE AR AND MADE PAYMENTS TO THE CONSOLIDATOR M/S VIKRAM ELECTRIC EQ UIPMENT (P) LTD. THE GENUINE NATURE OF THE PAYMENT IS NOT IN DO UBT. THE DEBATABLE ISSUE IS WHETHER DISALLOWANCE ULS 40(A)(I A) COULD BE MADE FOR NOT DEDUCTING TAX U/S 194H/194C. THE APPEL LANT HAS ENCLOSED COPIES OF THE DECISIONS OF THE HON'BLE ITA T IN ITS GROUP CASES WHEREIN IT WAS HELD THAT PROVISIONS OF 194H O R 194C WERE NOT APPLICABLE . 6.5. THE APPELLANT STATES THAT A BONAFIDE CLAIM OF DEDUCTION HAS BEEN DISALLOWED. THE APPELLANT HAD FURNISHED ALL RE LEVANT FACTS AND DETAILS ON RECORD AND HAD NOT CONCEALED ANY FACTS. THE FACTS AND DETAILS FURNISHED BY THE APPELLANT WERE NOT FOUND T O BE BOGUS OR FALSE BY ANY AUTHORITY. NO INACCURATE PARTICULARS H AD BEEN SUBMITTED BY THE APPELLANT. 6.6. FURTHER, IN NONE OF THE CASES QUOTED WHICH WER E GROUP CONCERNS OF THE APPELLANT, IT WAS HELD BY THE LD. C IT(A) OR THE HON'BLE ITAT THAT THE PAYMENT TO THE CONSOLIDATOR W AS NOT A GENUINE PAYMENT. THE ONLY ISSUE IN ALL THE CASES WA S WHETHER PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WOULD BE APPLICABLE. 6.7. IN THE CASE OF ITO VS. FINIAN ESTATES THE AO H AD DISALLOWED THE AMOUNT PAID BY THE APPELLANT OUT OF PURCHASES A ND REDUCED IT FROM THE CLOSING STOCK. THE AMOUNT HAD BEEN PAID TO M/S VIKRAM ELECTRIC EQUIPMENT (P) LTD. M/S VIKRAM ELECTRIC EQU IPMENT (P) ITA NO.2122/DEL/2014 4 LTD. WAS A CONSOLIDATOR TO ACQUIRE AND CONSOLIDATE LAND HOLDINGS. THE HON'BLE ITAT STATED THE AMOUNT WAS DULY REFLEC TED IN THE PURCHASES AND CLOSING STOCK. FURTHER THAT PROVISIO NS OF SECTION 40(A)(IA) WOULD NOT BE APPLY AS NO DEDUCTION WAS CL AIMED IN THE P&L A/C. 6.8. IN THE CASE OF ZANOBI BUILDERS &. CONSTRUCTION S (P) LTD. VS. ITO, PAYMENTS WERE MADE TO MIS VIKRAM ELECTRIC EQUI PMENT (P) LTD. THE HON'BLE ITAT STATED THAT NO DISALLOWANCE U LS 40(A)(IA) WAS CALLED FOR, FOR NOT DEDUCTING TDS ULS 194 OR 19 4H. 6.9. THE INTENTION TO QUOTE THESE CASES. AT THIS JU NCTURE IS TO SHOW THAT M/S VIKRAM ELECTRIC EQUIPMENT (P) LTD. IS AN E XISTING ENTITY AND WORKS AS A CONSOLIDATOR. IN NO CASE THE GENUINE NESS OF THE TRANSACTIONS WITH MIS VIKRAM ELECTRIC EQUIPMENT (P) LTD. HAS BEEN DOUBTED. IN ALL RELATED CONCERNS MIS VIKRAM ELECTRI C EQUIPMENT (P) LTD. IS THE CONSOLIDATOR TO WHOM PAYMENTS WERE MADE ON A REGULAR BASIS AND THE PAYMENTS HAVE NEVER BEEN CONS IDERED AS NON GENUINE EXPENDITURE. IN VIEW THEREOF, THE FINDINGS OF THE HON' BLE ITAT ESTABLISH THAT M/S VIKRAM ELECTRIC EQUIPMENT ( P) LTD. IS A GENUINE EXISTING ENTITY. FURTHER, THAT TDS ON PAYME NTS MADE TO MIS VIKRAM ELECTRIC EQUIPMENT (P) LTD. IS NOT REQUI RED TO BE DEDUCTED. 6.10. I SHALL NOW CONSIDER WHETHER PENALTY ULS 271( 1)(C) IS LEVIABLE ON THE ADDITIONS MADE IN THIS YEAR TREATING PAYMEN T TO M/S VIKRAM ELECTRIC EQUIPMENT (P) LTD. AS NON GENUINE AND DISA LLOWING THE PAYMENT MADE FOR NOT DEDUCTING TDS. 6.11. IN THE MATTER OF PENALTY, IT IS SEEN THAT THE APPELLANT HAD FURNISHED ALL PARTICULARS IN RESPECT OF INCOME EARN ED AND ITA NO.2122/DEL/2014 5 EXPENDITURE INCURRED. THE AO HAD ALSO NOT STATED TH AT THE PARTICULARS FURNISHED WERE INACCURATE OR THERE WAS AN ATTEMPT TO FURNISH INACCURATE PARTICULARS. 6.12. THE BONAFIDES OF THE APPELLANT CAN BE SEEN FR OM THE FACT THAT ALL DETAILS WERE FURNISHED. THE ACTION OF THE APPEL LANT IS NOT DELIBERATE OR FOR CONCEALMENT OF INCOME. THERE WAS NO CONCEALMENT OF MATERIAL FACTS. THERE WAS NO INTENTI ON OF THE APPELLANT TO CONCEAL INCOME AND EVADE TAX AND MISLE AD THE REVENUE. 6.13. THE HON'BLE SUPREME COURT OF INDIA IN K. P. M ADHUSUDAN VS. CIT (2011) 118 TAXMAN 324 (SC) HELD THAT IN THE CIR CUMSTANCES STATED IN THE EXPLANATION, IF THE APPELLANT'S FAILU RE TO RETURN HIS CORRECT INCOME WAS NOT DUE TO FRAUD OR NEGLECT, HE SHALL BE NOT DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INC OME OR FURNISHED INACCURATE PARTICULARS THEREOF AND CONSEQ UENTLY BE LIABLE TO BE PENALTY PROVIDED BY THAT SECTION. IN VIEW OF THE ABOVE, THE ONUS IS ON THE APPELLANT TO PROVE THAT THERE WAS NO FRAUD OR NEGLECT IN FILING CORRECT INCOME, WHICH THE APPELLANT HAS P ROVED. 6.14. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD. OBSERVED THAT MAKING AN INCO RRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PART ICULARS. THE APPELLANT HAD GIVEN AN EXPLANATION, WHICH IS BONAFI DE. THERE IS NO FURNISHING OF INACCURATE PARTICULARS OF INCOME OR D ELIBERATE ATTEMPT TO CONCEAL INCOME. THE PENALTY OF RS.32,12, 599/- IS THEREFORE DELETED. THE GROUNDS OF APPEAL ARE RULED IN FAVOUR OF THE APPELLANT. ITA NO.2122/DEL/2014 6 5.1 EVEN OTHERWISE, WE NOTE THAT IN ASSESSEES OWN CASE IN ITA NO. 1949/DEL/2011 FOR A.Y. 2007-08 VIDE ORDER DATED 11. 2.2016, THE TRIBUNAL HAD ADJUDICATED THE ISSUE VIDE PARA NO. 6 TO 9.6 AT PAG ES 5 TO 12 AND DELETED THE QUANTUM ADDITION IN THIS REGARD ALSO. THE RELEVA NT PORTION IS REPRODUCED AS UNDER:- 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE LD. AR AND THE DR AND HAVE PERUSED THE PAPER BOOK FILED BEFORE US. 7. THE LD. AR SUBMITS THAT ON IDENTICAL SET OF FACT S, THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE D BENCH OF THE ITAT IN ITA NO. 2361/D/2011 AN D ITA NO.1953/D/2011 FOR THE AY 2007-08 IN THE CASE OF M/ S FINIAN ESTATE DEVELOPERS P. LTD. ORDER DATED 5TH OCTOBER, 2011. WE FURTHER SUBMIT THAT THE H BENCH OF THE TRIBUNAL I N THE CASE OF ZEBINA REAL ESTATE P. LTD. VS. ITO IN ITA NO. 1429/ D/2011 AND 1430/D/2011 ORDER DATED 12.4.2013 FOLLOWED THE JUDG MENT OF TRIBUNAL IN THE CASE OF FINIAN ESTATES DEVELOPERS P . LTD. 142 TTJ 545 (DEL) AND ALLOWED THE APPEAL OF THE ASSESSEE. 7.1. THE LD. AR FURTHER SUBMITTED THAT AGAINST THE ORDER OF FINAIL ESTATE DEVELOPERS (SUPRA) THE REVENUE HAS NOT PREFE RRED ANY APPEAL BEFORE THE HONBLE HIGH COURT. ITA NO.2122/DEL/2014 7 7.2. THE LD. AR HAS ALSO PLACED RELIANCE ON THE DEC ISION OF THIS TRIBUNAL IN THE CASE OF PENTHEA BUILDERS & DEVELOPE RS P. LTD. IN ITA NO. 1951/D/2011 FOR AY 2007-08 ON IDENTICAL SET OFF FACTS. THE LD.AR SUBMITS THAT THE REVENUE HAD PREFERRED AN APP EAL IN THE CASE OF PANTHEA BUILDERS AND DEVELOPERS (SUPRA) IN ITA N O. 270/2005 BEFORE THE HONBLE JURISDICTIONAL HIGH COURT. THE H ONBLE HIGH COURT AT PARA 11 HAS OBSERVED THE FOLLOWING FACTS: 11. IN ITS ORDER DT. 5TH OCTOBER, 2011, THE ITAT E XAMINED THE NATURE OF THE MOU BETWEEN FINIAN AND VEEPL WITH PARTICULAR REFERENCE TO THE CLAUSES THEREIN AND CON CLUDED THAT FINIAN WAS TRANSACTING WITH VEEPL ON A PRINCI PAL TO PRINCIPAL BASIS AND THAT IT COULD NOT BE SAID THAT THE PAYMENT TO VEEPL WAS FOR RENDERING SERVICES. CONSEQUENTLY, IT WAS HELD THAT SECTION 194H OF THE ACT WAS NOT AT ALL APPLICABLE. THE ITAT NOTED THAT IN TER MS OF CLAUSE 3.2 OF THE MOU NO SUM WAS DUE TO BE PAID TO VEEPL FOR THE SERVICES RENDERED BY IT TILL IT PROCURED 27 ACRES OF LAND. THE AMOUNT PAID TO VEEPL WAS DULY REFLECTED B Y FINIAN IN ITS PURCHASES AND THE CLOSING STOCK AND N O SALES HAD BEEN MADE DURING THE YEAR IN QUESTION. THE PAYM ENT OF 2% OF THE SALE AMOUNT OF VEEPL AS CONSIDERATION FOR ITA NO.2122/DEL/2014 8 TRANSFERRING VEEPLS RIGHTS IN THE LAND WAS IN TERM S OF CLAUSE 3.2 OF THE MOU AND IT HAD NOT BEEN SHOWN THA T SUCH PAYMENT WAS NOT A FAIR COMPENSATION. 12. AS ALREADY NOTICED HEREINBEFORE, NO APPEAL WAS FILED BY THE REVENUE IN THIS COURT AGAINST THE DECISION OF T HE ITAT ON THE ABOVE ASPECT IN THE CASE OF FINIAN. 13. ..IT IS SUBMITTED THAT WHILE IN THE CASE OF F INIAN THE CONSOLIDATOR INVESTED ITS OWN FUNDS FOR 7 ITA NO. 1949/DEL/2011PURCHASING THE LAND FOR THE ACQUIRER IN THE PRESENT CASE OF ZREPL THE ACQUIRER PAID FROM ITS OW N FUNDS. HOWEVER, LD. COUNSEL FOR THE REVENUE HAS BEEN UNABL E TO SHOW ANY DIFFERENCE IN THE ACTUAL CLAUSES OF THE MO U BETWEEN ZREPL AND VEEPL WHEN COMPARED TO THE MOU BETWEEN FINIAN AND VEEPL. IN THE CIRCUMSTANCES, THE COURT IS UNABLE TO APPRECIATE ON WHAT BASIS IT COULD BE S AID THAT THE ARRANGEMENT BETWEEN ZREPL AND VEEPL WAS NOT ON A PRINCIPAL TO PRINCIPAL BASIS. WITH THE REVENUE HA VING ACCEPTED THE DECISION OF THE ITAT IN THE CASE OF IT O VS. FINIAN ESTATES DEVELOPERS P. LTD., AND WITH THERE B EING NOTHING TO DISTINGUISH IT IN RELATION TO THE CASE O F ZREPL, THE COURT IS NOT INCLINED TO INTERFERE WITH THE IMPUGNE D ORDER OF THE ITAT WHICH, IN THE OPINION OF THE COURT, HAS RI GHTLY RELIED UPON ITS EARLIER DECISION IN THE CASE OF FIN IAN. 16. HAVING CONSIDERED AT LENGTH THE SUBMISSIONS OF LD. COUNSEL FOR THE REVENUE, THE PLEADINGS AND THE DOCU MENTS NOT ONLY IN THE CASE OF PBDPL BUT ALSO IN THE CASE OF FINIAN, ITA NO.2122/DEL/2014 9 THE COURT IS UNABLE TO FIND ANY DISTINCTION BETWEEN THE TWO CASES AS FAR AS THE CLAUSES IN THE MOU BETWEEN THE PARTIES AND VEEPL OR THE PAYMENT MADE TO THE LATER PURSUANT THERETO. AGAIN, WITH THE REVENUE HAVING ACCEPTED TH E DECISION OF THE ITAT IN THE CASE OF FINIAN, AND WIT H THE REVENUE BEING UNABLE TO BRING OUT ANY DISTINGUISHIN G FEATURE AS FAR AS THE CASE OF PBDPL, THE COURT SEES NO REAS ON WHY IT SHOULD INTERFERE WITH THE IMPUGNED ORDER OF THE ITA T. 7.3. THE LD.AR SUBMITTED THAT IN THE FACTS OF THE P RESENT CASE BEFORE US, THE ASSESSEE HAS THE PAYMENT TO VIKRAM ELECTRIC EQUIPMENT P. LTD., ON ACCOUNT OF TRANSFER OF CERTAIN RIGHTS OF V IKRAM ELECTRIC EQUIPMENT P. LTD. IN THE LANDS TRANSFERRED TO THE A SSESSEE, AND WAS NOT TOWARDS ANY SERVICES RENDERED. THE LD.AR SUBMIT TED THAT AS A CONSOLIDATOR, VIKRAM ELECTRIC EQUIPMENT P. LTD. WA S TO CONTACT THE LOCAL FARMERS IN AND AROUND GURGAON, WHO WERE W ILLING TO SELL THEIR LAND. 7.4. HE SUBMITTED THAT VIKRAM ELECTRIC EQUIPMENT P. LTD. WAS MAKING PAYMENTS FROM ITS ACCOUNT TO THE FARMERS AND THERETO HAVE CERTAIN RIGHTS IN THE LAND. ON THE ULTIMATE TRANSFE R OF LAND TO THE ASSESSEE THROUGH VIKRAM ELECTRIC EQUIPMENT P. LTD., THE FINAL PAYMENT WAS TO BE MADE TO THE FARMERS. TOWARDS THE RIGHT OF VIKRAM ELECTRIC EQUIPMENT P. LTD. 2% OF THE COST OF LAND (IN SOME CASES, EVEN A HIGHER AMOUNT) WAS TO BE PAID TO VIKR AM ELECTRIC EQUIPMENT P. LTD. AS MUTUALLY AGREED. THIS WAS THE MUTUALLY AGREED PRICE. 7.5. THE LD.AR SUBMITTED THAT VIKRAM ELECTRIC EQUIP MENT P. LTD. WORKED FOR LAND ACQUISITION AND AFTER SCRUTINY OF T HE CONCERNED ITA NO.2122/DEL/2014 10 DOCUMENTS OF THE LAND, VIKRAM ELECTRIC EQUIPMENT P. LTD. WOULD SUGGEST THE APPROPRIATE LAND FOR PURCHASE BY THE AS SESSEE. HE SUBMITTED THAT VIKRAM ELECTRIC EQUIPMENT P. LTD. TH US ACTED WITH THE FARMERS ON ITS OWN ACCOUNT RATHER THAN FOR AND ON BEHALF OF THE ASSESSEE, ON PRINCIPLE TO PRINCIPLE BASIS, WITH THE FARMERS ON THE ONE HAND AND THE ASSESSEE ON THE OTHER. 7.6. THE LD.AR FURTHER SUBMITTED THAT THIS BEING SO , THE PROVISIONS OF NEITHER SECTION 194C NOR SECTION 194H GET ATTRAC TED TO THE PAYMENT MADE BY THE ASSESSEE TO VIKRAM ELECTRIC EQU IPMENT P. LTD. IT HAS BEEN SUBMITTED BY THE LD.AR THAT THE PA YMENT ALONG WITH PAYMENT MADE TO THE FARMERS DIRECTLY REPRESENTED TH E PURCHASE OF THE COST OF LAND AND HAD BEEN CORRECTLY TREATED AS SUCH IN THE ASSESSEES BOOKS OF ACCOUNT. IT HAS BEEN CONTENDED THAT ALTERNATIVELY, IN ANY CASE, THE PAYMENT MADE TO VIK RAM ELECTRIC EQUIPMENT P. LTD. HAS NOT AFFECTED THE TAXABLE PROF ITS OF THE ASSESSEE DURING THE YEAR. THE TOTAL PURCHASES WERE LYING AS CLOSING STOCK, AS OBSERVED BY THE TAXING AUTHORITIES ALSO AND THE EFFECT OF ADJUSTMEN T WITH REGARD TO THE AMOUNT PAID TO VIKRAM ELECTRIC EQUIPMENT P. LTD . WOULD ARISE ONLY ON AND IN THE INSTANCES OF SALE OF LAND BY THE ASSESSEE. IT IS THUS SUBMITTED THAT NO DISALLOWANCE U/S 40(A)(IA) O F THE ACT IS CALLED FOR MUCH LESS ANY CONSEQUENTIAL ACTION U/S 2 01 OF THE ACT. IT HAS BEEN CONTENDED THAT VIKRAM ELECTRIC EQUIPMENT P . LTD. HAD AN IMPORTANT ROLE TO PLAY AS A CONSOLIDATOR, SINCE THE ASSESSEE REQUIRED CONTIGUOUS LAND HOLDINGS IN ORDER TO DEVEL OP A COLONY. THE LD.AR SUBMITTED THAT IN CASE LAND WHICH WAS AGR EED TO BE ACQUIRED BY VIKRAM ELECTRIC EQUIPMENT P. LTD. WAS N OT FOUND TO BE SUITABLE BY THE ASSESSEE, IT WAS VIKRAM ELECTRIC EQ UIPMENT P. LTD. ITA NO.2122/DEL/2014 11 WHICH WOULD HAVE TO BEAR THE CONSEQUENCES, INDICATI NG THAT VIKRAM ELECTRIC EQUIPMENT P. LTD. WAS NOT ACTING AS AN AGENT ON BEHALF OF THE ASSESSEE, BUT WAS WORKING ON A PRINCI PLE TO PRINCIPLE BASIS, INDEPENDENTLY. 8. ON THE OTHER HAND, THE STAND OF THE LD.DR, HAS B EEN THAT MOU SIGNED BY THE ASSESSEE AND VIKRAM ELECTRIC EQUIPMEN T P. LTD. LAYS DOWN THAT VIKRAM ELECTRIC EQUIPMENT P. LD. MAKES IT CLEAR THAT VIKRAM ELECTRIC EQUIPMENT P. LTD. WAS ACTING AS AN AGENT OF THE ASSESSEE, RENDERING SERVICES, FOR WHICH, THE PROVI SIONS OF SECTION 194H OF THE ACT ARE APPLICABLE AND IT IS CORRECTLY APPLIED BY THE LD. CIT(A). 9. WE HAVE PERUSED THE AGREEMENT IN THIS REGARD. IT IS SEEN THAT CLAUSE 3.2 OF THE MOU BETWEEN THE ASSESSEE AND VIKR AM ELECTRIC EQUIPMENT P. LTD. MAKES IT CLEAR THAT VIKRAM ELECTR IC EQUIPMENT P. LTD. OR ITS AGENT AGREED TO ASSIGN THEIR RIGHTS TO PURCHASE THE LAND IN FAVOUR OF THE ASSESSEE. IT WOULD BE APPROPR IATE TO REPRODUCE HERE, THE SAID CLAUSE 3.2: 3.2 IN CONSIDERATION OF THE CONSOLIDATOR OR ITS AGENT/NOMINEE ASSIGNING ITS RIGHT TO PURCHASE THE L AND IN FAVOUR OF THE BUYER COMPANY AND CAUSING THE LAND OW NERS TO EXECUTE THE SALE DEEDS DIRECTLY IN FAVOUR OF THE BUYER COMPANY, THE BUYER COMPANY SHALL PAY THE CONSOLIDAT OR SUCH SUM AS MAY BE MUTUALLY AGREED. HOWEVER, IT IS SPECIFICALLY AGREED BY THE CONSOLIDATOR THAT NO SUM SHALL ACCRUE TO IT ON THIS ACCOUNT TILL IT PROCURES 27 AC RES OF LAND FOR THE BUYER COMPANY (UNLESS THE BUYER COMPANY DEC IDES ITA NO.2122/DEL/2014 12 TO PROCURE LESS THAN 27 ACRES THROUGH THE CONSOLIDA TOR) AND ALL THE ISSUES RELATING TO POSSESSION AND MUTATION OF SUCH LAND ARE SETTLED TO THE SATISFACTION OF THE BUYER C OMPANY. 9.1. THE ABOVE CLAUSE ALSO MAKES IT EVIDENT THAT UN LESS THE ASSESSEE DECIDED TO PROCURE LESS THAN 27 ACRES OF LAND THROU GH VIKRAM ELECTRIC EQUIPMENT P. LTD. VIKRAM ELECTRIC EQUIPMEN T P. LTD. WAS TO PROCURE 27 ACRES OF LAND FOR THE ASSESSEE, FAILI NG WHICH, NO PAYMENT WAS TO BE MADE BY THE ASSESSEE TO VIKRAM EL ECTRIC EQUIPMENT P. LTD. 9.2. THIS CLEARLY SHOWS THAT VIKRAM ELECTRIC EQUIPM ENT P. LTD. WAS TRANSACTING ON A PRINCIPLE TO PRINCIPLE BASIS AND I T CANNOT BE SAID THAT THE PAYMENT WAS MADE BY THE ASSESSEE TO VIKRAM ELECTRIC EQUIPMENT P. LTD. FOR RENDERING OF ANY SERVICE. THE PROVISIONS OF SEC. 194H OF THE ACT ARE, THEREFORE, NOT AT ALL APP LICABLE. 9.3. MOREOVER, THE AMOUNT PAID TO VIKRAM ELECTRIC E QUIPMENT P. LTD. WAS DULY REFLECTED BY THE ASSESSEE IN THE PURC HASES CLOSING STOCK. NO SALES HAD BEEN MADE DURING THE YEAR UNDER CONSIDERATION. IT HAS NOT BEEN SHOWN TO BE OTHERWIS E. IN SUCH A SCENARIO, IN OUR CONSIDERED OPINION, NO DISALLOWANC E IS CALLED FOR. 9.4. PERTINENTLY, NO ADDITION HAVING BEEN MADE FOR THE YEAR BY THE ASSESSING OFFICER, THE ALTERNATE CONTENTION OF THE ASSESSEE TO THE ITA NO.2122/DEL/2014 13 EFFECT THAT NO ADDITION CAN BE MADE DURING THE YEAR , STANDS ACCEPTED BY BOTH THE AUTHORITIES BELOW. 9.5. THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT IN ANY CASE DO NOT APPLY, THE ASSESSEE HAVING NOT CLAIMED ANY DEDU CTION FOR ANY EXPENSES ON ACCOUNT OF PAYMENT TO VIKRAM ELECTRIC E QUIPMENT P. LTD. EITHER IN ITS PROFIT AND LOSS ACCOUNT OR IN TH E COMPUTATION OF TAXABLE INCOME FILED. IT WAS ONLY THAT THE ASSESSIN G OFFICER RECORDED A LOSS OF RS. 19,700/-. THIS OBVIOUSLY, DI D NOT INCLUDE ANY ADDITION OF EITHER RS. 4.02 CRORES OR RS. 1.24 CROR ES. 9.6. IN VIEW OF THE ABOVE DISCUSSIONS, THE GRIEVANC E OF THE ASSESSEE IS FOUND TO BE CORRECT AND IS ACCEPTED AS SUCH. CON SISTENT WITH THE VIEW TAKEN THEREIN, AS IT IS UNDISPUTED THAT THE FA CTS ARE IDENTICAL, WE ALLOW THIS APPEAL OF THE ASSESSEE. THE GROUNDS R AISED BY THE ASSESSEE STANDS ALLOWED. 6. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES O F THE CASE, WE FIND THAT LD. CIT(A) BY RELYING UPON THE HONBLE SUPREME COU RT OF INDIA DECISION IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD. HAS OBSERVED THAT THE ASSESSEE HAD GIVEN AN EXPLANATION, WHICH IS BONAFI DE. THERE IS NO FURNISHING OF INACCURATE PARTICULARS OF INCOME OR DELIBERATE ATT EMPT TO CONCEAL INCOME, HENCE, HE RIGHTLY DELETED THE PENALTY IN DISPUTE. EVEN OT HERWISE, WE NOTE THAT THE ADDITION ON WHICH THE PENALTY IN DISPUTE WAS LEVIED , HAS ALREADY BEEN DELETED BY THE ITAT VIDE ORDER DATED 11.2.2016 IN ITA NO. 1 949/DEL/2011 (2007-08), AS AFORESAID, HENCE, THE PENALTY IN DISPUTE WILL NOT SURVIVE. IN VIEW OF THE ITA NO.2122/DEL/2014 14 ABOVE, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DI SMISS THE APPEAL FILED BY THE REVENUE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/09/2016. SD/- SD/- [O.P. KANT] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 05/09/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY OR DER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES