ITO, New Delhi V. M/s. Philia Estate Developers Pvt. Ltd., New Delhi

ITA 2123/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7091 (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
• Keywords: Competent authority
• 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.2123/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 PHILIA ESTATE DEVELOPERS PRIVATE LIMITED, I-E, NAAZ CINEMA COMPLEX, JHANDEWALAN EXTN., NEW DELHI (PAN:AAECP2582R) (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.2123/DEL/2014 2 AMOUNTING RS. 12,53,072/- 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. 1950/DEL/2011 (AY 2007-08) VIDE ORDER DATED 28.4.2016. HE HAS ALSO FILED THE COPY OF THE SAID TRIBUNALS ORDER DATED 28.4.2016. 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. 5.4 ITA NO.2123/DEL/2014 3 TO 5.14 VIDE HIS ORDER DATED 21.1.2014. THE RELEVAN T PARAS NO. 5.4 TO 5.14 ARE REPRODUCED AS UNDER:- 5.4. 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 . 5.5. 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. 5.6. 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. 5.7. 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.2123/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. 5.8. 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. 5.9. 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. 5.10. 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. 5.11. IN THE MATTER OF PENALTY, IT IS SEEN THAT THE APPELLANT HAD FURNISHED ALL PARTICULARS IN RESPECT OF INCOME EARN ED AND ITA NO.2123/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. 5.12. 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. 5.13. 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. 5.14. 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.12,67, 580/- IS THEREFORE DELETED. THE GROUNDS OF APPEAL ARE RULED IN FAVOUR OF THE APPELLANT. ITA NO.2123/DEL/2014 6 5.1 EVEN OTHERWISE, WE NOTE THAT IN ASSESSEES OWN CASE IN ITA NO. 1950/DEL/2011 FOR A.Y. 2007-08 VIDE ORDER DATED 28. 4.2016, THE TRIBUNAL HAD ADJUDICATED THE ISSUE VIDE PARA NO. 3 TO 8 AT PAGES 3 TO 9 AND DELETED THE QUANTUM ADDITION IN THIS REGARD ALSO. THE RELEVA NT PORTION IS REPRODUCED AS UNDER:- 3. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND C AREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. LD. ASSESSEES REPRESENTATIVE (AR) CONTENDED THAT ON THE IDENTICAL SET OF FACTS AND CIRCUMSTANCES SIMILAR ISSUE HAS BEEN DECIDED IN FAV OUR OF THE ASSESSEE BY THE ITAT F BENCH IN ITA NO.1949/DEL/2 011 IN THE SIMILAR ASSTT. YEAR 2007-08 IN THE CASE OF PHILANA BUILDERS & DEVELOPERS P. LTD. VS. ITO ORDER DATED 11.2.2016. T HE LD. AR FURTHER CONTENDED THAT THE ASSESSEE AND PHILANA BUI LDERS & DEVELOPERS P. LTD. BELONG TO A SAME GROUP COMPANY A ND IN THE SIMILAR FACTS AND CIRCUMSTANCES ITAT H BENCH DELH I IN THE CASE OF ZEBINA REAL ESTATE P. LTD. VS. ITO IN ITA NO. 14 29/D/2011 AND 1430/D/2011 ORDER DATED 12.4.2013 THE TRIBUNAL HAS FOLLOWED THE ORDER DATED 5TH OCTOBER,2011 PASSED IN THE CASE OF M/S. FINIAN ESTATE DEVELOPERS P LTD. VS. ITO REPORTED IN 142 T TJ 545 (DEL) WHICH IS ALSO A GROUP COMPANY OF THE ASSESSEE GROUP . 4. LD. AR CONTENDED THAT EXCEPT AMOUNT OF ADDITION ALL FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE SIMILAR TO TH E CASE OF PHILANA BUILDERS & DEVELOPERS P LTD. VS ITO (SUPRA). THEREF ORE THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY TH E ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL. ITA NO.2123/DEL/2014 7 5. REPLYING TO THE ABOVE LD. DR STRONGLY SUPPORTED THE ACTION OF THE AO AS WELL AS THE FIRST APPELLATE ORDER BUT HE COULD NOT SHOW US ANY OTHER ORDER OF THE TRIBUNAL OR ANY OTHER HIGHER FORUM TO SHOW US THE ORDER OF THE ITAT DELHI BENCH F IN THE CAS E OF PHILANA BUILDERS & DEVELOPERS P LTD. VS. ITO (SUPRA) HAVE E ITHER BEEN MODIFIED OR SET ASIDE BY ANY COMPETENT AUTHORITY. L D. AR CONTENDED THAT THE CONSOLIDATOR WAS NOT WORKING AS AN AGENT OF THE ASSESSEE. THEREFORE THE ASSESSEE OUGHT TO HAVE DEDU CTED TDS ON THE AMOUNT PAID TO THE CONSOLIDATOR EITHER U/S 194C OR U/S 194H OF THE ACT. 6. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS FR OM THE ORDER OF THE TRIBUNAL IN THE CASE OF PHILANA BUILDERS & DEVE LOPERS P. LTD. DATED 11.2.2016 (SUPRA) WE OBSERVE THAT THE TRIBUNA L HAS GRANTED RELIEF TO THE ASSESSEE WITH FOLLOWING OBSERVATIONS AND CONCLUSION :- 7. THE LD. AR SUBMITS THAT ON IDENTICAL SET OF FA CTS, 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 F INIAN ESTATE DEVELOPERS P. LTD. ORDER DATED 5TH OCTOBER, 2011. W E FURTHER SUBMIT THAT THE H BENCH OF THE TRIBUNAL IN THE CA SE 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.2123/DEL/2014 8 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 AP PEAL IN THE CASE OF PANTHEA BUILDERS AND DEVELOPERS (SUPRA) IN ITA NO. 270/2005 BEFORE THE HONBLE JURISDICTIONAL HIGH COU RT. THE HONBLE HIGH COURT AT PARA 11 HAS OBSERVED THE FOLL OWING FACTS: 11. IN ITS ORDER DT. 5 TH OCTOBER, 2011, THE ITAT EXAMINED THE NATURE OF THE MOU BETWEEN FINIAN AND VEEPL WITH PAR TICULAR REFERENCE TO THE CLAUSES THEREIN AND CONCLUDED THAT FINIAN WAS TRANSACTING WITH VEEPL ON A PRINCIPAL 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 TERMS 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 ACR ES OF LAND. THE AMOUNT PAID TO VEEPL WAS DULY REFLECTED BY FINIAN I N ITS PURCHASES AND THE CLOSING STOCK AND NO SALES HAD BE EN MADE DURING THE YEAR IN QUESTION. THE PAYMENT OF 2% OF T HE SALE AMOUNT OF VEEPL AS CONSIDERATION FOR TRANSFERRING VEEPLS RIGHTS IN THE LAND WAS IN TERMS OF CLAUSE 3.2 OF THE MOU AND IT H AD NOT BEEN SHOWN THAT 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 THE I TAT 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 PURCHASING THE LAND FOR THE ITA NO.2123/DEL/2014 9 ACQUIRER IN THE PRESENT CASE OF ZREPL THE ACQUIRE R PAID FROM ITS OWN FUNDS. HOWEVER, LD. COUNSEL FOR THE REVENUE HAS BEEN UNABLE TO SHOW ANY DIFFERENCE IN THE ACTUAL CLAUSES OF THE MOU BETWEEN ZREPL AND VEEPL WHEN COMPARED TO THE MOU BETWEEN FI NIAN AND VEEPL. IN THE CIRCUMSTANCES, THE COURT IS UNABL E TO APPRECIATE ON WHAT BASIS IT COULD BE SAID THAT THE ARRANGEMENT BETWEEN ZREPL AND VEEPL WAS NOT ON A PRINCIPAL TO PRINCIPAL BASIS. WITH THE REVENUE HAVING ACCEPTED THE DECISIO N OF THE ITAT IN THE CASE OF ITO VS. FINIAN ESTATES DEVELOPERS P. LTD., AND WITH THERE BEING NOTHING TO DISTINGUISH IT IN RELATION T O THE CASE OF ZREPL, THE COURT IS NOT INCLINED TO INTERFERE WITH THE IMPUGNED ORDER OF THE ITAT WHICH, IN THE OPINION OF THE COUR T, HAS RIGHTLY 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 DOCUMENTS NOT ON LY IN THE CASE OF PBDPL BUT ALSO IN THE CASE OF FINIAN, 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 MA DE TO THE LATER PURSUANT THERETO. AGAIN, WITH THE REVENUE HAV ING ACCEPTED THE DECISION OF THE ITAT IN THE CASE OF FINIAN, AND WITH THE REVENUE BEING UNABLE TO BRING OUT ANY DISTINGUISHIN G FEATURE AS FAR AS THE CASE OF PBDPL, THE COURT SEES NO REASON WHY IT SHOULD INTERFERE WITH THE IMPUGNED ORDER OF THE ITAT. 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 ITA NO.2123/DEL/2014 10 NOT TOWARDS ANY SERVICES RENDERED. THE LD.AR SUBMIT TED THAT AS A CONSOLIDATOR, VIKRAM ELECTRIC EQUIPMENT P. LTD. WAS TO CONTACT THE LOCAL FARMERS IN AND AROUND GURGAON, WHO WERE WILLI NG 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 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. T HUS 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 ITA NO.2123/DEL/2014 11 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. 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 PROVIS IONS OF SECTION 194H OF THE ACT ARE APPLICABLE AND IT IS CORRECTLY APPLIED BY THE LD. CIT(A). ITA NO.2123/DEL/2014 12 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 AGE NT/NOMINEE ASSIGNING ITS RIGHT TO PURCHASE THE LAND IN FAVOUR OF THE BUYER COMPANY AND CAUSING THE LAND OWNERS TO EXECU TE THE SALE DEEDS DIRECTLY IN FAVOUR OF THE BUYER COMPANY, THE BUYER COMPANY SHALL PAY THE CONSOLIDATOR SUCH SUM A S MAY BE MUTUALLY AGREED. HOWEVER, IT IS SPECIFICALLY AGR EED BY THE CONSOLIDATOR THAT NO SUM SHALL ACCRUE TO IT ON THIS ACCOUNT TILL IT PROCURES 27 ACRES OF LAND FOR THE BUYER COM PANY (UNLESS THE BUYER COMPANY DECIDES TO PROCURE LESS T HAN 27 ACRES THROUGH THE CONSOLIDATOR) AND ALL THE ISSUES RELATING TO POSSESSION AND MUTATION OF SUCH LAND ARE SETTLED TO THE SATISFACTION OF THE BUYER COMPANY. 7. IN VIEW OF THE ABOVE IT IS AMPLY CLEAR THAT THE AMOUNTS PAID TO THE CONSOLIDATOR I.E. M/S. VIKRAM ELECTRIC CO. (P) LTD. WAS DULY ACCOUNTED BY THE ASSESSEE IN THE PURCHASES AND CLOS ING STOCK. UNDISPUTEDLY NO SALES HAVE BEEN MADE BY THE ASSESEE DURING THE PERIOD UNDER CONSIDERATION. IN VIEW OF ABOVE SCENAR IO AND FACTS WE CONCUR WITH THE CONCLUSION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF THE PHILANA BUILDERS & DEVELOPERS P. LTD. (SUPRA) AND HOLD THAT THE PROVISIONS OF SECTION 40(I)(IA) O F THE ACT DO NOT ITA NO.2123/DEL/2014 13 APPLY TO THE PRESENT CASE ON THE PAYMENTS MADE BY T HE ASSESSEE TO THE CONSOLIDATOR AS THE ASSESSEE HAS NOT CLAIMED AN Y DEDUCTION FOR PAYMENT AS AMOUNTED TO THE CONSOLIDATOR I.E PAYMENT MADE TO M/S. VIKRAM ELECTRIC CO. (P) LTD. EITHER IN THE PROFIT A ND LOSS ACCOUNT OR IN THE COMPUTATION OF THE TAXABLE INCOME FILED ALON GWITH THE RETURN OF INCOME. THUS, WE DECLINE TO ACCEPT CONTENTION OF THE LD. DR THAT THE PAYMENT MADE BY THE ASSESSEE TO THE CONSOLIDATO R ON PURCHASE OF LAND ATTRACTS THE TDS PROVISION OF SECTION 194C OR SECTION 194H OF THE ACT. HENCE, RESPECTFULLY FOLLOWING THE DECIS ION OF THE TRIBUNAL DATED 11.2.2016 (SUPRA) THE CONTENTION OF THE ASSESSEE ARE FOUND TO BE CORRECT AND ACCEPTABLE AS PER PROVISION S OF THE ACT AND WE CONCLUDE THAT THE PAYMENT TO THE CONSOLIDATO R DOES NOT ATTRACT TDS PROVISIONS AND THUS SOLE ISSUE, IN THE PRESENT APPEAL, OF THE ASSESSEE IS ALLOWED. 5.2 KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF 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 ITA NO.2123/DEL/2014 14 BY THE ITAT VIDE ORDER DATED 28.4.2016 IN ITA NO. 1 950/DEL/2011 (2007-08), AS AFORESAID, HENCE, THE PENALTY IN DISPUTE WILL NOT SURVIVE. IN VIEW OF THE ABOVE, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DI SMISS THE APPEAL FILED BY THE REVENUE. 6. 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