DCIT, New Delhi V. M/s. A.T. Properties Pvt. Ltd., New Delhi

ITA 3303/DEL/2013

• Counselvise Citation: 330320114 RSA 2013
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-11-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 24-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS ANURADHA MISRA
• Assessee Lawyers: RANU JA IN; A K AGGARWAL C AS
• Section: 40A(3)

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 A AA A : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV, ,, , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO. .. .3303/DEL/2013 3303/DEL/2013 3303/DEL/2013 3303/DEL/2013 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2005 2005 2005 2005- -- -06 0606 06 DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -1, 1,1, 1, NEW NEW NEW NEW DELHI. DELHI. DELHI. DELHI. VS. VS. VS. VS. M/S A.T. PROPERTIES PVT.LTD., M/S A.T. PROPERTIES PVT.LTD., M/S A.T. PROPERTIES PVT.LTD., M/S A.T. PROPERTIES PVT.LTD., N NN N- -- -49 (1 49 (1 49 (1 49 (1 ST STST ST FLOOR), FLOOR), FLOOR), FLOOR), CONNAUGHT PLACE, CONNAUGHT PLACE, CONNAUGHT PLACE, CONNAUGHT PLACE, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. PAN : AAECA6302Q. PAN : AAECA6302Q. PAN : AAECA6302Q. PAN : AAECA6302Q. (APPELLANT) (RESPONDENT) ITA NO ITA NO ITA NO ITA NO.3304/DEL/2013 .3304/DEL/2013 .3304/DEL/2013 .3304/DEL/2013 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2006 2006 2006 2006- -- -07 0707 07 DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIR CENTRAL CIR CENTRAL CIR CENTRAL CIRCLE CLECLE CLE- -- -1, 1,1, 1, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S AJAY AGGARWAL PROJECTS M/S AJAY AGGARWAL PROJECTS M/S AJAY AGGARWAL PROJECTS M/S AJAY AGGARWAL PROJECTS PVT.LTD., PVT.LTD., PVT.LTD., PVT.LTD., N NN N- -- -49 (1 49 (1 49 (1 49 (1 ST STST ST FLOOR), FLOOR), FLOOR), FLOOR), CONNAUGHT PLACE, CONNAUGHT PLACE, CONNAUGHT PLACE, CONNAUGHT PLACE, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. PAN : AAFCA1649D. PAN : AAFCA1649D. PAN : AAFCA1649D. PAN : AAFCA1649D. (APPELLANT) (RESPONDENT) REVENUE BY : MRS. ANURADHA MISRA, CIT-DR. ASSESSEES BY : SMT. RANU JAIN AND SHRI A.K. AGGARWAL, CAS. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-III, NEW DELHI DATED 28 TH MARCH, 2013 FOR THE AY 2005-06 & 2006-07. 2. IN BOTH THESE APPEALS, IDENTICAL GROUNDS HAVE BE EN RAISED WHICH READ AS UNDER:- ITA 3303 & 3304/D/2013 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE O F RS.14,43,280/- MADE BY THE ASSESSING OFFICER UNDER SECTION 40A(3) OF THE INCOME TAX ACT 1961, BEING 1/ 5 TH OF TOTAL EXPENDITURE OF RS.72,16,397/- INCURRED OTHERW ISE THAN BY CROSSED CHEQUE. 2. THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 3. THE FACTS IN BOTH THE CASES ARE SIMILAR. THEREF ORE, WE SHALL DISCUSS HEREIN BELOW THE FACTS RELATING TO M/S A.T. PROPERTIES PVT.LTD. THAT DURING THE ACCOUNTING YEAR RELEVANT TO ASSESSM ENT YEAR UNDER CONSIDERATION, THE ASSESSEE MADE THE PAYMENT OF ` 72,16,397/- IN CASH FOR PURCHASE OF LAND. SINCE THE ASSESSEE IS A BUIL DER AND A DEVELOPER, THE ABOVE LAND WAS SHOWN AS WORK IN PROGRESS. THE ASSESSING OFFICER DISALLOWED 1/5T OF THE ABOVE PAYMENT, I.E., ` 14,43,280/- UNDER SECTION 40A(3). ON APPEAL, LEARNED CIT(A) DELETED THE ADDI TION WITH THE FOLLOWING FINDING:- 6.2 AS REGARDS THE ISSUE OF DISALLOWANCE/ADDITION UNDER SECTION 40A(3) IS CONCERNED, IT IS SEEN FROM THE RE CORDS AND EVIDENCES AVAILABLE THAT UPTO THE ASSESSMENT YE AR 2005-06, CLOSING WORK IN PROGRESS OF LAND TO THE TU NE OF RS.24,70,27,553, HAS BEEN SHOWN WHICH COMPRISES OF OPENING WORK IN PROGRESS, PURCHASES AND DEVELOPMENT COST BUT NO AMOUNT HAS BEEN CLAIMED AS EXPENDITURE IN TH E YEAR UNDER CONSIDERATION. IT IS NOTICED THAT A SIMILAR ISSUE HAD ARISEN IN AP PELLANTS SISTER COMPANY CASE NAMELY VANSIDHAR PROJECTS P.LTD . IN ASSESSMENT YEAR 2007-08 AND MY PREDECESSOR VIDE HIS ORDER DATED 06.02.2012 HAD GIVEN A FINDING THAT :- PAYMENT MADE AS ADVANCES FOR PURCHASE OF LAND WHIC H DOES NOT FORM PART OF PROFIT AND LOSS ACCOUNT, WOUL D NOT QUALIFY FOR DISALLOWANCE WITHIN MEANING OF SECTION 40A(1) READ WITH 40A(3). THE DISALLOWANCE UNDER SECTION 40A(3) CAN BE MADE ONLY WHEN THE COST OF LAND IS DEBITED AS WORK-IN-PROGRES S/STOCK IN TRADE AND THE PROFIT AND LOSS ACCOUNT. ITA 3303 & 3304/D/2013 3 THE ABOVE VIEW OF THE CIT(A) WAS ALSO UPHELD BY ITA T VIDE THEIR ORDER DATED 07.12.2012, IN ITA NO.1973/DEL/20 12. 6.3 SINCE IN THE PRESENT CASE THE AMOUNT GIVEN FOR PURCHASE OF LAND DOES NOT FORM PART OF PROFIT & LOS S ACCOUNT AND THE SAME HAS NOT BEEN CLAIMED AS EXPENDITURE IN THE YEAR UNDER CONSIDERATION, THEREF ORE RELYING ON ITATS ORDER DELIVERED IN APPELLANTS SI STER CONCERN NAMELY VANSIDHAR PROJECTS P.LTD., I AM OF T HE CONSIDERED VIEW THAT THE PROVISIONS OF SECTION 40A( 3) WOULD NOT APPLY TO THE FACTS OF APPELLANTS CASE. HENCE THE ADDITION OF RS.14,43,280, MADE BY THE AO IN THE PRESENT CASE CANNOT BE ADDED AS INCOME NOW AT THIS POINT OF TIME AND THUS IT DESERVES TO BE DELETED. THE ON LY THING WHICH CAN BE DONE NOW IS THAT THE COST OF WORK-IN-P ROGRESS IS TO BE REDUCED BY THE SAME AMOUNT I.E. RS.14,43,2 80. SUBJECT TO THE ABOVE DIRECTIONS, THE ADDITION OF RS.14,43,280 IS DELETED FOLLOWING THE ITATS ORDER NO. ITA 1973/DEL/2012, DATED 07.12.2012 IN APPELLANTS GROU P CONCERN NAMELY VANSHIDHAR PROJECTS P.LTD. THE REVENUE, AGGRIEVED WITH THE ORDER OF LEARNED CI T(A), IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL PLACED BEFORE US. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SIDES AND THE FACTS OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A). THE LEARNED CIT(A) HAS NOT DISPUTED THE AP PLICABILITY OF SECTION 40A(3) IN RESPECT OF CASH PAYMENT MADE BY THE ASSES SEE. HOWEVER, ANY EXPENDITURE CAN BE DISALLOWED ONLY WHEN THE DED UCTION IN RESPECT OF SUCH EXPENDITURE IS CLAIMED BY THE ASSESSEE. IN THIS CASE, ADMITTEDLY, THE ASSESSEE HAS NOT CLAIMED THE EXPEND ITURE ON PURCHASE OF LAND BY DEBITING THE SAME TO THE PROFIT & LOSS A CCOUNT BUT THE EXPENDITURE FOR PURCHASE OF LAND HAS BEEN DEBITED T O WORK-IN-PROGRESS. THE CIT(A) HAS ALREADY DIRECTED THAT THE WORK-IN-PR OGRESS IS TO BE REDUCED BY THE DISALLOWANCE REQUIRED TO BE MADE UND ER SECTION 40A(3). IN OUR OPINION, THE DIRECTION OF THE CIT(A ) IS FULLY JUSTIFIED. WE, ITA 3303 & 3304/D/2013 4 THEREFORE, DO NOT FIND ANY JUSTIFICATION TO INTERFE RE WITH THE SAME. THE ORDER OF LEARNED CIT(A) IS SUSTAINED. 5. IN THE CASE OF AJAY AGGARWAL PROJECTS PVT.LTD. A LSO, THE FACTS AND THE ORDER OF THE CIT(A) ARE IDENTICAL. FOR THE DET AILED DISCUSSION IN PARAGRAPH 4 ABOVE, WE UPHOLD THE ORDER OF LEARNED C IT(A) IN THIS CASE. ACCORDINGLY, THE REVENUES APPEALS ARE DISMISSED. 6. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DI SMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 29 TH NOVEMBER, 2013. SD/- SD/- (RAJPAL YADAV (RAJPAL YADAV (RAJPAL YADAV (RAJPAL YADAV) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 29.11.2013 VK. COPY FORWARDED TO: - 1. APPELLANT : DEPUTY COMMISSIONER OF INCOME TA X, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -1, NEW DELHI. 1, NEW DELHI. 1, NEW DELHI. 1, NEW DELHI. 2. RESPONDENT : M/S A.T. PROPERTIES PVT.LTD. AND M/S A.T. PROPERTIES PVT.LTD. AND M/S A.T. PROPERTIES PVT.LTD. AND M/S A.T. PROPERTIES PVT.LTD. AND M/S AJAY AGGARWAL PROJECTS PVT.LTD., M/S AJAY AGGARWAL PROJECTS PVT.LTD., M/S AJAY AGGARWAL PROJECTS PVT.LTD., M/S AJAY AGGARWAL PROJECTS PVT.LTD., N NN N- -- -49 (1 49 (1 49 (1 49 (1 ST STST ST FLOOR), CONNAUGHT PLACE, FLOOR), CONNAUGHT PLACE, FLOOR), CONNAUGHT PLACE, FLOOR), CONNAUGHT PLACE, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR