Poonam Promoters and Developers Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 4082/DEL/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0152 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 24-06-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 02-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V S RASTOGI
• Assessee Lawyers: VIVEK WADEKAR
• Keywords: Loose papers; Document seized; Deemed dividend; Commercial expediency; Documents seized
• Section: 40A(3); 37(1); 37

Judgement Text

ITA 4064, 1590/DEL/2013 1763 & 4082/DEL/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER ITA NO.4064/DEL/2013 ASSTT.YEAR: 2006-07 ITA NO.1590/DEL/2013 ASSTT.YEAR: 2006-07 ACIT, CENTRAL CIRCLE-23, VS POONAM PR OMOTERS & DEVELOPERS (P) LTD., E-2, ARA CENTRE, M-11, MIDDLE CIRCLE, CO NNAUGHT CIRCUS, JHANDEWALAN EXTENSION, NEW DELHI-110001 NEW DELHI-110055 ITA NO.1763/DEL/2013 ASSTT.YEAR: 2006-07 ITA NO.4082/DEL/2013 ASSTT.YEAR: 2006-07 POONAM PROMOTERS & DEVELOPERS (P) LTD., VS ACI T, CC-23, NEW DELHI. NEW DELHI. (PAN NO. AAACP6882G) (APPELLANT) ( RESPONDENT) APPELLANT BY: SHRI VIVEK WADEKAR, CIT(DR) RESPONDENT BY: SHRI V. S. RASTOGI CA DATE OF HEARING: 24.06.2015 DATE OF PRONOUNCEMENT: 30.6.2015 O R D E R PER C.M. GARG, JUDICIAL MEMBER THESE APPEALS HAVE BEEN PREFERRED AGAINST THE ORDE R OF THE CIT(A)- XXXIII, NEW DELHI DATED 28.03.2012 IN APPEAL NO.508 /09-10/297 FOR AY 2006-07. ITA 4064, 1590/DEL/2013 1763 & 4082/DEL/2013 2 2. IN APPEAL NO. 4082/D/2013, THE ASSESSEE HAS RAIS ED AS MANY AS THREE GROUNDS BUT THE LD. COUNSEL OF THE ASSESSEE SUBMITT ED THAT THE ASSESSEE DOES NOT WANT TO PRESS GROUND NO. 2 & 3, THEREFORE, THE SAME ARE DISMISSED AS NOT PRESSED. REMAINING GROUNDS OF ASSESSEE READ AS UND ER:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN UPHOLDING MADE THE DISALLO WANCE U/S 40A(3) OF RS.13,45,626/-. 1.1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN CONFIRMING THE AFORESAID DISALL OWANCE DESPITE THAT NO DEDUCTION IN RESPECT THEREOF WAS CL AIMED BY THE APPELLANT. 1.2 THAT EVEN ON MERIT THE DISALLOWANCE WAS NOT JU STIFIED. 3. APROPOS THESE GROUNDS, LD. COUNSEL OF THE ASSESS EE SUBMITTED THAT A SIMILAR DISALLOWANCE WAS MADE BY THE AO IN THE CASE OF WESTLAND DEVELOPERS PVT. LTD. (A GROUP COMPANY OF THE ASSESSEE) AND WAS CONFIRMED BY THE CIT(A). LD. COUNSEL FURTHER CONTENDED THAT IN THE ASSESSEE S APPEAL, THE TRIBUNAL DEALT WITH THE MATTER AT LENGTH AND CONCLUDED THUS IN PAR A 10.10 ON PAGE 29 OF ASSESSES PAPER BOOK. THE RELEVANT OPERATIVE PART OF THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S WESTLAND DEVELOPERS FOR AY 2006-07 DATED 22.8.2014 READS AS UNDER:- 10.10. WE HAVE ALSO TAKEN OURSELVES THROUGH THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT IN THE C ASE OF CIT VS INDUSTRIAL ENGINEERING PROJECTS PVT. LTD. (CITED SU PRA) WHICH HAS BEEN RELIED UPON BEFORE US FOR THE PROPOSITION THAT REIMBURSEMENT OF EXPENSES CANNOT BE TREATED TO BE A REVENUE RECEIPT. HOW THE JUDGEMENT OF THE APEX COURT IN TUT ICORIN ALKALI CHEMICALS & FERTILIZERS IS APPLICABLE TO THE FACTS OF THE PRESENT CASE HAS NOT BEEN SET OUT IN THE ORDER OF THE AUTHO RITIES NOR HAS ITA 4064, 1590/DEL/2013 1763 & 4082/DEL/2013 3 THE LD. DR BEEN ABLE TO ADDRESS THE APPLICABILITY O F THE SAID JUDGEMENT TO THE ISSUE AT HAND. WE HAVE TAKEN OURSE LVES THROUGH THE SAID JUDGEMENT AND SEEN THAT IT PROCEEDS ON ENT IRETY DIFFERENT FACTS AND CIRCUMSTANCES AND HAS NO APPLICABILITY TO THE FACTS OF THE PRESENT CASE. CONSEQUENTLY, IT IS SEEN THAT FRO M THE RATIO OF THE JUDGEMENTS RELIED UPON BEFORE THE CIT(A) AND AL SO BEFORE US WHICH HAVE BEEN DISCUSSED IN THE EARLIER PART OF TH IS ORDER NO ARGUMENTS HAVE BEEN ADVANCED BY THE REVENUE SO AS T O CONTEND HOW THEY ARE NOT APPLICABLE TO THE CASE AT HAND, NO DISTINGUISHING FACT, CIRCUMSTANCE OR POSITION OF LA W HAS BEEN RELIED UPON SO AS TO COME TO A CONTRARY FINDING THA N THE ONE ARRIVED AT. ACCORDINGLY ON A CONSIDERATION OF THE P ECULIAR FACTS AND CIRCUMSTANCES OF THE CASE AND THE JUDGEMENTS RE LIED UPON CONSIDERING THE RELEVANT PROVISION OF THE ACT NAMEL Y SECTION 40A(3), WE HOLD FOR THE DETAILED REASONS GIVEN HERE INABOVE THAT SECTION 40A(3) OF THE ACT HAS BEEN WRONGLY INVOKED AS ADMITTEDLY NO EXPENSES RELATABLE TO THE ADDITION HA S BEEN CLAIMED AND THE ASSESSEE HAS SUCCESSFULLY DEMONSTRA TED THAT THE PAYMENT WERE REIMBURSEMENT MADE BY CWPPL. ACCORDING LY GROUND NO-4 IS ALLOWED. 4. IN VIEW OF ABOVE, WE ARE INCLINED TO HOLD THAT I N SIMILAR SET OF FACTS AND CIRCUMSTANCES, THE TRIBUNAL IN THE CASE OF ASSESSEE S GROUP COMPANY M/S WESTLAND DEVELOPERS PVT. LTD. CATEGORICALLY HELD TH AT THE ASSESSEE SUBMITTED DETAILED REASONS TO DEMOLISH INVOCATION OF SECTION 40A(3) OF THE ACT AND ADMITTEDLY NO EXPENSES RELATABLE TO THE ADDITION HA VE BEEN CLAIMED AND THE ASSESSEE HAS SUCCESSFULLY DEMONSTRATED THAT THE PAY MENTS WERE REIMBURSEMENT MADE BY CWPPL, THEREFORE, THERE WAS NO OCCASION TO INVOKE SECTION 40A(3) OF THE ACT. RESPECTFULLY FOLLOWING THE CONCLUSION OF THE TRIBUNAL IN THE CASE OF M/S WESTLAND DEVELOPERS PVT. LTD. (SUPRA) IN THE SI MILAR SET OF FACTS AND CIRCUMSTANCES, WE HOLD THAT THE AO WRONGLY MADE IMP UGNED DISALLOWANCE OF RS.13,45,626 WHICH WAS UPHELD BY THE CIT(A) ON WRON G ASSUMPTION OF FACTS ITA 4064, 1590/DEL/2013 1763 & 4082/DEL/2013 4 AND CIRCUMSTANCES. HENCE, ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT(A) U/S 40A(3) OF THE ACT IS NOT FOUND TO BE SUS TAINABLE AND WE DISMISS THE SAME. ACCORDINGLY, GROUND NO. 1 TO 1.2 ARE HEREBY ALLOWED. 5. IN ITA NO. 4064/DEL/2013, THE REVENUE HAS RAISED SOLE GROUND WHICH READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.16, 85,489/- MADE BY THE AO IN VIEW OF THE PROVISIONS OF SECTION 2(22 )(E) OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF DEEMED DIVIDEND. 6. APROPOS AFOREMENTIONED GROUND OF THE REVENUE, LD . DR SUBMITTED THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.16, 85,489/- MADE BY THE AO IN VIEW OF THE PROVISIONS OF SECTION 2(22)(E) OF THE I NCOME TAX ACT, 1961 ON ACCOUNT OF DEEMED DIVIDEND. LD. DR SUBMITTED THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO ON THIS IS SUE. LD. COUNSEL OF THE ASSESSEE SUPPORTING THE IMPUGNED ORDER SUBMITTED TH AT TO INVOKE PROVISIONS OF SECTION 2(22)(E) OF THE ACT, IT IS MANDATORY FOR TH E AO TO ESTABLISH THAT THE ASSESSEE IS A REGISTERED SHAREHOLDER OF PAYER COMPA NY, THEN THE IMPUGNED AMOUNT CANNOT BE TAXED IN THE HANDS OF THE ASSESSEE U/S 2(22)(E) OF THE ACT. LD. COUNSEL PLACED RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF ANKITECH (P) LTD. (2011) 1 1 TAXMAN.COM 100 (DELHI) AND SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THIS JUDGEMENT OF HONBLE HIGH COURT. ITA 4064, 1590/DEL/2013 1763 & 4082/DEL/2013 5 7. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, W E NOTE THAT THE CIT(A) GRANTED RELIEF TO THE ASSESSEE WITH FOLLOWING OBSER VATIONS AND CONCLUSION:- THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF CI T VS. ANKITECH (P) LTD. [20 11] 11TAXMAN.COM 100 (DELHI) HAS HELD AS UNDER IN PARA 25 OF THE JUDGMENT. 'FURTHER, IT I S AN ADMITTED CASE THAT UNDER NORMAL CIRCUMSTANCES, SUCH A LOAN O R ADVANCE GIVEN TO THE SHAREHOLDERS OR TO A CONCERN, WOULD NO T QUALIFY AS DIVIDEND. IT HAS BEEN MADE SO BY LEGAL FICTION CREA TED UNDER SECTION 2(22) (E) OF THE ACT. WE HAVE TO KEEP IN MI ND THAT THIS LEGAL PROVISION RELATES TO 'DIVIDEND'. THUS BY A DE EMING PROVISION, IT IS THE DEFINITION OF DIVIDEND WHICH I S ENLARGED. LEGAL FICTION DOES NOT EXTEND TO SHAREHOLDER'. WHE N WE KEEP IN MIND THIS ASPECT, THE CONCLUSION WOULD BE OBVIOUS, VIZ, LOAN OR ADVANCE GIVEN UNDER THE CONDITIONS SPECIFIED UNDER SECTION 2(22) (E) OF THE ACT WOULD ALSO BE TREATED AS DIVID END. THE FICTION HAS TO STOP HERE AND IS NOT TO BE EXTENDED FURTHER FOR BROADENING THE CONCEPT OF SHAREHOLDERS BY WAY LEGAL FICTION. IT IS A COMMON USE THAT ANY COMPANY IS SUPPOSED TO DIS TRIBUTE THE PROFITS IN THE FORM OF DIVIDEND TO ITS SHAREHOLDER /MEMBERS AND SUCH DIVIDEND CANNOT BE GIVEN TO NON- MEMBERS. THE SECOND CATEGORY SPECIFIED UNDER SECTION 2(22) (E) OF THE A CT. VIZ, A CONCERN (LIKE THE ASSESSEE HEREIN), WHICH IS GIVEN THE LOAN OR ADVANCE IS ADMITTEDLY NOT A SHAREHOLDER/MEMBER OF T HE PAYER COMPANY. THEREFORE, UNDER NO CIRCUMSTANCE, IT COULD BE TREATED AS SHAREHOLDER/MEMBER RECEIVING DIVIDEND. IF THE IN TENTION OF THE LEGISLATURE AS TO TAX SUCH LOAN OR ADVANCE AS D EEMED DIVIDEND AT THE HANDS OF DEEMING SHAREHOLDER' THEN THE LEGISLATURE WOULD HAVE INSERTED DEEMING PROVISION I N RESPECT OF SHAREHOLDER AS WELL, THAT HAS NOT HAPPENED. MOST OF THE ARGUMENTS OF THE LEARNED COUNSELS FOR THE REVENUE W OULD STAND ANSWERED, ONCE WE LOOK INTO THE MATTER FROM THIS PE RSPECTIVE'. IN PARE NO. 28; THE HON'BLE HIGH COURT HAS OBSERVED THAT 'INSOFAR AS RELIANCE UPON CIRCULAR NO. 495 DATED 22 -09-1997 ISSUED BY CENTRAL BOARD OF DIRECT TAXES IS CONCERNE D, WE ARE INCLINED TO AGREE WITH THE OBSERVATIONS OF THE MUMB AI BENCH DECISION IN BHAUMIK COLOUR (P) LTD'S CASE (SUPRA) T HAT SUCH OBSERVATIONS ARE NOT BINDING ON THE COURTS. ONCE IT IS FOUND THAT SUCH LOAN OR ADVANCE CANNOT BE TREATED AS DEEM ED DIVIDEND AT THE HANDS OF SUCH CONCERNS WHICH IS NOT A SHAREH OLDER, AND THAT AFFORDING TO US IS THE CORRECT LEGAL POSITION, SUCH A CIRCULAR ITA 4064, 1590/DEL/2013 1763 & 4082/DEL/2013 6 WOULD BE OF NO AVAIL. FURTHER, IN PARA NO. 30, THE HON'BLE HIGH COURT HAS OBSERVED THAT 'BEFORE WE PART WITH, SOME COMMENTS ARE TO BE NECESSARILY MADE BY US. AS POINT ED OUT ABOVE, IT IS NOT IN DISPUTE THAT THE CONDITIONS STI PULATED IN SECTION 2(22) (E) OF THE ACT TREATING THE LOAN AND ADVANCE AS DEEMED DIVIDEND ARE ESTABLISHED IN THESE CASES. THE REFORE, IT WOULD ALWAYS BE OPEN TO THE REVENUE TO TAKE CORRECT IVE MEASURE BY TREATING THIS DIVIDEND INCOME AT THE HANDS OF TH E SHAREHOLDERS AND TAX THEM ACCORDINGLY. AS OTHERWISE , IT WOULD AMOUNT TO ESCAPEMENT OF INCOME AT THE HANDS OF THOS E SHAREHOLDERS. ' THE HON'BLE DELHI HIGH COURT HAS FOLLOWED THE DECI SION IN THE CASE OF ANKITECH (SUPRA) IN THE FOLLOWING RECEN T JUDGMENT DATED 21.11.2011: I. CIT VS. NAVYUG PROMOTERS PVT. LTD. (2011) 16 TAXMANN.COM 292 (DELHI) 2. CIT VS. MCC MARKETING PVT. LTD. (2011 )16 TAXMANN.COM 411 (DELHI) THE GIST OF THE ABOVE JUDGMENT IS THAT DEEMED DIVID END U/S 2(22) (E) CAN BE TAXED ONLY IN THE HANDS OF THE PER SON WHO IS A SHAREHOLDER/MEMBER OF THE, PAYER COMPANY. 3.7 RESPECTIVELY FOLLOWING THE DECISIONS OF THE JURISDICTIONAL HIGH COURT CITED SUPRA, IT IS HELD T HAT THE AMOUNT OF RS. 16, 85,489/- IS NOT TAXABLE AS DEEMED DIVIDE ND IN THE HANDS OF THE APPELLANT U/S 2(22) (E) AS THE APPELLANT IS NOT A SHAREHOLDER OR MEMBER OF M/S PAYOR COMPANIES. THERE FORE THIS GROUND IS ALLOWED AND THE SAID ADDITION IS DELETED. 8. IN VIEW OF ABOVE, WE NOTE THAT IN THE PRESENT CA SE, THE AO COULD NOT BRING ANY ALLEGATION AGAINST THE ASSESSEE THAT THE ASESSE E IS A SHAREHOLDER/MEMBER OF M/S PAYOR COMPANIES, THEREFORE, PROVISIONS OF SECTI ON 2(22)(E) OF THE ACT CANNOT BE INVOKED AND THE AO WAS NOT CORRECT IN MAK ING IMPUGNED ADDITION AND THE SAME WAS RIGHTLY DELETED BY THE CIT(A) FOLLOWIN G THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF C IT VS ANKITECH (SUPRA). ITA 4064, 1590/DEL/2013 1763 & 4082/DEL/2013 7 9. THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE A SSESSEE BY THE JUDGMENT OF HONBLE HIGH COURT OF DELHI AND WE ARE UNABLE TO SE E ANY INFIRMITY OR ANY OTHER VALID REASON TO INTERFERE WITH THE IMPUGNED ORDER A ND WE UPHOLD THE SAME. ACCORDINGLY, SOLE GROUND OF THE REVENUE BEING DEVOI D OF MERITS IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED AND APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 1763/D/2013 & 1590/D/2013 11. LD. COUNSEL OF THE ASSESSEE IN ASSESSEES APPEA L NO. 1763/DEL/2013 SUBMITTED THAT THE ASSESSEE DOES NOT WANT TO PRESS GROUND NO. 1, 2, 2.1. 4, 5, 6 AND 7 AND THE SAME ARE DISMISSED AS NOT PRESSED. 12. LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED T HAT THE ASSESSEE ALSO DOES NOT WANT TO PRESS GROUND NO. 3, 3.1 AND 3.2 AS THE CIT(A) HAS GRANTED RELIEF FOR THE ASSESSEE ON THIS ISSUE AGAINST WHICH THE REVENU E HAS FILED APPEAL IN ITA NO.1590/DEL/2013. THEREFORE, THE ASSESSEES GROUND NO. 3, 3.1 & 3.2 ARE ALSO DISMISSED AS NOT PRESSED. FINALLY, ITA NO. 1763/DE L/DEL/2013 OF THE ASSESSEE IS DISMISSED AS NOT PRESSED. REVENUES APPEAL IN ITA NO. 1590/DEL/2013 13. THE MAIN GROUNDS RAISED BY THE REVENUE IN THIS APPEAL READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 25 ,69,253/-, ITA 4064, 1590/DEL/2013 1763 & 4082/DEL/2013 8 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTERES T ON PDCS PAID OUT OF BOOKS OF ACCOUNT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1, 60,32,683/- MADE BY THE ASSESSING OFFICER IN VIEW OF THE PROVIS IONS OF SECTION 37(1) OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF ADD ITIONAL PAYMENT IN VIOLATION OF STAMP DUTY ACT, 1899. GROUND NO. 1 OF THE REVENUE 14. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND C AREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. AT THE VERY OU TSET, LD. COUNSEL OF THE ASSESSEE HAS DRAWN OUR ATTENTION TOWARDS ORDER OF T HE ITAT DELHI C BENCH DATED 9.1.2015 IN ITA NO. 2542/DEL/2013 FOR AY 200 8-09 IN THE CASE OF ACIT VS M/S PRECISION INFRASTRUCTURE PVT. LTD. AND SUBMI TTED THAT IN SIMILAR SET OF FACTS AND CIRCUMSTANCES IN THE CASE OF GROUP COMPANY OF T HE ASSESSEE, THE ISSUE OF POST DATED CHEQUES (PDC) WAS DECIDED IN FAVOUR OF T HE ASSESSEE, THEREFORE, THE ISSUE IS SQUARELY COVERED AND CIT(A) WAS RIGHT IN G RANTING RELIEF FOR THE ASSESSEE. LD. DR STRONGLY SUPPORTED THE ASSESSMENT ORDER AND THE OBSERVATIONS MADE BY THE AO. HOWEVER, LD. DR COULD NOT SHOW US ANY ORDER OR OTHER FACTS TO SHOW THAT THE ORDER OF THE TRIBUNAL (SUPRA) IN THE CASE OF PRECISION INFRASTRUCTURE PVT. LTD. HAS BEEN MODIFIED OR SET ASIDE. 15. FROM THE ORDER OF THE CIT(A), WE OBSERVE THAT T HE CIT(A) GRANTED RELIEF FOR THE ASSESSEE WITH FOLLOWING CONCLUSION:- LEARNED AR HAS BEEN MAINTAINING ALL ALONG THAT INT EREST IS NOT PAID AS ALL THE RECEIPTS ARE ONLY MEMORANDUM ONLY. ANALYSIS OF THESE ABOVE SEIZED DOCUMENT REVEALS THA T THESE SEIZED ITA 4064, 1590/DEL/2013 1763 & 4082/DEL/2013 9 DOCUMENTS DEFINITELY PROVES THAT INTEREST IS PAID O N PDCS. VARIOUS VOUCHER IN SEIZED DOCUMENTS CONCLUSIVELY PR OVES THAT THE RECIPIENT HAS SIGNED ON VOUCHER FOR RECEIPT OF THE INTEREST. LD AR'S CONTENTION THAT THESE ARE ONLY WORKING OF INTE REST CLAIMED BY SELLER FOR PUTTING UP BEFORE SENIOR MANAGEMENT D OES NOT APPEAR TO BE CONVINCING. IN CASE OF CLAIM, THE RECE IVER WILL NOT SIGN THE VOUCHER AS RECIPIENT. AMOUNTS ARE SPECIFIC AND CALCULATION IS 15% PER ANNUM. THEREFORE, LD AR WITH OUT CONCEDING THAT THE INTEREST IS PAID ON ROES HAS TAK EN THE STAND THAT IN NONE OF THE SEIZED MATERIAL, I.E. EVEN IN R ECEIPT SEIZED, THE INTEREST IS FROM DATE OF ISSUE OF PDCS. NOW ISSUE A RISES WHETHER INTEREST ON PDCS ARE PAID FROM DATE OF ISSUE OR FOR EXTENSION OF PDCS. DOCUMENTS DISCUSSED ABOVE WHERE THERE IS CLE AR EVIDENCE OF RECEIPT OF INTER T IS FOR EXTENSION OF PERIOD OF PDCS. LD. AR'S ARGUMENTS THAT CALCULATION OF INTEREST ON PDCS HAS BEEN CONSIDERED WHILE ENTERING INTO AGREEMENT HOLD S SOME LOGIC. BUT WHEN DATES OF PDCS ARE EXTENDED, THE RECIPIENT WILL DEFINITELY ASK AND SETTLE FOR SOME ADDITIONAL COMPE NSATION IN FORM OF INTEREST. THERE IS NO EVIDENCE WHICH PROVES THAT INTEREST IS PAID FROM THE DATE OF SALE TO DATE OF ENCASHMEN T OF POST DATED CHEQUES. HOWEVER, THERE IS CONCRETE EVIDENCE IN FOR M OF SEIZED MATERIAL TO SHOW THAT INTEREST IS PAID AND RECEIVED BY SELLER ON THE EXTENSION OF PDC S AS DISCUSSED ABOVE WHILE ANA LYZING THE SEIZED DOCUMENT. THEREFORE, IN MY VIEW WHERE EVER T HE DATES OF PDCS ARE EXTENDED INTEREST IS PAID 15% PER ANNUM IN CASH OUT OF BOOK OF ACCOUNTS, WHICH ARE EVIDENT FROM SEIZED MAT ERIAL. THEREFORE, INTEREST ON PDCS TO THE EXTENT OF EXTENS ION PERIOD APPEARS TO QUITE REASONABLE AND LOGICAL. ACCORDINGL Y, INTEREST ON PDCS EITHER A SALE CONSIDERATION OR ADDITIONAL PAYM ENT MAY BE RECOMPUTED TO THE EXTENT OF EXTENDED PERIOD OF PDCS BY THE A.O. AND TO THAT EXTENT ADDITION IS CONFIRMED. THE ABOVE FORMULAE WILL APPLY TO ALL GROUP COMPANIES UNDER THE MANAGEMENT O F BPTP I.E.( M/S BPTP AND ASSOCIATE COMPANIES) INCLUDING T HE APPELLANT COMPANY AS EVIDENCE IS FOUND IN RESPECT OF VARIOUS COMPANIES OF BPTP AND SOME SEIZED PAPER COULD NOT BE RELATED TO SPECIFIC COMPANY. THEREFORE, IT IS PROPER TO APPLY THIS FORM ULA FOR ALL COMPANIES UNDER THE COMMON MANAGEMENT OF BPTP GROUP HEADED BY SHRI KABUL CHAWLA. ALL THESE COMPANIES AR E CLOSELY LINKED. SOME COMPANIES PURCHASE LAND AND TRANSFER THE SAME TO MI BPTP LTD, OR COUNTRYWIDE PROMOTER (P) LTD. FOR H OUSING OR COMMERCIAL PROJECTS ARE ULTIMATELY DEVELOPED AND SO LD BY M/S BPTP LTD AND COUNTRYWIDE PROMOTERS LTD. OR IN STRAY CASE BY SOME OTHER COMPANIES. ASSESSING OFFICER HAS APPLIED THE CASE OF ITA 4064, 1590/DEL/2013 1763 & 4082/DEL/2013 10 EUSUF ALI FOR APPLYING INTEREST ON PDCS FOR ALL COM PANIES OF BPTP GROUP FOR ALL ASSESSMENT YEAR UNDER CONSIDERAT ION. LD AR HAS TRIED TO DIFFERENTIATE THE ABOVE CITED CASE ON FACTS. IN MY VIEW, AS INTEREST PAYMENT ON EXTENSION OF PERIOD OF PDCS ARE ESTABLISHED ON NUMEROUS SEIZED DOCUMENT. A TREND IS ESTABLISHED FOR THE GROUP AS THE OVERALL MANAGEMENT IS CONTROLL ED BY ONE PERSON SHRI KABUL CHAWLA AND ACTIVITIES OF ALL COMP ANIES ARE INTERRELATED. IF IT IS NOT POSSIBLE TO WORK OUT THE EXTENSION OF PDCS IN EACH CASE THEN A.O. IS DIRECTED TO RECOMPUTE INTERE ST ON PO S AFTER IX MONTHS FROM DATE OF ISSUE OF PDCS I.E. DA TE OF SALE, AS SIX MONTHS IS TAKEN A REASONABLE PERIOD FOR GIVING PDCS A PER SALE DEED. THIS VIEW IS FORMED ON THE BASIS OF THE STATEMENT OF SH. CHHOTU RAM WHICH SAYS THAT NORMALLY PDCS ARE GIVEN FOR 8 TO 10 MONTHS. FURTHER LD AR HAS ALSO SUBMITTED FEW SA LE DEED IN RESPECT OF SOME OF SEIZED RECORD IN THE CASE OF RAM VATI BEERO ETC WHERE THE INTEREST WORKING IS MADE AFTER 9/ 15 MONT HS. TAKING THESE FACTS INTO CONSIDERATION. IT WOULD BE PROPER TO COMPUTE INTEREST AFTER 6 MONTHS FROM DATE OF SAL E ON CONSERVATIVE SIDE. ACCORDINGLY THIS GROUND IS PARTL Y ALLOWED. 16. FROM THE ORDER OF THE TRIBUNAL IN THE CASE OF P RECISION INFRASTRUCTURE PVT. LTD. (SUPRA), WE NOTE THAT THE SIMILAR ISSUE WAS DE CIDED IN FAVOUR OF THE ASSESSEE WITH FOLLOWING OBSERVATIONS AND CONCLUSION:- 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVA ILABLE ON THE RECORD. IT IS NOTICED THAT THE FACTS OF THE PRE SENT CASE ARE IDENTICAL TO THE FACTS INVOLVED IN THE CASE OF M/S IAG PROMOTERS AND DEVELOPERS PVT. LTD. (SUPRA). THE SAI D COMPANY IS A SISTER CONCERNS OF THE ASSESSEE AND BE LONGED TO THE SAME GROUP COMPANIES OF BPTP GROUP TO WHICH THE ASSESSEE BELONGS. IN THE SAID CASE VIDE ORDER DATED 31.10.2014 THE ITAT BENCH C, NEW DELHI IN ITA NOS. 1674/DEL/ 2013 & 1765/DEL/2013 FOR THE ASSESSMENT YEAR 2008-09 OBSER VED IN PARA 5 AS UNDER: 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND PERUSED RELEVANT MATERIAL PLACED BEFORE US. AT THE OUTSET, THE GROUND RAISED BY THE REVENUE IS MISCONCEIVED BECAUS E LEARNED ITA 4064, 1590/DEL/2013 1763 & 4082/DEL/2013 11 CIT(A) HAS NOT DELETED THE ADDITION OF RS. 5,06,625 /- BUT HAS ONLY DIRECTED TO RECALCULATE THE INTEREST. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THE LEARNED CIT(A) AND ALSO TH E SUBMISSIONS OF BOTH THE PARTIES AND WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A). AFTER EXAMINING THE LOOSE PAPERS SEIZED AT THE TIME OF SEARCH AT THE ASSESSEE S PREMISES, IT WAS NOTICED THAT INTEREST IS PAID ON THE PDCS ONLY DURING THE PERIOD OF EXTENSION OF PDCS AND, THEREFORE, HE DIRE CTED THE ASSESSING OFFICER TO RECOMPUTE THE INTEREST ON PDCS AT THE TIME OF EXTENSION OF THE PDCS. HE HAS FURTHER OBSERVED T HAT IF IT IS NOT POSSIBLE TO WORK OUT THE EXTENSION OF PDCS IN E ACH CASE, THEN THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE INTEREST ON PDCS AFTER SIX MONTHS FROM THE DATE OF ISSUE OF THE PDCS. THEREFORE, THE GROUND OF APPEAL OF THE REVENUE THAT THE CIT(A) DELETED THE ADDITION OF RS. 5,06,625/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST ON PDCS IS FACTUALLY INCORRECT AND CONTRARY TO THE ORDER OF THE CIT(A). THE CIT(A) DIRECTED TO RECALCULATE THE INTEREST ON PDCS AND THERE WAS A SO UND LOGIC FOR SUCH DIRECTION. HIS DIRECTION IS BASED ON MATER IAL FOUND AND SEIZED AT THE TIME OF SEARCH. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF LE ARNED CIT(A) IN THIS REGARD AND ACCORDINGLY, WE REJECT GROUND NO. 1 OF THE REVENUES APPEAL 8. SINCE, THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE FACTS INVOLVED IN THE AFORESAID REFERRED TO THE CAS E. SO, RESPECTFULLY ITA NO. 2542/DEL/2013 PRECISION INFRAS TRUCTURE (P) LTD. 11 FOLLOWING THE ORDER DATED 31.10.2014 IN ITA NOS. 1674/DEL/2013 & 1765/DEL/2013 FOR THE ASSESSMENT YE AR 2008- 09 IN THE CASE OF SISTER CONCERN OF THE ASSESSEE VI Z. M/S IAG PROMOTERS AND DEVELOPERS PVT. LTD., WE DO NOT SEE A NY VALID GROUND TO INTERFERE WITH THE FINDINGS GIVEN BY THE LD. CIT(A) AND ACCORDINGLY DO NOT SEE MERIT IN THIS APPEAL OF THE DEPARTMENT. 17. IN VIEW OF ABOVE, WE OBSERVE THAT THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE QUITE SIMILAR TO THE FACTS INVOLVE D IN THE CASE OF PRECISION INFRASTRUCTURE PVT. LTD. (SUPRA), THEREFORE, RESPEC TFULLY FOLLOWING THE ORDER OF THE TRIBUNAL DATED 9.1.2015 IN THE CASE OF PRECISIO N INFRASTRUCTURE (SUPRA), WE ARE UNABLE TO SEE ANY INFIRMITY, PERVERSITY OR ANY OTHER VALID REASON TO INTERFERE ITA 4064, 1590/DEL/2013 1763 & 4082/DEL/2013 12 WITH THE CONCLUSION OF THE CIT(A) AND HENCE GROUND NO.1 OF THE REVENUE BEING DEVOID OF MERITS IS DISMISSED. GROUND NO. 2 18. APROPOS GROUND NO.2, WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CAREFULLY PERUSED THE MATERIAL PLACED ON RECORD. G ROUND NO.2 IS RELATED TO THE DISALLOWANCE AND ADDITION MADE BY THE AO OF RS.1,60 ,32,683 IN VIEW OF PROVISIONS OF SECTION 37(1) OF THE ACT ON ACCOUNT O F ADDITIONAL PAYMENT IN VIOLATION OF STAMP DUTY. LD. DR SUPPORTING THE IMP UGNED ORDER SUBMITTED THAT THE AO WAS RIGHT IN MAKING ADDITION IN THIS REGARD AS THE ADDITIONAL PAYMENT MADE TO THE FARMERS WAS A MADE UP AFFAIR AND THE PA YMENTS WERE NOT GENUINE AND THUS IT WAS INADMISSIBLE. LD. DR FURTHER CONTE NDED THAT THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE IMPUGNED ADDITION, THEREF ORE, THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. LD. COUN SEL OF THE ASSESSEE REPLIED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSE SSEE BY THE VARIOUS ORDERS OF THE TRIBUNAL INCLUDING RECENT JUDGMENT OF ITAT C BENCH DELHI IN THE CASE OF ACIT VS M/S ISG ESTATE PVT. LTD. IN ITA NO. 1756/D EL/2013 FOR AY 2006-07 DATED 23.1.2015. LD. COUNSEL VEHEMENTLY CONTENDED THAT THE AO MADE ADDITION WHICH WAS RIGHTLY DELETED BY THE CIT(A). ADDITIONA L PAYMENT MADE TO THE FARMERS WAS REQUIRED IN ORDER TO AVOID POTENTIAL DI SPUTE BETWEEN THE CLAIMANTS OF THE LAND HOLDING WHICH HAVE BEEN PASSED THROUGH THE LAND OWNERS FROM GENERATION TO GENERATION. LD. COUNSEL FURTHER POIN TED OUT THAT THE FACT REMAINS ITA 4064, 1590/DEL/2013 1763 & 4082/DEL/2013 13 THAT THERE IS NO DISPUTE AS THE EXPENDITURE WAS NOT CLAIMED AS AN EXPENSE BY THE ASSESSEE AND CONSEQUENTLY THE SAME WAS NOT ROUTED T HROUGH PROFIT & LOSS ACCOUNT, THEREFORE, THE DISALLOWANCE AND ADDITION M ADE BY THE AO IS NOT SUSTAINABLE. 19. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISS IONS OF BOTH THE SIDES, WE NOTE THAT IN SIMILAR SET OF FACTS AND CIRCUMSTANCES , ITAT DELHI BENCH IN THE CASE OF M/S ISG ESTATE PVT. LTD. (SUPRA), DECIDED THE IS SUE IN FAVOUR OF THE ASSESSEE WITH FOLLOWING OBSERVATIONS AND CONCLUSION:- 7. WITH REGARD TO GROUND NO. 4, 4.1, 4.2 & 4.3 RAI SED BY THE ASSESSEE. LD. COUNSEL OF THE ASSESSEE HAS SUBMI TTED THAT THE AO HAD MADE A DISALLOWANCE OF RS.20,09,701/- U/ S 37 ON ACCOUNT OF ADDITIONAL PAYMENTS FOR THE PURCHASE OF LAND. THE ASSESSEE HAD CHALLENGED BEFORE THE CIT(A) THAT THE DEDUCTION OF THE PURCHASE OF LAND HAVING NOT BEEN CLAIMED BY THE APPELLANT, NO DISALLOWANCE COULD BE MADE. THE CIT(A ) DID NOT ACCEPT THIS CONTENTION VIZ., THAT THE ASSESSEE HAVI NG NOT CLAIMED THE DEDUCTION NO DISALLOWANCE COULD BE MADE . HE HOWEVER, GAVE CERTAIN DIRECTIONS TO QUANTIFY THE DI SALLOWANCE TO BE MADE. AS PER THESE DIRECTIONS WHILE GIVING AP PEAL EFFECT THE ENTIRE CLAIM OF RS.20,09,701/- IS TO BE ALLOWED . 7.1 HE FURTHER SUBMITTED THAT THE CONTENTION IN GRO UND NO. 4 HOWEVER, IS THAT THE ASSESSEE HAVING NOT CLAI MED THE EXPENDITURE, THE SAME CANNOT BE DISALLOWED. SIMILAR DISALLOWANCE WAS MADE IN THE CASE OF WESTLAND DEVEL OPERS PVT. LTD FOR THE AY 2006-07 AND WAS PARTLY CONFIRME D BY THE CIT(A). THE HON'BLE TRIBUNAL VIDE ORDER REFERRED TO SUPRA DELETED THE ADDITION VIDE PARA 13 PASSED IN ITA NO.1752/DEL2/013 IN THE CASE OF WESTLAND DEVELOPERS PVT. LTD. VS. ACIT (PAGE 67 OF THE PAPER BOOK). COPY OF THE ITAT ORDER IS AT PAGE 34-68 OF THE PB. FOR THE SAKE OF C ONVENIENCE ITA NOS.1532 & 1756/DEL/2013 6 THE ISSUE RAISED IN GROUND NO. 3 AND FINDING OF THE TRIBUNAL IN PARA 13 OF THE SAID ORDER IS REPRODUCED AS UNDER:- ITA 4064, 1590/DEL/2013 1763 & 4082/DEL/2013 14 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. THE CASE LAW RELI ED UPON BY THE PARTIES HAS BEEN TAKEN INTO CONSIDERATION. ON A CONSIDERATION OF THE SAME WE ARE OF THE VIEW THAT S INCE IN THE FACTS OF THE PRESENT CASE THE MATERIAL ISSUE IS THA T THE SAID EXPENDITURE WAS NEVER CLAIMED AS ASSESSEE'S BUSINES S EXPENDITURE THE OCCASION TO MAKE A DISALLOWANCE OF THE SAME DOES NOT ARISE. ON THIS FACT THERE IS NO DISPUTE AS ADMITTEDLY THE EXPENDITURE WAS NOT CLAIMED AS AN EXPENSE BY TH E ASSESSEE AND CONSEQUENTLY HAS NOT BEEN ROUTED THROUGH ITS P& L A/C. IN THE CIRCUMSTANCES, THE OCCASION TO MAKE AN ADDITION OF THE SAME BY WAY OF A DISALLOWANCE IN THESE PECULIAR FAC TS AND CIRCUMSTANCES OF THE CASE DOES NOT ARISE. THE REASO NING AND FINDING GIVEN WHILE CONSIDERING THE ARGUMENTS QUA G ROUND NO-4 WOULD FULLY APPLY HERE ALSO. THE DIFFERENCE TH AT HERE THE ENTIRE AMOUNT IS ADDED U/S 37 AS OPPOSED TO PART OF THE EXPENDITURE DISALLOWED U/S 40A(3) IS NOT SO MATERIA L AS THE FINDING IS ARRIVED AT TAKING COGNIZANCE OF THE MATE RIAL FACT THAT HEREIN ALSO NO SUCH CLAIM OF EXPENDITURE HAS BEEN M ADE. THE FACT THAT THE ADDITIONAL PAYMENTS WERE WARRANTED IN ORDER TO AVOID POTENTIAL DISPUTES AMONGST THE CLAIMANTS OF T HE LAND HOLDING WHICH HAVE BEEN PASSED THROUGH TO THE LAND HOLDERS FROM GENERATION TO GENERATION WHEREIN THERE MAY BE INFORMAL ARRANGEMENTS OF OWNERSHIP AND OR THE PAYMENTS WERE FOR COMMERCIAL EXPEDIENCY TO FACILITATE PEACEFUL POSSES SION AND REGISTRATION OF THE LAND HOLDING; WHERE BY THE TIME REGISTRY WAS MADE THE LANDHOLDERS FELT A HIGHER PAYMENT WAS NECESSITATED DUE TO INCREASE IN VALUE ARE ISSUES WH ICH ARE NOT REQUIRED TO BE ADDRESSED IN THE PRESENT PROCEEDINGS . GROUND NO-3 ON THE FACTS AVAILABLE ON RECORD CONSIDERING T HE JUDICIAL PRECEDENT REFERRED TO IN DETAIL WHILE DECIDING GROU ND NO-4 HAS TO BE DECIDED IN FAVOUR OF THE ASSESSEE. 7.2 LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED T HAT SINCE THE FACTS IN THE PRESENT CASE ARE IDENTICAL T O THE FACTS IN THE CASE OF M/S WESTLAND DEVELOPERS PVT. LTD., HE P RAYED THAT NO DISALLOWANCE COULD BE MADE U/S. 37 AS NO EXPENDI TURE WAS CLAIMED AND GROUND NO. 4 MAY BE ALLOWED. 7.3 LD. COUNSEL OF THE ASSESEE FURTHER SUBMITTED TH AT ANOTHER CASE OF A GROUP COMPANY VIZ. M/S GLITZ BUIL DERS AND PROMOTERS PVT. LTD. SIMILAR DISALLOWANCE HAS BEEN D ELETED BY ITA 4064, 1590/DEL/2013 1763 & 4082/DEL/2013 15 THE ITAT VIDE ORDER DATED 2.12.2015 IN ITA NO. 1747/DEL/2013 VIDE PARA NO. 10. (COPY AT PAGES 138- 143). 8. LD. DR DID NOT HAVE ANY RAISED ANY OBJECTION TO THE AFORESAID PROPOSITION OF THE LD. COUNSEL OF THE ASS ESSEE. 9. WE HAVE HEARD THE BOTH PARTIES AND PERUSED THE RELEVANT RECORD AVAILABLE WITH US SPECIALLY THE IMP UGNED ORDER PASSED BY THE REVENUE AUTHORITIES; PAPER BOOK FILED BY THE ASSESSEE, WE FIND CONSIDERABLE COGENCY IN THE CONTE NTION OF THE LD. COUNSEL OF THE ASSESSEE THAT THE ISSUE RAISED I N GROUND NO. 4 IS SQUARELY COVERED BY THE ORDER DATED 22.8.2014 OF THE ITAT, DELHI H BENCH PASSED IN ITA NO. 1752/DEL/20 13 (A.Y. 2006-07) IN THE CASE OF M/S WESTLAND DEVELOPERS PVT . LTD., VS. ACIT WHEREIN THE TRIBUNAL HELD THAT GROUND NO. 3 O N THE FACTS AVAILABLE ON RECORD CONSIDERING THE JUDICIAL PRECEDENT REFERRED TO IN DETAIL WILE DECIDING GROUND NO. 4 HA S TO BE DECIDED IN FAVOR OF THE ASSESSEE. RESPECTFULLY FOL LOWING THE PRECEDENT AS AFORESAID, WE ALLOW THIS GROUND OF THE ASSESSEE. 20. IN VIEW OF ABOVE, RESPECTFULLY FOLLOWING THE OR DER OF THE TRIBUNAL (SUPRA), WE ARE INCLINED TO HOLD THAT THE CIT(A) WAS JUSTIFI ED IN GRANTING RELIEF TO THE ASSESSEE AND WE ARE UNABLE TO SEE ANY INFIRMITY, PE RVERSITY OR ANY OTHER VALID REASON TO INTERFERE IN THE ORDER OF THE CIT(A). AC CORDINGLY, GROUND NO. 2 IS DISMISSED. 21. IN THE RESULT, THE APPEALS OF THE REVENUE IN IT A NO. 1590/D/2013 & ITA NO. 4064/DEL/2013 ARE DISMISSED AND APPEAL OF THE A SSESSEE IN 1763/D/2013 IS DISMISSED AND APPEAL OF THE ASSESSEE IN ITA NO. 408 2/DEL/2013 IS PARTLY ALLOWED. ITA 4064, 1590/DEL/2013 1763 & 4082/DEL/2013 16 ORDER PRONOUNCED IN THE OPEN COURT ON 30.06.2015. SD/- SD/- (J.S. REDDY) (CHANDRAMOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 30TH JUNE 2015 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT. REGISTRAR