ITO, New Delhi V. M/s. Amar Gyan Developments Pvt. Ltd., New Delhi

ITA 6577/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2833 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 13-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 10-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Diversion of income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT ITA NO.6577/DEL/2015 ASSESSMENT YEAR : 2012-13 ITO, WARD 2(3), NEW DELHI. VS. AMAR GYAN DEVELOPMENTS PVT. LTD., 17-B, MGF HOUSE, ASAF ALI ROAD, NEW DELHI. PAN: AAFCA2818J ITA NO.6578/DEL/2015 ASSESSMENT YEAR : 2012-13 ITO, WARD 2(3), NEW DELHI.. VS. AMAR DEEP BUILDCON PVT. LTD., 17-B, MGF HOUSE, ASAF ALI ROAD, NEW DELHI. PAN: AAFCA2819K ASSESSEE BY : SHRI K. SAMPATH & SHRI V. RAJA KUMAR, ADVOCATES DEPTT. BY : SHRI AMIT JAIN, SR. DR DATE OF HEARING : 21.12.2017 DATE OF PRONOUNCEMENT : 21.12.2017 ITA NOS.6577 & 6578/DEL/2015 2 ORDER THESE APPEALS BY THE REVENUE PERTAINING TO TWO DIFF ERENT ASSESSEES RELATE TO THE ASSESSMENT YEAR 2012-13. SI NCE COMMON ISSUE IS RAISED IN BOTH THE APPEALS, I AM, THEREFOR E, PROCEEDING TO DISPOSE THEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.6577/DEL/2015 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAIN ST THE DELETION OF ADDITION OF RS.43,40,786/-. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE ENTERED INTO A COLLABORATION AGREEMENT WITH EMAAR MGF UNDER WHICH THE ASSESSEE WAS TO PROCURE LAND FOR AND ON BEHALF OF I TS PRINCIPAL, NAMELY, EMAAR MGF. THE LAND ACQUIRED BY THE ASSESSEE WAS T O BE REGISTERED IN ITS OWN NAME THOUGH UNDER THE SUPERVISION AND CO NTROL OF ITS PRINCIPAL. POSSESSION OF SUCH LAND WAS TO BE HANDE D OVER TO THE PRINCIPAL FOR DEVELOPMENT AND SALE THEREOF. NOTES T O ACCOUNT ATTACHED TO ITA NOS.6577 & 6578/DEL/2015 3 THE BALANCE SHEET FOR THE YEAR INDICATED THAT DURIN G THE YEAR, THE GOVERNMENT ACQUIRED 0.87 ACRE LAND WITH BOOK VALUE OF RS.42,87,471/-. COMPENSATION OF RS.86,28,257/- WAS AWARDED TO THE A SSESSEE. ON BEING CALLED UPON TO EXPLAIN AS TO WHY THE RESULTANT INCO ME WAS NOT SHOWN, THE ASSESSEE SUBMITTED THAT THE COMPENSATION RECEIVED W AS HANDED OVER TO THE PRINCIPAL AND PROFIT/GAIN ARISING THERE FROM WA S SHOWN BY ITS PRINCIPAL AS INCOME. UNCONVINCED, THE ASSESSING OF FICER ADDED PROFIT OF RS.43,40,786/- (RS.86,28,257/- MINUS RS.42,87,471/- ) TO THE ASSESSEES INCOME. THE LD. CIT(A) DELETED THE ADDITION. 4. HAVING HEARD BOTH THE SIDES AND PERUSED THE RELE VANT MATERIAL ON RECORD, IT IS SEEN THAT THE ASSESSEE ENTERED INTO A COLLABORATION AGREEMENT WITH EMAAR MGF UNDER WHICH IT WAS TO PROCURE LAND F OR AND ON BEHALF OF ITS PRINCIPAL. OUT OF SUCH ACQUIRED LAND , THE GOVERNMENT ACQUIRED 0.87 ACRE FROM WHICH INCOME OF RS.43.40 LA C RESULTED, WHICH HAS BEEN ADDED BY THE ASSESSING OFFICER. WHEN THE ASSESSEE WAS ACTING AS AN AGENT OF ITS PRINCIPAL IN ACQUIRING THE LAND FOR AND ON BEHALF OF EMAAR MGF, ANY INCOME FROM SUCH LAND HOLDING CANNOT BE SAID TO ITA NOS.6577 & 6578/DEL/2015 4 HAVE ACCRUED TO THE ASSESSEE AS THERE IS DIVERSION OF INCOME BY OVERRIDING TITLE. THE ASSESSEE CATEGORICALLY STATE D BEFORE THE ASSESSING OFFICER THAT THE AMOUNT OF COMPENSATION RECEIVED WA S HANDED OVER TO THE PRINCIPAL AND PROFIT/GAIN ARISING ON SUCH ACQUI SITION WAS SHOWN AS INCOME BY THE PRINCIPAL, WHICH HAS NOT BEEN CONTROV ERTED BY THE AO. IN VIEW OF THE FOREGOING DISCUSSION, IT IS CLEAR THAT THE INCOME WHICH ACCRUED OR AROSE TO EMAAR MGF CANNOT BE TAXED IN TH E HANDS OF ITS AGENT, NAMELY, THE ASSESSEE. I, THEREFORE, COUNTEN ANCE THE VIEW TAKEN BY THE LD. CIT(A). ITA NO.6578/DEL/2015 5. BOTH THE SIDES ARE AD IDEM THAT THE FACTS AND CIRCUMSTANCES OF GROUND NO.2, BEING, THE DELETION OF ADDITION OF RS .42,67,009/- ARE SIMILAR TO THOSE DISCUSSED ABOVE IN ITA NO.6577/DEL /2015. FOLLOWING THE VIEW TAKEN HEREINABOVE, I UPHOLD THE IMPUGNED O RDER ON THIS SCORE. 6. THE ONLY OTHER GROUND WHICH SURVIVES IN THIS APP EAL IS AGAINST THE DELETION OF ADDITION OF RS.13,94,189/- ON ACCOUNT O F DISALLOWANCE OF ITA NOS.6577 & 6578/DEL/2015 5 EXPENSES. THE ASSESSEE CLAIMED EXPENSES TO THE TUN E OF RS.15,80,478/- COMPRISING OF OFFICE MAINTENANCE AND RENT ETC. THE ASSESSING OFFICER DISALLOWED RS.13,94,189/- AS THE SAME, IN HIS OPINI ON, WAS NOT COMMENSURATE WITH THE FACT THAT NO EXPENDITURE ON A CCOUNT OF SALARY, ETC. WAS BOOKED. THE LD. CIT(A) DELETED THE ADDITI ON. 7. AFTER GOING THROUGH THE RELEVANT MATERIAL ON REC ORD, IT IS SEEN, AS AN ADMITTED POSITION THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF REAL ESTATE AND ENTERED INTO AN AGREEMENT WITH ITS PARENT COMPANY, NAMELY, EMAAR MGF LAND PVT. LTD. WHEN THE ASSESSEE WAS RUNNING ITS BUSINESS, IT WAS, BUT, NATURAL THAT THE EXPENSE S WERE BOUND TO BE INCURRED. THE ASSESSING OFFICER WENT ON TO MAKE TH E DISALLOWANCE OF EXPENSES IN AN ARBITRARY MANNER, WHICH ACTION RIGHT LY STOOD CORRECTED BY THE LD. CIT(A). I, THEREFORE, ACCORD IMPRIMATUR TO THE VIEW CANVASSED BY THE LD. CIT(A) ON THIS ISSUE. ITA NOS.6577 & 6578/DEL/2015 6 8. IN THE RESULT, BOTH THE APPEALS STAND DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.12.2017. SD/- [R.S. SYAL] VICE PRESIDENT DATED, 21 ST DECEMBER, 2017. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.