Asst.C.I.T., Bangalore V. M/s Maya Ventures Pvt. Ltd., Bangalore

ITA 840/BANG/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7524 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-07-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 02-06-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B R RAMESH
• Assessee Lawyers: R RAMAKRISHNAN
• Keywords: Business expenditure
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 840 /BANG/201 5 ASSESSMENT YEAR : 20 1 0 - 1 1 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -4(1)(2), BANGALORE. VS. M/S. MAYA VENTURES PVT. LTD., NO. 19 & 19/1, 3 RD FLOOR, SOUTH END ROAD, BASAVANAGUDI, BANGALORE 560 004. PAN: AAECM 1257G APPELLANT RESPONDENT ASSESSEE BY : SHRI R. RAMAKRISHNAN, CA REVENUE BY : SHRI B.R. RAMESH, JCIT ( DR) DATE OF HEARING : 20 .0 9 .201 7 DATE OF PRONOUNCEMENT : 28 .09 .2017 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS IS A REVENUES APPEAL DIRECTED AGAINST THE ORD ER OF LD. CIT(A)-IV, BANGALORE DATED 04.03.2015 FOR ASSESSMENT YEAR 2010-11. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER. 1. THE ORDER OF THE LD.CIT (A) IS OPPOSED TO THE LA W AND FACTS OF THE CASE. 2. THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE PAYMENT OF RS.65 LAKHS MADE TO THE OWNER'S SISTER H AS NOT BEEN ESTABLISHED TO BE LAID OUT FOR THE PURPOSE OF BUSIN ESS, WHEN CLAUSE 33 & 34 OF THE JOINT DEVELOPMENT AGREEMENT E NTERED INTO BY THE ASSESSEE AND THE OWNER OF THE LAND, STIPULAT ES THAT THE OWNER WILL BEAR THE EXPENDITURE TO KEEP THE TITLE C LEAR AND MAKE THE LAND USABLE FOR DEVELOPMENT TILL THE DEVELOPER' S SHARE IS TRANSFERRED. 3.THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE ASSESSEE HAS NOT ADDUCED ANY EVIDENCE TO PROVE THAT THE ONUS TO ITA NO.840/BANG/2015 PAGE 2 OF 4 CURE THE DEFECTIVE TITLE WAS SHIFTED TO THE ASSESSE E DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 4. FOR THESE AND OTHER GROUNDS. THAT MAY BE URGED A T THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT(A) IN SO FAR AS IT IS RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND TH AT OF THE ASSESSING OFFICER MAY BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED. 3. THE LD. DR OF REVENUE SUPPORTED THE ASSESSMENT O RDER. HE ALSO SUBMITTED THAT AS PER THE JDA COPY SUBMITTED BY HIM, IN PARA NO. 3 3 AND 34, IT IS CLEARLY SPECIFIED THAT ALL THE EXPENDITURE INCURRED TO MAKE THE SCHED ULE LAND USABLE FOR DEVELOPMENT SHALL BE BORNE BY THE OWNER OR SUCH AMO UNT SHALL BE DEBITED TO HIS ACCOUNT. HE ALSO SUBMITTED THAT AS PER THE ASSESSM ENT ORDER, SHRI RAMESH TO WHOM THE AMOUNT IN QUESTION WAS PAID DECIDED TO TRA NSFER THREE FLATS OF HIS SHARE TO THE ASSESSEE COMPANY FOR RS. 1,40,11,200/- AND I T WAS FROM THIS MONEY PAID TO SHRI RAMESH, THE AMOUNT IN QUESTION OF RS. 65 LA KHS WAS TRANSFERRED TO EXPENSES ACCOUNT WITHOUT ANY VALID BASIS. 4. THE LD. AR OF ASSESSEE SUPPORTED THE ORDER OF CI T(A). HE ALSO SUBMITTED THAT HE HAS ALREADY FILED THE WRITTEN SUBMISSIONS AS PER WHICH RELIANCE HAS BEEN PLACED ON SEVERAL JUDICIAL PRONOUNCEMENTS IN SUPPOR T OF HIS CONTENTION FOR PAYMENTS MADE TO THIRD PARTIES TO BE IN BUSINESS AN D CLAIMED AS BUSINESS EXPENSES ON ACCOUNT OF BUSINESS EXIGENCY AND EXPEDI ENCY, DEDUCTION IS ALLOWABLE U/S. 37 OF IT ACT. HE SUBMITTED THAT THES E WRITTEN SUBMISSIONS SHOULD BE CONSIDERED TO DECIDE THIS ISSUE. THE JUDGMENTS CITED ARE AS UNDER. 1. CIT VS. DELUXE FILM DISTRIBUTORS LTD. (114 ITR 4 34) (CAL) 2. DALMIA JAIN AND CO. LTD. VS. CIT (81 ITR 754) (S C) 3. CIT VS. BHOWRISANKARA STEAM FERRY CO. (87 ITR 65 0)(AP) 4. DCIT VS. B. KUMARA GOWDA (396 ITR 386) (KAR) HE ALSO SUBMITTED THAT THE AMOUNT IN QUESTION WAS P AID TO SHRI RAMESH FOR SETTLING DISPUTE WITH HIS SISTER SO THE DEVELOPMENT WORK OF THE PROPERTY CAN BE ITA NO.840/BANG/2015 PAGE 3 OF 4 CARRIED OUT SMOOTHLY AND THEREFORE, IT SHOULD BE AC CEPTED THAT THIS PAYMENT WAS FOR BUSINESS EXIGENCY. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS.THERE I S NO DISPUTE THAT AS PER THE PARA NO. 33 AND 34 OF JDA ENTERED INTO BETWEEN THE ASSESSEE COMPANY AND SHRI RAMESH, RAMESH WAS REQUIRED TO BEAR THE EXPEN DITURE INCURRED TO MAKE THE SCHEDULE LAND USABLE FOR DEVELOPMENT AND EVEN I F SUCH EXPENSES IS PAID BY THE OTHER PARTY, THE SAME IS TO BE DEBITED TO HIS A CCOUNT. IN VIEW OF THIS CLEAR UNDERSTANDING AS PER JDA, IT CANNOT BE ACCEPTED THA T THIS EXPENDITURE OF RS. 65 LAKHS IS BECAUSE OF BUSINESS EXIGENCY BECAUSE WHATE VER MAY BE THE DISPUTE BETWEENSHRI RAMESH AND HIS SISTER, IT WAS TO BE SET TLED BY SHRI RAMESH AT HIS OWN COST AND SUCH EXPENSES IS NOT REQUIRED TO BE BO RNE BY THE ASSESSEE COMPANY. 6. IN THIS VIEW OF THE MATTER, WE ARE OF THE CONSID ERED OPINION THAT THE ORDER OF CIT(A) IS NOT SUSTAINABLE BECAUSE THESE PARAS OF JD A WERE NOT CONSIDERED BY CIT(A) AT ALL. REGARDING VARIOUS JUDGMENTS CITED B Y LD. AR OF ASSESSEE, WE WOULD LIKE TO OBSERVE THAT IN VIEW OF THIS FACT THA T THE ASSESSEE HAD NOT BEEN ABLE TO ESTABLISH THAT THE PAYMENT IN QUESTION WAS ON AC COUNT OF BUSINESS EXIGENCY AND IT WAS REQUIRED TO BE BORNE BY THE ASSESSEE COM PANY AND NOT BY SHRI RAMESH, NONE OF THE JUDGMENTS CITED BY LD. AR OF AS SESSEE IS RELEVANT IN THE PRESENT CASE OF THE ASSESSEE. WE THEREFORE REVERSE THE ORDER OF CIT(A) AND RESTORE THAT OF AO. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (SUNIL KUMAR YADAV) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEM BER BANGALORE, DATED, THE 28 TH SEPTEMBER, 2017. /MS/ ITA NO.840/BANG/2015 PAGE 4 OF 4 COPY TO: 1. APP ELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.