Gorlas Constructions Pvt.Ltd., Hyderabad V. ITO, Ward-2(2), Hyderabad

ITA 940/HYD/2011

• Counselvise Citation: 94022514 RSA 2011
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 13-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DIWAKAR PRASAD
• Assessee Lawyers: S RAMA RAO
• Keywords: Cost of acquisition
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.940/HYD/2011 ASSESSMENT YEAR 2007-08 M/S GORLAS CONSTRUCTIONS (P) LTD., HYDERABAD (PAN AACCG 8480 D) VS THE ITO, WARD 2(2), HYDERABAD APPELLANT RESPONDENT APPELLANT BY : SHRI S. RAMA RAO RESPONDENT BY : SHRI DIWAKAR PRASAD DATE OF HEARING : 23.08.2011 DATE OF PRONOUNCEMENT : 23.08.2011 ORDER PER CHANDRA POOJARI, A.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) VIJAYAWADA DATED 28.2.2011 AND PERTAINS TO THE ASSESSMENT YEAR 2007- 08. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS IN IT S APPEAL: 1. THE CIT(A) OUGHT TO HAVE AFFORDED PROPER OPPORTUNITY TO THE ASSESSEE TO PROVIDE THE REQUIRED INFORMATION. 2. THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.22,31,408/- MADE BY THE ASSESSING OFFICER. 3. THE CIT(A) ERRED IN HOLDING THAT THE AMOUNT OF RS.22,31,408/- SHOULD HAVE BEEN SUBJECTED TO DEDUCTION OF TAX AT SOURCE AND FURTHER ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ITA NO.940/HYD/2011 M/S GORLAS CONSTRUCTIONS (P) LTD, HYDERABAD 2 IT ACT ARE APPLICATION TO THE FACTS OF THE ASSESSEE S CASE. 3. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSIN G OFFICER OBSERVED THAT THE ASSESSEE HAD CLAIMED AMOUNTS OF RS.19,19,010/- AND RS.3,12,398/- CREDITED TO THE AC COUNTS OF SRI SAI BABU AND MS.G. SAILAJA AS EXPENDITURE IN CURRED TOWARDS LAND DEVELOPMENT EXPENSES. WHEN CALLED UPO N TO STATE WHY THE EXPENDITURE SHOULD NOT BE DISALLOWED AS NO TAX AT SOURCE WAS DEDUCTED ON THESE PAYMENTS AS PER SECTION 194C OF THE ACT, THE ASSESSEE SUBMITTED THA T LAND WAS PURCHASED FROM THE ABOVE TWO PERSONS ON 28.12.2 006 AND OVER AND ABOVE THE REGISTERE3D SALE PRICE, THE ABOVE SUMS WERE PAID TOWARDS EXPENDITURE INCURRED BY SRI SAI BABU AND MS. G. SAILAJA. IT WAS EXPLAINED THAT THO UGH THE AMOUNT ACTUALLY COMPRISED OF THE TOTAL LAND COST TH E SAME WAS NOT INCLUDED IN THE REGISTERED DOCUMENTS TO MIN IMIZE THE STAMP DUTY. AS THE AMOUNT WAS ONLY A REIMBURSE MENT, IT WAS CONTENDED THAT THE PROVISIONS OF SECTION 194 C WERE INAPPLICABLE. REJECTING THE EXPLANATION, THE ASSES SING OFFICER OBSERVED THAT AS THE EXPENDITURE WAS BOOKED TOWARDS LAND DEVELOPMENT IN THE BOOKS OF ACCOUNTS N O CREDENCE COULD BE GIVEN TO THE CLAIM THAT IT REPRES ENTED PURCHASE COST. CONSEQUENTLY, THE DISALLOWANCE WAS MADE AS NO TAX AT SOURCE WAS DEDUCTED ON THE ABOVE PAYME NTS. 4. AT THE TIME OF HEARING, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS PLEADED FOR AN OPPORTUNITY TO PLACE NECESSARY EVIDENCE BEFORE THE CIT(A) TO PROVE THE ASSESSEES CLAIM ON THE ABOVE EXPENDITURE . WE ACCEDE TO THE REQUEST OF THE ASSESSEES COUNSEL. ACCORDINGLY, WE SET ASIDE THE ENTIRE ISSUE TO THE F ILE OF CIT(A) ITA NO.940/HYD/2011 M/S GORLAS CONSTRUCTIONS (P) LTD, HYDERABAD 3 FOR FRESH CONSIDERATION. AT THIS STAGE, WE REFRAIN FROM GOING INTO THE MERIT OF THE ISSUE INVOLVED HEREIN OR APPL ICABILITY OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME T AX ACT, 1961. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT 23. 08.2011 SD/ - G.C. GUPTA SD/ - CHANDRA POOJARI VICE PRESIDENT ACCOUNTANT M EMBER DATED THE 23 RD AUGUST, 2011 COPY FORWARDED TO: 1. M/S GORLAS CONSTRUCTIONS PVT. LIMITED, PLOT NO.124 6, ROAD NO.62, JUBILEE HILLS, HYDERABAD -500 033. 2. THE ITO, WARD 2(2), HYDERABAD 3. THE CIT(A) VIJAYAWADA. 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/