Hill County Properties Ltd., (formerly Maytas Properties Ltd.), Hyd, Hyderabad V. Addl. CIT, Central Range-3, Hyd, Hyderabad

ITA 991/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2691 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-08-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 08-07-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S RAMA RAO
• Keywords: Depreciation; Business expenditure; Proportionate interest; Retrospective amendment; Difference of opinion; Corroborative evidences; Notional interest; Commercial expediency
• Section: 43B; 40A(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO. AY. APPELLANT RESPONDENT 1000/HYD/16 2010-11 ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3(2), HYDERABAD M/S. HILL COUNTY PROPERTIES LIMITED (FORMERLY MAYTAS PROPERTIES LIMITED) HYDERABAD [PAN: AAECM2732Q] 1001/HYD/16 2011-12 991/HYD/16 2010-11 M/S. HILL COUNTY PROPERTIES LIMITED (FORMERLY MAYTAS PROPERTIES LIMITED) HYDERABAD [PAN: AAECM2732Q] ADDL. COMMISSIONER OF INCOME TAX, CENTRAL RANGE-3, HYDERABAD 992/HYD/16 2011-12 FOR REVENUE : SHRI PATHLAVATH PEERYA, CIT-DR SHRI L. RAMJI RAO, DR FOR ASSESSEE : SHRI S. RAMA RAO, AR DATE OF HEARING : 02-08-2017 DATE OF PRONOUNCEMENT : 07-08-2017 O R D E R PER CHANDRA POOJARI, A.M. : THESE ARE CROSS-APPEALS DIRECTED AGAINST DIFFERENT OR DERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-11, HYDERAB AD, FOR THE AYS. 2010-11 & 2011-12, WHEREIN THE ISSUES ARE COMMO N IN NATURE. WE HEARD ALL THE FILES TOGETHER AND DECIDED T HE SAME BY THIS COMMON ORDER. ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 2 - : ITA NO. 1000/HYD/2016 AY.2010-11 (REVENUES APPEAL ): GROUND-WISE DISCUSSION IS AS UNDER: GROUND NO.2 : THE LD.CIT(A) ERRED IN DIRECTING THE AO TO VERIFY AS TO WHETHER THE EXPENDITURE BILLS AMOUNTING TO RS. 41,7 8,480/- WHICH ARE IN THE NAME OF THE SUBSIDIARY COMPANY ARE CLAIM ED AS EXPENDITURE IN THAT COMPANY AND TO DISALLOW ONLY WH EN THERE IS A DOUBLE CLAIM I.E., CLAIM BY THE ASSESSEE COMPANY AN D SUBSIDIARY COMPANY: 2. THE FACTS OF THE FIRST ISSUE FOR ADJUDICATION IS WI TH REGARD TO DISALLOWANCE OF EXPENDITURE U/S 37(1) OF THE INCOME TAX ACT [ACT] AMOUNTING TO RS. 41,78,480/-. THE ASSESSIN G OFFICER (AO) DISALLOWED THE SAID EXPENDITURE SINCE THE BILLS AND EV IDENCES OF THE SAME ARE NOT IN THE NAME OF THE ASSESSEE-COMPANY. IN TH E COURSE OF THE FIRST APPELLATE PROCEEDINGS, THE LD.AR SUBMITTED THAT THE AO DISALLOWED THE EXPENDITURE LIKE INTERNET CHARGES, ELECTR ICITY CHARGES, CONSULTANT CHARGES ETC., WITHOUT OBSERVING THAT ALL SUCH EXPENDITURE WAS INCURRED WHOLLY FOR THE PURPOSE OF TH E HILL COUNTY PROJECT AND THE EXPENDITURE WOULD THEREFORE, BE LIABLE TO BE BORNE BY THE ASSESSEE. HOWEVER, DUE TO SIMILARITY OF NAMES OF THE OTHER COMPANIES WHICH ARE UNDER THE SAME MANAGEMENT, SUPPLIERS/SERVICE PROVIDERS BY OVERSIGHT RAISED SUCH INVOICES ON THE NAMES OF THE OTHER ENTITIES. IT WAS FURTHER SUBMITTED TH AT ALL THESE PAYMENTS HAVE BEEN MADE THROUGH REGULAR BANKING CHANNELS OF THE ASSESSEE'S BANK ACCOUNTS WHICH CAN BE VERIFIED FROM THE BANK STATEMENTS INCLUDING DEDUCTION OF ANY APPLICABLE T DS. 2.1. ON APPEAL, CIT(A) PLACED RELIANCE ON THE EARLI ER ORDER OF THE TRIBUNAL FOR THE AY. 2009-10 AND DIRECTED THE AO TO VERIFY WHETHER THERE IS ANY DOUBLE CLAIM ONCE IN ASSESSEES HAND AND ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 3 - : ANOTHER IN SISTER-CONCERN. AGAINST THE ORDER OF THE CIT (A), THE REVENUE IS IN APPEAL BEFORE US. 2.2. DURING THE COURSE OF ARGUMENT, LD.DR URGED THAT CIT(A) HAS NO POWER TO REMIT THE ISSUE TO THE FILE OF AO FOR FRESH CONSIDERATION AND HE SHOULD HAVE CALLED FOR REMAND R EPORT FROM THE AO AND OUGHT TO HAVE DECIDED THE ISSUE. 2.3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY IN EARLIER YEAR, SIMILAR ISSUE IN ASSESSEES OWN CASE CAME UP FOR CONSIDERATI ON BEFORE THIS TRIBUNAL IN ITA NO. 1404/HYD/2013 DT. 06-06-2014 FOR THE AY. 2008-09. IN THE SAID CASE, THE CO-ORDINATE BENCH OF T HE TRIBUNAL, REMITTED THE ISSUE TO THE FILE OF THE AO WITH THE FOLLOWI NG DIRECTIONS: 10. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RE CORD AS WELL AS GONE THROUGH THE ORDERS OF THE AUTHORITIES. THE ASSESSEE BROUGHT ON RECORD CONFIRMATION LETTER FROM MAYTAS ESTATE PVT. LTD. ISSUED TO THE MAYTAS PROPERTIES LTD. STATING THAT MAYTAS PROPERTI ES LTD., WHOSE NAME FORMERLY WAS MAYTAS ESTATE PVT. LTD. WHEREIN NEITHE R BILLS ARE RAISED FOR THIS EXPENDITURE NOR ACCOUNTED FOR THE SAME IN THEI R BOOKS OF ACCOUNT, WHICH IS PLACED ON RECORD AT PAGES 125 & 126 OF ASS ESSEES PAPER BOOK. IF THERE IS NO EVIDENCE WITH THE DEPARTMENT THAT TH ERE IS A DOUBLE CLAIM OF THIS EXPENDITURE ONE BY MAYTAS PROPERTIES PVT. LTD. AND ANOTHER BY MAYTAS PROPERTIES LTD., THE ASSESSEE COMPANY, THE DEPARTMENT CANNOT DISALLOW THE EXPENDITURE BECAUSE THE SAME IS A CLER ICAL ERROR IN THE BILLS PRODUCED BY THE ASSESSEE TOWARDS EXPENDITURE. IF T HIS EXPENDITURE IS NOT CLAIMED BY MAYTAS PROPERTIES PVT. LTD., THEREFORE, IT IS FAIR TO GRANT DEDUCTION TOWARDS BUSINESS EXPENDITURE IN THE HANDS OF THE PRESENT ASSESSEE M/S MAYTAS PROPERTIES LTD. ACCORDINGLY, W E REMIT THIS ISSUE BACK TO THE FILE OF THE AO TO CAUSE ENQUIRY WHETHER M/S MAYTAS PROPERTIES PVT. LTD. CLAIMED ANY EXPENDITURE TOWARDS THE IMPUG NED BILLS AND IF THERE IS NO DOUBLE CLAIM, THE CLAIM OF THE ASSESSEE HAS T O BE ALLOWED. THIS ISSUE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 4 - : 2.4. LATER, FOR THE AY. 2009-10 SIMILAR ISSUE CAME UP FOR CONSIDERATION. THE TRIBUNAL TOOK SAME VIEW IN ITA NO . 1644/HYD/2014 DT. 22-05-2015 IN PARA NO. 7 AS FOLLO WS: 7. AT THE TIME OF HEARING, THE LEARNED REPRESENTAT IVES OF BOTH THE SIDES HAVE AGREED THAT A SIMILAR ISSUE WAS INVOLVED IN TH E CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09 AND VIDE ITS ORDER DATED 6.6.2014 (SUPRA), THE TRIBUNAL HAS DECIDED THE SAME HOLDING THAT THE DEPARTMENT CANNOT DISALLOW THE EXPENDITURE MERELY BECAUSE THER E IS A CLERICAL ERROR IN THE BILLS PRODUCED BY THE ASSESSEE TOWARDS THE EXPE NDITURE. IT WAS HELD THAT IF THE EXPENDITURE IS NOT CLAIMED BY M/S. MAYT AS PROPERTIES LTD., IT IS FAIR TO ALLOW DEDUCTION TOWARDS BUSINESS EXPENDITUR E IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, THE ISSUE WAS RESTORED BY TH E TRIBUNAL TO THE FILE OF THE ASSESSING OFFICER TO VERIFY WHETHER THE SAME EX PENDITURE WAS CLAIMED BY M/S. MAYTAS PROPERTIES P. LTD. AND IF IT IS FOUN D, ON SUCH VERIFICATION THAT THERE IS NO SUCH DOUBLE CLAIM, THE ASSESSING O FFICER WAS DIRECTED BY THE TRIBUNAL TO ALLOW THE CLAIM OF THE ASSESSEE OF SUCH EXPENDITURE. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE COO RDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 ON SIMILAR ISSUE, WE UPHOLD THE IMPUGNED ORDER OF THE DISPUTE RESOLUTION PANEL, SETTING ASIDE THIS ISSUE TO THE FILE OF THE ASSESSI NG OFFICER FOR DECIDING THE SAME AFRESH AS PER THE SAME DIRECTIONS AS GIVEN BY THE TRIBUNAL FOR ASSESSMENT YEAR 2008-09. GROUND NO.2 OF THE REVENUE S APPEAL IS ACCORDINGLY DISMISSED. 2.5. AS SEEN FROM THE ABOVE, TRIBUNAL HELD IN EARLI ER YEARS THAT THERE CANNOT NOT BE ANY DOUBLE CLAIM BY DIFFERENT ASSESSEE TOWARDS THE SAME EXPENDITURE. IT IS THE DUTY OF THE ASS ESSEE TO ESTABLISH THAT THERE IS NO DOUBLE CLAIM TOWARDS THIS EX PENDITURE AND THEREAFTER IT IS TO BE PROVED THAT EXPENDITURE WAS IN CURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF CARRYING O N THE BUSINESS OF ASSESSEE. WITH THESE OBSERVATIONS, WE REMIT THIS IS SUE TO THE FILE OF THE AO FOR FRESH CONSIDERATION. THIS GROUNDS IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 5 - : 3. NEXT GROUNDS FOR OUR CONSIDERATION IS AS FOLLOWS: 3. THE LD. CIT(A) ERRED IN DIRECTING THE AO TO ALLO W THE PAYMENTS MADE BY THE ASSESSEE THROUGH BANKING CHANNELS ESPEC IALLY WHEN THE PAYMENTS WERE MADE BY THE ASSESSEE BY BEARER CH EQUE WHICH IS IN CONTRA OF THE PROVISIONS OF SECTION 40A(3) OF TH E I.T. ACT. 4. THE LD. CIT(A) ERRED IN DIRECTING TO DISALLOW ON 10% OF THE CASH EXPENDITURE WHERE AS THE PROVISIONS OF SECTION 40A( 3) MANDATES FOR DISALLOWANCE OF 10% OF SUCH EXPENDITURE. 3.1. IT IS WITH REGARD TO DISALLOWANCE OF EXPENDITURE U/S. 40A(3) AMOUNTING TO RS.13,67,000/-. IN THE SPECIAL AUD IT REPORT, THE SPECIAL AUDITOR HAS POINTED OUT THAT THE ASSESSEE H AD MADE PAYMENTS TO THE TUNE OF RS. 67,17,000/- IN EXCESS OF RS . 20,000/- OTHERWISE THAN BY A CROSSED CHEQUE OR DEMAND DRAFT VIO LATING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. IT WAS FURTHER STATED BY THE SPECIAL AUDITOR THAT A SUM OF RS. 53,50,000/- HAS ALRE ADY BEEN DISALLOWED BY THE ASSESSEE AND ADDED BACK TO THE TOTAL INCOME. WITH REGARD TO THE BALANCE OF RS. 13,67,000/-, THE ASSE SSEE HAS PRODUCED BILLS AS EVIDENCE TOWARDS THE PAYMENTS MADE UNDER THE HEAD 'LAND SCAPING'. THE AO OBSERVED THAT NONE OF THE BILLS PRODUCED BY THE ASSESSEE ARE FROM OUT OF A BILL BOOK HAVING A SALES TAX OR A COMMERCIAL TAX NUMBER AND ALL THE BILLS ARE GENERATED FROM PLAIN PAPER AND DO NOT BEAR THE SEMBLANCE ISSUED BY DIFFERENT PARTIES. ACCORDINGLY, HE DISALLOWED THE AMOUNT OF RS. 13,67,000/- U/S 40A(3) OF THE ACT. ON APPEAL BEFORE THE CIT(A), H E PLACED RELIANCE ON PARA 30 OF THE HON'BLE ITAT'S ORDER IN I TS OWN CASE FOR AY 2008-09(SUPRA) AND DECIDED PARTLY IN FAVOUR OF AS SESSEE. ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 6 - : 3.2. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY IN EARLIE R YEAR, SIMILAR ISSUE IN ASSESSEES OWN CASE CAME UP FOR CONSIDERATI ON BEFORE THIS TRIBUNAL IN ITA NO. 1404/HYD/2013 DT. 06-06-2014 FOR THE AY. 2008-09. IN THE SAID CASE, THE CO-ORDINATE BENCH OF TH E TRIBUNAL HAS DECIDED THE ISSUE AS UNDER: 30. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIE S, PERUSED THE RECORD AND GONE THROUGH THE ORDERS OF THE REVENUE A UTHORITIES. IN OUR OPINION THE REASON FOR DISALLOWANCE IS REGARDING GE NUINENESS OF EXPENDITURE. ACCORDING TO THE LOWER AUTHORITIES MOS T OF THE PAYMENTS ARE SELF-GENERATED, WHICH HAVE HIGH BILL VALUE AND BEIN G SO IT WAS DISALLOWED. INCURRING OF EXPENDITURE WAS NOT DOUBTED BY THE DEP ARTMENT, BUT, ONLY QUANTUM OF EXPENDITURE IS DOUBTED. THE EXPENDITURE IS WHOLLY AND EXCLUSIVELY LAID OUT FOR THE PURPOSE OF BUSINESS, T HEREFORE, THE ENTIRE EXPENDITURE CANNOT BE DISALLOWED. SINCE THE BILLS A RE SELF-GENERATED, THERE IS NO CONCLUSIVE PROOF THAT 100% OF THE EXPENDITURE IS GENUINE. HENCE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , WE DIRECT THE AO TO DISALLOW 10% OF CASH EXPENDITURE INCURRED BY THE AS SESSEE AND THERE COULD BE NO DISALLOWANCE IF THE ASSESSEE INCURRED T HE EXPENDITURE BY CHEQUE. THUS, THIS GROUND IS PARTLY ALLOWED. 3.3. FURTHER, SIMILARLY FOR AY. 2009-10 IN ITA NO. 1644/HYD/2014 DT. 22-05-2015, THE TRIBUNAL HELD AS F OLLOWS: 9. AS NOTICED BY THE ASSESSING OFFICER FROM THE RE PORT OF THE SPECIAL AUDITOR, THE ASSESSEE COMPANY HAD MADE PAYMENT OF C ERTAIN EXPENDITURE IN EXCESS OF RS.20,000 OTHERWISE THAN BY CROSSED CH EQUE OR BANK DRAFT. AS THESE PAYMENTS AGGREGATING TO RS.1,03,32,278 WER E CLEARLY HIT BY THE PROVISIONS OF S.40A(3), THE ASSESSEE WAS CALLED UPO N BY THE ASSESSING OFFICER TO OFFER ITS EXPLANATION IN THE MATER. THE EXPLANATION OFFERED BY THE ASSESSEE IN THIS MATTER, HOWEVER, WAS NOT FOUND ACC EPTABLE BY THE ASSESSING OFFICER. ACCORDINGLY, HE PROPOSED TO DISA LLOW THE EXPENDITURE OF RS.1,03,32,278 BY INVOKING THE PROVISIONS OF S.40A( 3). HE ALSO OBSERVED THAT THE SAID EXPENDITURE WAS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE AND THE SAME WAS, THEREFORE, LIABLE TO BE DISALLOWED ALTERNATIVELY AS PER THE PROVISIONS OF S.37(1). ON THE OBJECTION RAISED BY THE ASSESSEE, THE DISPUTE RESOLUTION PANEL FOUND TH AT A SIMILAR ISSUE WAS DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 VIDE ORDER DATED 6.6.2014 (SUPRA) WHEREIN S IMILAR DISALLOWANCE MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVI SIONS OF S.40A(3) WAS HELD TO BE NOT SUSTAINABLE. AS REGARDS THE DISALLOW ANCE OF THE SAID ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 7 - : EXPENDITURE MADE BY THE ASSESSING OFFICER ALTERNATI VELY AS PER THE PROVISIONS OF S.37(1), IT WAS HELD BY THE TRIBUNAL THAT SUCH EXPENDITURE CLAIMED BY THE ASSESSEE, WHICH WAS OTHERWISE GENUIN E, COULD NOT BE DISALLOWED ENTIRELY FOR WANT OF VOUCHERS. IT WAS HE LD BY THE TRIBUNAL THAT IT WOULD BE FAIR AND REASONABLE IN THE FACTS OF THE CASE TO DISALLOW RELEVANT EXPENDITURE TO THE EXTENT OF 10% FOR THE U NVERIFIABLE ELEMENT. FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR ASSESSMENT YEAR 2008-09, THE DISPUTE RESOLUTION PAN EL DIRECTED THE ASSESSING OFFICER TO RESTRICT THE AMOUNT OF DISALLO WANCE TO THE EXTENT OF 10%. 3.4. BEFORE US, LD.AR SUBMITTED THAT THE ISSUE IN THIS YEAR IS SQUARELY COVERED BY THE ABOVE ORDER OF THE TRIBUNA L. ON THE CONTRARY, LD.DR SUBMITTED THAT IT IS NOT PROPER TO DISALLO W 10% OF THE EXPENDITURE. ON THE OTHER HAND, 100% OF EXPENDITURE IS TO BE DISALLOWED WHICH IS PAID BY CASH. IN OUR OPINION, IF THE FACTS ARE SIMILAR AS IN EARLIER YEAR AND THE EXPENDITURE WAS I NCURRED TOWARDS HORTICULTURE, THEN IT FALLS UNDER EXCEPTIONS PROVIDED IN RULE 6DD OF IT RULES. THERE CANNOT BE DISALLOWANCE U/S. 40A(3) OF THE ACT. ON THE OTHER HAND, THE ASSESSEE HAS TO PROVE THEREAFTER THAT THE EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND FALLS UNDER THE PURVIEW OF SECTION 37(1) OF THE ACT. ACCORDINGLY, WE DIRECT THE AO NOT TO DISALLOW ANY PAYME NTS MADE BY CROSS ACCOUNT PAYEE CHEQUE IF THE ASSESSEE IS ABLE TO PROVE THAT IT IS INCURRED FOR THE PURPOSE OF BUSINESS OF ASSESSE E. IN CASE OF EXPENSES INCURRED IN CASH, THE ASSESSEE IS NOT ONLY TO PROVE THE INCURRING OF THE EXPENDITURE FOR THE PURPOSE OF BUSIN ESS, IT HAS TO BE PROVED THAT THERE IS NO INFLATION OF EXPENDITURE. S INCE, IT WAS HELD ALREADY ON EARLIER OCCASION THAT THERE IS A CHAN CE OF INFLATING THE EXPENDITURE BY ASSESSEE BY WAY OF CASH VOUCHER, 1 0% OF THAT CASH EXPENDITURE IS TO BE DISALLOWED. WITH THIS, THES E GROUNDS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 8 - : 4. NEXT GROUND OF APPEAL IS AS FOLLOWS: 5. THE LD. CIT(A) ERRED IN DIRECTING THE ADDITION O F RS.6,08,95,308/- WHICH WAS DISALLOWED BY AO AS THE INTEREST BEARING FUNDS WERE FOUND TO BE UTILIZE FOR GIVING INTEREST FREE LOANS TO SISTER CONCERNS. 4.1. THE FACTS OF THIS ISSUE ARE THAT THE SPECIAL AUDI TOR HAS POINTED OUT THAT THE ASSESSEE HAD ADVANCED INTEREST FREE LOANS TO THE LAND OWNING COMPANIES AND ITS RELATED COMPANIES. IT HAD ESTIMATED THE ACCRUAL OF NOTIONAL INTEREST @ 10.5% ON PROPORTIONATE INTEREST FREE ADVANCES GIVEN IN THE EAR LIER YEAR AND AT THE SAME RATE, AFTER INCLUDING THE IDENTIFIED THIRD PARTIES AS RELATED PARTIES AND ALSO AFTER EXAMINING THE AVERAGE F UND FLOW I.E., AVERAGE TOTAL FUNDS AVAILABLE AND AVERAGE FUND S ADVANCED TO RELATED PARTIES, THE RATIO OF 8.80% HAS BEEN CONSIDERE D BY THE AO TO ARRIVE AT THE NOTIONAL INTEREST CHARGEABLE @ 10.5% ON THE PROPORTIONATE INTEREST FREE ADVANCES AND DISALLOWED AN AMOUNT OF RS. 6,08,95,308/-. 4.2. THE LD.CIT(A) BY FOLLOWING THE EARLIER ORDER OF THE TRIBUNAL IN ITA NO. 1404/HYD/2013 DT. 06-06-2014, DE LETED THE ADDITION. AGAINST WHICH, THE REVENUE IS IN APPEAL BEFO RE US. 4.3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY IN EARLIER YEAR, SIMILAR ISSUE IN ASSESSEES OWN CASE CAME UP FOR CONSIDERATI ON BEFORE THIS TRIBUNAL IN ITA NO. 1404/HYD/2013 DT. 06-06-2014. IN THE SAID CASE, THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS DECID ED THE ISSUE AS UNDER: ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 9 - : 34. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. THE REVENUE AUTHORITIES DISALLOWED THE NOTIONAL INTERES T ON THE AMOUNTS ADVANCED TO SISTER CONCERNS ON THE REASON THAT INTE REST BEARING BORROWED FUNDS WERE USED BY THE ASSESSEE FOR NON-BUSINESS PU RPOSES. HOWEVER, THE ASSESSEE MADE A PLEA BEFORE US THAT IT IS HAVIN G ENOUGH OWN FUNDS IN THE FORM OF SHARE CAPITAL, RESERVES AND SURPLUS, IN TEREST FREE ADVANCE FROM CUSTOMERS AND DEPOSITS AND THE FUNDS WERE DIVERTED TO THE SISTER CONCERN FOR BUSINESS PURPOSE WHICH ARE IN THE SIMILAR NATUR E OF BUSINESS OF THE ASSESSEE. BEING SO, IT CANNOT BE CONSIDERED THAT TH E ASSESSEE USED THE INTEREST BEARING FUNDS FOR NON-BUSINESS PURPOSES. T HE ASSESSEE ALSO PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE SUPR EME COURT IN THE CASE OF SA BUILDERS LTD., VS. CIT, 288 ITR 1 (SC). IN OU R OPINION, BEFORE DISALLOWANCE OF NOTIONAL INTEREST IT IS INCUMBENT U PON AO TO ESTABLISH THAT THERE IS A NEXUS BETWEEN THE AMOUNT DIVERTED AND IN TEREST INCURRED BY THE ASSESSEE. EVEN IF ASSESSEE HAS DIVERTED INTEREST B EARING FUNDS TO THE SISTER CONCERN, THEN IT IS BUSINESS DECISION TAKEN BY THE ASSESSEE TO MAKE SUCH AN INVESTMENT AND EVEN IF IT HAS RESULTED NO INCOME TO THE ASSESSEE, NOTIONAL INTEREST CANNOT BE DISALLOWED ON THE REASO N THAT ASSESSEE SHOULD HAVE USED ITS NON-INTEREST BEARING FUNDS FOR THE PU RPOSE OF BUSINESS INSTEAD OF USING BORROWED FUNDS. THE AO CANNOT SIT IN THE ARM CHAIR OF BUSINESSMAN AND DECIDE WHAT THE ASSESSEE HAS TO DO TO MAXIMIZE ITS PROFIT. IN OUR OPINION, THE JUDGMENT RELIED UPON BY THE LEARNED AR OF THE ASSESSEE IN THE CASE OF SA BUILDERS (SUPRA) AND ALS O COORDINATE BENCH DECISION IN THE CASE OF SSPDL LTD. VS. DCIT, 24 ITR (TRIB.)(HYD.) 290 ALSO SUPPORT THE CASE OF THE ASSESSEE. ACCORDINGLY, THIS GROUND IS ALLOWED. 4.4. NOW THE CONTENTION OF THE DR IS THAT THE ASSESSEE H AS NOT PROVED COMMERCIAL EXPEDIENCY TO ADVANCE THE MONEY TO THE SISTER CONCERN AT FREE OF INTEREST. 4.5. ON THE CONTRARY, LD.AR SUBMITTED THAT IT WAS IN POSSESSION OF CUSTOMER ADVANCES TO THE TUNE OF RS. 635 .50 CRORES AND CCDS WORTH RS. 600 CROES WHICH DO NOT BEAR INTER EST. OUT OF WHICH THE ASSESSEE ADVANCED RS. 625.85 CRRORES FOR MEETING ITS BUSINESS REQUIREMENTS AND SUCH ADVANCES ARE FOR MEETI NG ITS BUSINESS REQUIREMENTS. WHEREAS AMOUNTS BORROWED FROM BANK IS ONLY RS. 126.18 CRORES AND THE SAID AMOUNTS WERE UTILI ZED FOR WORKING CAPITAL REQUIREMENTS. IT IS ALSO SUBMITTED THAT N O INTEREST CAN BE HELD AS INCOME ON NOTIONAL BASIS WHERE NO INT EREST HAS ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 10 -: ACTUALLY BEEN CHARGED. THERE IS NO PROVISION IN THE ACT WHICH EMPOWERS THE AO TO CHARGE NOTIONAL INTEREST ON INTEREST-F REE LOANS GIVEN TO SISTER CONCERNS. 4.5.I. WITHOUT PREJUDICE TO THE ABOVE, IT IS ALSO SUBMI TTED BY AR THAT THE ADVANCES MADE TO THE SUBSIDIARIES AND OTHE RS ARE EITHER FOR THE PURPOSE OF ACQUIRING THE LANDS OR BLOCK ING DEVELOPMENTAL RIGHTS AGAINST THE PROPERTIES HELD BY THE SAID COMPANIES. THEREFORE, THE ADVANCES WERE MADE FOR THE PURPOSE OF BUSINESS ACTIVITY OF THE ASSESSEE. ASSESSEE IS IN THE BUSINESS OF REAL ESTATE AND THE SUBSIDIARIES ARE ALSO IN THE SAME BUSINESS. ASSESSEE WAS INTENDING TO PROMOTE THE DEVELOPMENTAL ACTIV ITIES WITH THE SUBSIDIARIES WHO ARE ALSO IN THE SAME LINE O F BUSINESS. ASSESSEE ALSO SUBMITTED THAT: A. THE AMOUNTS ARE ADVANCED FROM OUT OF INTEREST FREE FUN DS AND; B. THE AMOUNTS WERE ADVANCED FOR THE PURPOSE OF CARRYING ON THE BUSINESS ACTIVITY; 4.5.II. FURTHER, IT WAS SUBMITTED THAT INCOME TAX IS CHARGEABLE ONLY ON REAL INCOME. THE ASSESSEE, WHILE PAYING THE ADVANCE, DID NOT INTEND TO COLLECT INTEREST FROM THE RECI PIENT COMPANIES AS ADVANCES ARE BUSINESS ADVANCES. THE SA ID COMPANIES ALSO DID NOT UNDERTAKE TO PAY INTEREST ON SUC H ADVANCE AND HENCE NO RIGHT ACCRUED TO ASSESSEE TO CHARGE ANY I NTEREST. THERE IS NO OBLIGATION FOR THE RECIPIENTS TO PAY INTERE ST ON THE ADVANCES. HENCE, THE AO IS NOT JUSTIFIED IN ASSUMIN G THAT INCOME ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 11 -: ACCRUED TO ASSESSEE. IT IS ALSO SUBMITTED THAT ALL THE S UBSIDIARIES EXCEPT THREE ARE MERGED WITH ASSESSEE-COMPANY W.E.F. 0 1-04-2015. 4.6. WE HAVE HEARD THE RIVAL SUBMISSIONS. IN OUR OP INION, ASSESSEE HAS TO DEMONSTRATE THAT ASSESSEE HAS NOT BORROWE D ANY MONEY TO LEND TO ITS SISTER CONCERN AND IT HAS LENT ITS O WN FUNDS OR LENT NON-INTEREST BEARING FUNDS AND NOT RESULTED IN ANY ADDITIONAL INTEREST COST TO ASSESSEE. WHENEVER THE ASSESSEE ADVAN CED INTEREST FREE FUNDS TO SUBSIDIARIES, THERE CANNOT BE ANY DISALL OWANCE OF NOTIONAL BASIS. IT IS THE DUTY OF ASSESSEE TO DEMONSTR ATE THE ABOVE FACTS BEFORE THE AO. IN THE PRESENT CASE, CIT(A) BLIND LY FOLLOWED THE EARLIER ORDER OF THE TRIBUNAL WITHOUT GOING INTO THE A CTUAL FACTS OF THE CASE. IN OTHER WORDS, CIT(A) HAS NOT GONE INTO THE MONEY ADVANCED TO THE SISTER CONCERN AS A MEASURE OF COMMER CIAL EXPEDIENCY AND ONLY IN SUCH CASES, NO NOTIONAL INTER EST COULD BE DISALLOWED. WITH THESE OBSERVATIONS, WE REMIT THE ISSUE -IN-DISPUTE TO THE FILE OF THE AO WITH A DIRECTION TO ASSESSEE TO DEM ONSTRATE THAT INTEREST FREE FUNDS ARE AVAILABLE WITH ASSESSEE AS ON DATE OF ADVANCE TO THE SISTER CONCERN AND IT IS ON ACCOUNT OF C OMMERCIAL EXPEDIENCY SO AS TO APPLY THE RATIO LAID DOWN BY THE H ON'BLE SUPREME COURT IN THE CASE OF S.A. BUILDERS LTD. VS. CI T [288 ITR 1] (SC) AND HERO CYCLES (P) LTD., VS. CIT [379 ITR 347] (SC). WITH THESE OBSERVATIONS, WE REMIT THE ISSUE-IN-DISPUTE TO THE FILE OF AO FOR HIS CONSIDERATION. THIS GROUND IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 5. THE NEXT GROUND IN REVENUES APPEAL IS AS FOLLOWS : 6. THE LD. CIT(A) ERRED IN DIRECTING TO ALLOW THE P AYMENTS MADE THROUGH BANKING CHANNELS THAT IT BEARER CHEQUES ETC . AND DISALLOW ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 12 -: ONLY 10% OF THE EXPENDITURE IN RESPECT OF ADDITION OF RS. 2,34,06,450/- MADE FOR NON-SUBMISSION OF BILLS OF E XPENDITURE. 5.1. THE ABOVE GROUND IS WITH REGARD TO THE DISALLOWA NCE OF EXPENSES AMOUNTING TO RS.2,34,06,450/-. IT IS SEEN T HAT THE AO HAS DISALLOWED THE ABOVE EXPENDITURE AS THERE WERE NO SUPPORTING EVIDENCES FOR ESTABLISHING THE GENUINENESS OF THE PAYM ENTS. IN THE COURSE OF THE APPELLATE PROCEEDINGS, IT WAS SUBMITTED THA T THE AO DISALLOWED THE EXPENDITURE LIKE TELEPHONE CHARGES, MO NTHLY CONSULTANT CHARGES, LEGAL EXPENSES, PROFESSIONAL CHAR GES, HOUSE- KEEPING, SECURITY CHARGES, WAGES, WATER CHARGES, BUI LDING WIP CHARGES ETC. WITHOUT OBSERVING THAT ALL SUCH EXPENDITUR E WAS INCURRED WHOLLY FOR THE PURPOSE OF THE HILL COUNTY PR OJECT AND THE EXPENDITURE WOULD THEREFORE, BE LIABLE TO BE BORNE BY THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT ALL THESE PAYMENTS HAVE BEEN MADE THROUGH REGULAR BANKING CHANNELS OF THE ASSESSEE'S BA NK ACCOUNTS WHICH CAN BE VERIFIED FROM THE BANK STATEMENTS INCLUDIN G DEDUCTION OF TDS APPLICABLE, IF ANY. 5.2. THE LD.CIT(A) OBSERVED AND GAVE A FINDING THAT THE BILLS IN RESPECT OF THESE EXPENSES WERE EITHER IN THE NAME OF A SISTER CONCERN OR NOT AVAILABLE AT ALL. THE ASSESSEE ARGUED THAT THE EXPENSES WERE PAID FOR BY CHEQUE AND ASSETS IN QUESTI ON ARE BORNE ON THE BOOKS OF THE ASSESSEE. THE ASSESSEE FURTHER REL IED ON PARA 38 OF THE ITAT'S ORDER IN ITS CASE FOR AY 2008-09. S EEN IN THE LIGHT OF THE ASSESSEE'S SUBMISSIONS CIT(A) CONSIDERED AND HELD THAT THE TRIBUNAL IN EARLIER YEAR SIMILAR FACTS OBSERVED, THAT THE MERE FACT OF THE BILL BEING IN THE NAME OF A SISTER CONCERN WILL N OT GO AGAINST THE ASSESSEE UNLESS THERE IS A DOUBLE CLAIM OR ANY ADVER SE FINDING REGARDING THE GENUINENESS OF THE EXPENDITURE. IN THE M ATTER OF A ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 13 -: DEPRECIATION CLAIM THE BILL IS ONLY ONE OF THE DOCUMEN TARY EVIDENCES POSSIBLE TO ESTABLISH OWNERSHIP. IF THE EXCL USIVE OWNERSHIP OF THE IMPUGNED ASSET CAN BE ESTABLISHED BY ANY OTHER MEANS IN THE PRESENT CASE BY COLLECTION OF A CHEQUE PAYMENT BY A PARTY SELLING THE ITEM IN THE FIXED ASSETS REGISTER, DEP RECIATION ON SUCH ASSETS SHOULD BE ALLOWED. SUCH A VERIFICATION TH AT NO DOUBLE CLAIM IS MADE WAS IN FACT DIRECTED BY THE TRIBUNAL IN AY. 2008-09, AND IN AY. 2009-10. FINALLY, HE DIRECTED THE AO TO AL LOW THE CLAIM IN LINE WITH THE VERIFICATION SO MADE. ACCORDINGLY, HE ALLOWED THIS GROUND. AGAINST THE ORDER OF THE CIT(A), REVENUE IS I N APPEAL BEFORE US. 5.3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY IN EARLIER YEAR, SIMILAR ISSUE IN ASSESSEES OWN CASE CAME UP FOR CONSIDERATI ON BEFORE THIS TRIBUNAL IN ITA NO. 1404/HYD/2013 DT. 06-06-2014. IN THE SAID CASE, THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS DECID ED THE ISSUE AS UNDER: 17. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE REASON FOR DISALLOWING THIS EXPENDITURE IS THAT THE SPECIAL AUDITOR MADE AN OBSERVATION THAT NO SUPPORTING EVIDENCE FOR THESE PAYMENTS FOR ESTABLISHING GENUINENESS OF THE PAYMENT HAS BEEN FI LED. BEFORE US, THE LEARNED AR SUBMITTED THAT THESE PAYMENTS WERE MADE THROUGH CHEQUES AND OUT OF TOTAL PAYMENT OF RS. 1,75,70,005/-, THE DRP ACCEPTED THE PAYMENT OF RS. 26,72,773/- AS GENUINE AND THERE IS NO REASON FOR DISALLOWING OF RS. 1,48,97,232/-. THE PAYMENT HAS B EEN BY WAY OF CHEQUE AND BEING SO THE EXPENDITURE IS TO BE ALLOWE D. CONSIDERING THE REQUEST OF THE ASSESSEES COUNSEL, WE ARE INCLINED TO DIRECT THE AO NOT TO DISALLOW THE PAYMENTS WHICH ARE MADE BY WAY OF CHEQ UE AND IN RESPECT OF CASH EXPENSES THERE IS EVERY CHANCE OF INFLATING THE SAME. ACCORDINGLY, WE DIRECT THE AO TO DISALLOW 10% OF CASH EXPENSES M ADE BY CASH PAYMENTS. THIS GROUND IS PARTLY ALLOWED. ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 14 -: 5.4. FURTHER, SIMILARLY FOR AY. 2009-10 IN ITA NO. 1644/HYD/2014 DT. 22-05-2015, THE TRIBUNAL HELD AS F OLLOWS: 40. AS REGARDS THE ISSUE INVOLVED IN ADDITIONAL GR OUND NO.1 OF THE REVENUE, RELATING TO DISALLOWANCE OF VARIOUS EXPENS ES AMOUNTING TO RS.5,72,62,133 PROPOSED TO BE MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE BILLS PRODUCED BY THE ASSESSEE COMP ANY IN SUPPORT OF THE SAID EXPENSES WERE NOT IN ITS NAME, BUT WERE IN THE NAME OF OTHER GROUP COMPANIES, IT IS OBSERVED THAT A SIMILAR ISSUE AS I NVOLVED IN GROUND NO.2 ORIGINALLY RAISED IN THE APPEAL OF THE REVENUE HAS ALREADY DECIDED BY US IN THE FOREGOING PORTION OF THIS ORDER BY FOLLOWING THE DECISION OF THE COORDINATE BENCH IN ASSESSEES OWN CASE FOR ASSESSM ENT YEAR 2008-9. FOLLOWING THE SAID DECISION, WE UPHOLD THE IMPUGNED ORDER OF THE DRP DIRECTING THE ASSESSING OFFICER TO VERIFY THE RELEV ANT EXPENSES AND IF IT IS FOUND ON SUCH VERIFICATION THAT THE PAYMENTS ARE MA DE BY THE ASSESSEE COMPANY BY CHEQUE AND THE SAME EXPENSES ARE NOT CLA IMED BY THE OTHER GROUP COMPANIES, IN WHOSE NAMES THE RELEVANT BILLS ARE ISSUED, THE SAME MAY BE ALLOWED AS DEDUCTION IN THE CASE OF THE ASSE SSEE. ADDITIONAL GROUND NO.1 OF THE REVENUES APPEAL IS ACCORDINGLY DISMISSED. 5.5. IN VIEW OF THIS, WE REMIT THE ISSUE TO THE FILE OF THE AO NOT TO DISALLOW THE PAYMENTS WHICH ARE MADE BY ACCOUN T PAYEE CROSSED CHEQUES AND IF IT IS PROVED THAT IT IS WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS. HOWEVER, IN THE CASE OF CASH PAYMENT, ASSESSEE HAS TO PROVE THE GENUINENESS OF THE P AYMENTS AND ALSO TO PROVE THAT THERE IS NO INFLATION OF ANY EX PENDITURE. IF THE AO FINDS THAT THERE IS INFLATING EXPENDITURE, 10% O F SUCH CASH PAYMENT IS TO BE DISALLOWED. IN VIEW OF THIS WE RE MIT THE ISSUE TO THE FILE OF AO FOR FRESH CONSIDERATION. 6. THE NEXT GROUND IN REVENUES APPEAL IS AS FOLLOWS : 7. THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.2,48,43,132/- MADE BY THE AO BEING THE PRIOR PERIOD EXPENDITURE W HICH NOT RELATABLE TO AY. UNDER CONSIDERATION. ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 15 -: 6.1. AS FAR AS THIS GROUND IS CONCERNED, THE ASSESS EE CHALLENGED THE DISALLOWANCE OF PRIOR PERIOD EXPENDITU RE AMOUNTING TO RS.2,48,43,132/- BEFORE CIT(A). THE AO NOTICED THAT THE ABOVE SUM OF EXPENDITURE BELONGS TO AN EARLIER ACCOUNTING P ERIOD AND THEREFORE PROPOSED TO DISALLOW THE SAME. THE ASSESSEE SUBMITTED THAT THERE WAS A DIFFICULTY IN OBTAINING THE BILLS AND PROVIDING FOR THE EXPENDITURE IN VIEW OF THE ONGOING NATURE OF THE PRO JECT. IT WAS SUBMITTED THAT SUCH DIFFICULTIES WERE COMMON IN THE REAL TY SECTOR. IT WAS FURTHER SUBMITTED THAT THE CLAIM OF EXPENDITURE IN ANY CASE WAS AN ANNUAL ESTIMATE AND THE MATERIALITY OF THE EXPE NSE WAS NEVER IN QUESTION. RELIANCE WAS ALSO PLACED ON A DEC ISION OF THE DELHI HIGH COURT IN THE CASE OF CIT VS. VISHNU INDUST RIAL GASES. THE AO WAS NOT INCLINED TO CONSIDER THIS EXPLANATION A ND PROCEEDED WITH THE DISALLOWANCE OF RS.2,48,43,132/-. 6.2. THE LD.CIT(A) OBSERVED THAT AS SEEN FROM THE ASSESSMENT ORDER THAT IN MAKING THE DISALLOWANCE, THE A O AT PARA 11.2 CONSIDERED THAT UNDER THE MERCANTILE SYSTEM OF ACC OUNTING EXPENDITURE PERTAINING TO AY 2010-11 SHOULD BE RECOGN ISED ONLY IN AY 2010-11. ADMITTEDLY, THE BILLS WERE FOR VALUE RECE IVED IN AN EARLIER ACCOUNTING PERIOD. BUT THEY WERE ACCOUNTED FOR AS SOON AS THEY WERE RECEIVED AND PAID FOR. IT IS SEEN FROM THE ORDER THAT THE PAYMENTS WERE MADE BY CHEQUE, AND THE GENUINENESS OF SUCH EXPENDITURE WAS NEVER AN ISSUE. IT IS IN THIS CONTEXT THAT THE ASSESSEE'S ARGUMENTS ON MATERIALITY OF EXPENDITURE SHO ULD BE SEEN. IT IS NOT UNCOMMON THAT ASCERTAINMENT OF A CLAIM OR ITS R ECOGNITION IN BOOKS OR ACCOUNTS SPILLS OVER INTO A SUBSEQUENT AC COUNTING PERIOD. WHILE EXPENDITURE SHOULD NORMALLY BE CLAIME D IN THE YEAR OF ACCOUNT TO WHICH IT PERTAINS, THIS SHOULD NOT BE SEE N AS A ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 16 -: PROHIBITION ON PRIOR PERIOD EXPENSES. ON THE FACTS OF THE CASE BROUGHT OUT IN THE 'PARTICULARS' COLUMN OF THE EXPENDITUR E BREAK- UP ON PAGE 36 & 37 OF THE ASSESSMENT ORDER, AND THE SP ECIFIC NATURE OF THE ASSESSEE'S PROJECT WITH ITS INCOME RECOGNI TION MODEL, IT IS HELD THAT DELAY IN ASCERTAINMENT OF THE EXPENDITU RE CLAIMED IS NOT UNREASONABLE. THE CLAIM OF EXPENDITURE AS A PRIO R PERIOD ITEM THEREFORE, WAS DELETED BY THE CIT(A). AGAINST THIS, TH E REVENUE IS IN APPEAL BEFORE US. 6.3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CONTENTION OF THE LD .DR IS THAT ASSESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF BOOK K EEPING AND AS SUCH PRIOR PERIOD EXPENDITURE CANNOT BE ALLOWED. LD. AR SUBMITTED THAT OUT OF THIS, MAJORITY EXPENDITURE IS RELATING TO TAX P AYMENTS WHICH IS COVERED BY SECTION 43B OF THE ACT AND IT WILL BE ALLOWED ON ACTUAL BASIS. HE FURTHER SUBMITTED THAT EXPENDITURE IS CR YSTALISED IN THE ASSESSMENT YEAR UNDER CONSIDERATION AND ACCORDI NGLY IT IS TO BE ALLOWED. IN OUR OPINION, IF IT IS STATUTORY PAYMEN T COVERED BY SECTION 43B, IT IS TO BE ALLOWED ON ACTUAL PAYMENT BASI S. IN RESPECT OF OTHER PAYMENTS WHICH ARE NOT COVERED BY THE PROVISI ONS OF SECTION 43B, IT CANNOT BE ALLOWED IN THE ASSESSMENT YEAR UNDER CONSIDERATION WHICH IS NOT RELATING TO THE ASSESSMENT YE AR UNDER CONSIDERATION. MORE SO, THE ASSESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF BOOK KEEPING WHICH IS ON ACCRUAL BASIS. A CCORDINGLY, WE REMIT THE ISSUE-IN-DISPUTE TO THE FILE OF AO FOR FRESH C ONSIDERATION. THIS GROUND IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 17 -: 7. THE NEXT GROUND IN REVENUES APPEAL IS AS FOLLOWS : 8. THE LD. CIT(A) ERRED IN DIRECTING TO VERIFY WHET HER THE DEDUCTEE HAS PAID THE TAXES AND TO ALLOW THE EXPENSES IF SO, WHILE THE PROVISIONS OF SECTION 40(A)(IA) MANDATES DISALLOWAN CES OF EXPENDITURE WHERE TDS WAS NOT DONE. 7.1. THE SUM OF RS 8,61,52,185/- IS AN EXPENDITURE ON ACCOUNT OF INTEREST TOWARDS ICD FROM MAYTAS INFRA LTD. IT IS SEEN FROM PAGE 76 OF THE ASSESSMENT ORDER THAT THE ASSESSE HA D REPRESENTED BEFORE THE AO THAT THE PAYEE HAS CONSIDERE D THE SAME AS INCOME IN ITS RETURN OF INCOME FOR THE AY.2010-11. THE AO, HOWEVER, WAS NOT INCLINED TO ACCEPT THIS EXPLANATION A ND HELD: 'MERE OFFERING OF INCOME BY THE 3RD PARTY WILL NOT INDEMNIFY THE ASSESSEE FROM DISCHARGING ITS LIABILITIES.' 7.2. IN APPELLATE FIRST PROCEEDINGS, THE ARGUMENTS WE RE REITERATED IN THE WRITTEN SUBMISSIONS. THE COMPANY ALS O FURNISHED IN ITS PAPER BOOK TDS CERTIFICATES EVIDENCING DEDUCTIO N AT THE END OF THE NEXT ACCOUNTING PERIOD, AND ACCOUNT COPIES FROM ITS BOOKS RECORDING THE ENTRIES PASSED. 7.3. THE CIT(A) OBSERVED THAT T HE PROVISIONS OF SECTION 40(A)(IA) ARE PRIMARILY TO HELP IN THE ENFORCEMENT O F COMPLIANCE WITH TDS PROVISIONS. IN SO FAR AS TAXES RELATABLE TO A GIVEN TRANSACTION ARE REALISED THE OPERATION OF THE NEGATIVE S ANCTION CONTAINED IN SECTION 40(A)(IA) BECOMES REDUNDANT. A SI MILAR ISSUE WAS CONSIDERED BY THE TRIBUNAL IN THE CASE OF THE ASSE SSEE- COMPANY IN ITA 1404/HYD/2013. IT ENDORSED A DECISION OF THE COCHIN BENCH IN THE CASE OF ANTONY. DMUNDACAKAL VS. A CIT IN ITA NO. 38/COCHIN/2013, DATED 29-11-2013 WHICH RELIED, I NTER-ALIA ON ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 18 -: THE SUPREME COURT DECISION IN THE CASE OF HINDUSTAN COC O-COLA BEVERAGES LTD. [293 ITR 226] WHEREIN IT WAS HELD THAT R EVENUE IS NOT ENTITLE TO RECOVER TAX FROM PAYER IF RECIPIENT HAS DE CLARED THE PAYMENTS IN HIS RETURN OF INCOME. IT WAS, THEREFORE, D IRECTED AT PARA 56.2 THAT THE AO SHOULD EXAMINE WHETHER THE RECIP IENT HAD PAID ITS TAXES OR NOT ON THIS PAYMENT. IN THE EVENT TAXES WERE PAID BY THE RECIPIENT THIS DISALLOWANCE IN THE HANDS OF THE ASSESSEE SHOULD BE DELETED. 7.4. IT WAS ALSO OBSERVED THAT THE AMENDMENT BROUGHT ABO UT VIDE FINANCE ACT, 2012 IF THE PAYMENT IN QUESTION HAS B EEN ACCOUNTED FOR AS INCOME BY THE PAYEE IT CANNOT BE DISAL LOWED U/S 40(A)(IA) IN THE HANDS OF THE PAYEE. IT WAS HELD BY THE TRIBUNAL IN THE CASE OF DCIT VS. AP INDUSTRIAL INFRASTRUCTURE CORP ORATION LTD., ITA NO. 1806 & 1807/HYD/2013 DATED 04-09-2015 THAT THE PROVISO INSERTED W.E.F. 01-04-2013 IS DECLARATORY AN D CLARIFICATORY IN NATURE AND THEREFORE HAS RETROSPECTIVE EFFECT FROM 0 1-04-2005. THE ASSESSEE IS ALSO SUPPORTED IN THE MATTER BY THE DEC ISION OF THE SUPREME COURT IN THE CASE OF CIT VS. ALOM EXTRUSIONS L TD. [2009] 319 ITR 306. THOUGH THIS DECISION WAS RENDERED IN THE CONTEXT OF SECTION 43B, IT HELD THAT AS A RULE OF INTERPRETATION A PROVISION AMENDED TO REMOVE UNINTENDED CONSEQUENCES IS NECESSAR ILY RETROSPECTIVE IN OPERATION. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 7.5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY IN EARLIER YEAR, SIMILAR ISSUE IN ASSESSEES OWN CASE CAME UP FOR CONSIDERATI ON BEFORE THIS TRIBUNAL IN ITA NO. 1404/HYD/2013 DT. 06-06-2014. IN THE SAID ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 19 -: CASE, THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS DECID ED THE ISSUE AS UNDER: 56.2 FOLLOWING THE DECISION OF THE COORDINATE BENC H OF ITAT, COCHIN IN THE CASE OF ANTONY D. MUNDACKAL VS. ACIT(SUPRA), WE DIR ECT THE ASSESSING OFFICER TO SEE WHETHER THE RECIPIENT HAS PAID TAX O R NOT ON THIS PAYMENT AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW. FURTHE R, SHORT DEDUCTION OF TDS AND REMITTANCE OF THE SAME CANNOT BE A REASON F OR DISALLOWANCE U/S 40(A)(IA) AS HELD BY THE HONBLE CALCUTTA HIGH COUR T IN THE CASE OF TEKRIWAL (SUPRA). THIS GROUND IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 7.6. HOWEVER, IN OUR OPINION, ASSESSEE HAS TO PROV E THAT RECIPIENT OF SUCH INCOME HAS DECLARED THE SAME IN THE RETURN OF INCOME AND PAID TAX ON IT. HOWEVER, IN THE PRESENT CAS E, ASSESSEE HAS NOT DEMONSTRATED THIS FACT AS SUCH WE ARE NOT IN A P OSITION TO APPRECIATE THE ARGUMENT OF THE LD.AR THAT RECIPIENT HAS P AID THE TAX ON THE SAID INCOME. ACCORDINGLY, THE ISSUE IS REMI TTED TO THE FILE OF AO FOR FRESH CONSIDERATION WITH A DIRECTION TO ASSE SSEE TO DEMONSTRATE THAT RECIPIENT OF THE SAID INCOME HAS DISCLOS ED THE SAME IN THEIR RETURN OF INCOME AND PAID TAXES THEREON. ACCORDINGLY, WE REMIT THIS ISSUE TO THE FILE OF AO FOR FRESH CONSIDERATION. THIS GROUND IS PARTLY ALLOWED FOR STATIS TICAL PURPOSES. 8. THE NEXT GROUND OF APPEAL IN REVENUES APPEAL IS AS FOLLOWS: 9. THE LD. CIT(A) ERRED IN DELETING THE ADDITION MA DE UNDER SECTION 40(A)(IA) FOR SHORT DEDUCTION OF TAX, OBSERVING THA T SHORT DEDUCTION OF TAX DOES NOT EXTRACT THE PROVISIONS OF SECTION 40 ( A)(IA) OF THE I.T. ACT. 8.1. IN THIS GROUND THE REVENUE CHALLENGES THE ALLOWA NCE OF RS. 2,41,06,046/- U/S. 40(A)(IA) ON ACCOUNT OF SHORT DEDUCTION OF TAXES. IT IS SEEN THAT THE AO DISALLOWED THE ABOVE EXPE NDITURE ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 20 -: WHICH IS DEBITED TO PROFIT & LOSS A/C U/S. 40(A)(IA) ON THE GROUND THAT TDS WAS SHORT DEDUCTED. 8.2. THE CIT(A) OBSERVED THAT THE ASSESSEE IS A PRINC IPAL CONTRACTOR/PRINCIPAL EMPLOYER WHO IN TURN HAS APPOINTE D A SUB- CONTRACTOR TO EXECUTE THE PROJECT. ON THE PAYMENTS BEING MADE BY ASSESSEE TO SUB-CONTRACTORS, THE ASSESSEE HAS DEDUCTED TAX AT SOURCE @1% BUT THE AO DISALLOWED THE ENTIRE AMOUNT OF TH E SUB- CONTRACT EXPENDITURE ON WHICH TDS WAS DEDUCTED @ 1.133 % THOUGH THERE IS ONLY SHORT DEDUCTION OF TDS. IT WAS FUR THER URGED THAT PROVISIONS OF SECTION 40(A)(IA) ARE TRIGGERED ONLY IF TAX IS NOT WITHHELD OR AFTER WITHHOLDING IT IS NOT PAID. IF TAX IS WITHHELD AT A LOWER RATE, THE PROVISIONS OF THE ABOVE SECTION DO NOT GET ATTRACTED. FOR THIS PROPOSITION RELIANCE WAS PLACED ON A DECISIO N OF THE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. S.K. TEKRIW AL, ITA NO.183 OF 2012 AND ANOTHER DECISION OF THE MUMBAI BE NCH OF THE HON'BLE ITAT IN THE CASE OF DCIT VS. M/S. CHANDABHOY & JASSOBHOY, ITA NO.20/MUM/2010. IT WAS FURTHER SUBMITTE D THAT SIMILAR DISALLOWANCE MADE IN AYS 2008-09 & 2009-10. IN AY 2008- 09 THE DRP'S DIRECTIONS TO DELETE THE ADDITION WAS UPHEL D BY THE TRIBUNAL TO THE EXTENT THAT THE PAYEE HAD PAID TAXES ON THI S AMOUNT. A SIMILAR VIEW WAS TAKEN BY THE DRP FOR AY. 20 09-10 ALSO. 8.3. THE LD.CIT(A) DELETED ADDITION BY PLACING RELI ANCE ON THE EARLIER ORDER OF TRIBUNAL, IN ASSESSEES OWN CAS E IN ITA NO. 1404 AND 1373/HYD/2013, WHEREIN IT WAS HELD AS UNDER : '78. AFTER HEARING THE PARTIES, PERUSING THE RECORD AS WELL AS THE ORDERS OF THE REVENUE AUTHORITIES, WE FIND THAT THE HON'BLE KOLKATA TRIBUNAL IN THE CASE OF SK TEKRIWAL (INFRA) HAS HEL D THAT THE DISALLOWANCE U/S 40A(IA) IS NOT APPLICABLE IN THE C ASE OF SHORT ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 21 -: DEDUCTION OF TDS. IT WAS HELD THAT IF THERE IS A SH ORTFALL DUE TO A DIFFERENCE OF OPINION, THE TAX PAYER MAY BE TREATED AS A DEFAULTER U/S 201 BUT NO DISALLOWANCE CAN BE MADE U/S 40A(IA) . IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE DRP, HENCE, THE SAME IS HEREBY UPHELD DISMISSING THE GROUNDS RA ISED BY THE REVENUE'. AGAINST THE ORDER OF THE CIT(A), REVENUE IS IN APPEAL BEFORE US. 8.4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY IN EARLIER YEAR, SIMILAR ISSUE IN ASSESSEES OWN CASE CAME UP FOR CONSIDERATI ON BEFORE THIS TRIBUNAL IN ITA NO. 1404/HYD/2013 DT. 06-06-2014. IN THE SAID CASE, THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS DECID ED THE ISSUE IN FAVOUR OF ASSESSEE IN PARA 78 AS ABOVE. 8.5. IN VIEW OF THE ABOVE, WE ARE INCLINED TO DISMIS S THIS GROUND OF APPEAL TAKEN BY THE REVENUE. 9. IN THE RESULT, APPEAL OF REVENUE IN ITA NO. 1000/HYD/2016 (AY.2010-11) IS PARTLY ALLOWED FOR STATI STICAL PURPOSES. ITA NO. 991/HYD/2016 AY.2010-11 (ASSESSEES APPEAL ): GROUND-WISE DISCUSSION IS AS UNDER: GROUND NO.2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER TO DEL ETE THE ADDITION MADE OF RS.41,78,480/- AS SUCH PAYMENTS WERE MADE B Y THE APPELLANT THROUGH THE BANKING CHANNELS FOR THE PURP OSE OF APPELLANT'S BUSINESS. 10. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPINI ON THAT THIS GROUND DOES NOT REQUIRE ANY ADJUDICATION AS TH E SIMILAR ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 22 -: ISSUE OF REVENUE APPEAL, DISCUSSED ABOVE, HAS BEEN REMITTED TO THE FILE OF AO FOR FRESH CONSIDERATION IN PARA NOS. 2 TO 2.5 OF THIS ORDER. ACCORDINGLY THIS GROUND IS DISMISSED AS INFRUCTUOUS . THE NEXT GROUNDS OF APPEAL ARE AS FOLLOWS: 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN NOT DELETING THE ADDITION MADE OF RS.8,61,52,185/-. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE SEEN THAT NO SUCH ADDITION COULD BE MADE BY THE ASSESSING OFFICE R. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE FACT THAT THE AMOUNTS WERE PAID TO M AYTAS INFRA LTD., WHICH IS SEPARATELY ASSESSED TO TAX. 5. ALTERNATIVELY, THE LEARNED COMMISSIONER OF INCOM E-TAX (APPEALS) OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER TO ALL OW THE AMOUNT IN THE YEAR IN WHICH THE TDS WAS PAID TO THE CREDIT OF THE GOVERNMENT. 6. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION MADE OF RS.39,76,803/- WHEN THE AMOUNT WAS ACTUALLY PAID DURING THE PREVIOUS YEAR AND WHEN THE PROVISIONS OF SEC.40(A)(IA) ARE NOT APPLICABLE. 7. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING ADDITION OF RS.1,69,000/- WHICH WAS ACTU ALLY PAID DURING THE PREVIOUS YEAR. 11. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPINI ON THAT THESE GROUNDS DOES NOT REQUIRE ANY SEPARATE ADJUD ICATION AS THE SIMILAR ISSUES IN REVENUE APPEAL VIDE GROUND NOS . 8 & 9, DISCUSSED IN PARA NOS. 7 & 8 OF THIS ORDER, WHICH H AVE BEEN REMITTED TO THE FILE OF AO FOR FRESH CONSIDERATION. AC CORDINGLY THESE GROUNDS ARE ALSO DISMISSED AS INFRUCTUOUS. 12. IN THE RESULT APPEAL OF ASSESSEE IN ITA NO. 991/HYD/2016 (AY. 2010-11) IS DISMISSED. ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 23 -: ITA NO. 1001/HYD/2016 AY.2011-12 (REVENUES APPEAL ): 13. GROUND-WISE DISCUSSION IS AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO VERIFY THAT WHE THER THE COMPANY ON WHOSE NAME BILLS WERE THERE, HAS CLAIMED THE EXP ENDITURE TO THE TUNE OF RS.5,64,273/- WHICH WAS DISALLOWED U/S.37(1 ) AS BILLS WERE NOT IN THE NAME OF ASSESSEE COMPANY. 13.1. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPI NION THAT AS THE SIMILAR ISSUE WAS CONSIDERED IN REVENUE AP PEAL IN ITA NO. 1000/HYD/2016, AS DISCUSSED ABOVE HAS BEEN REMI TTED TO THE FILE OF AO FOR FRESH CONSIDERATION. ACCORDINGLY THI S GROUND IS REMITTED TO AO FOR FRESH CONSIDERATION. 14. NEXT GROUND BY REVENUE IN AS FOLLOWS: 2. THE LEARNED CIT(A) ERRED IN DIRECTING THE AO TO ALLOW THE PAYMENTS MADE THROUGH BANKING CHANNELS THAT IS A BEARER CHEQ UE ETC., AND DISALLOW ONLY 10% OF THE EXPENDITURE OF THE CASH EX PENDITURE OF RS.2,67,10,513/-WHICH WAS DISALLOWED U/S37(1) FOR N ON-SUBMISSION OF BILLS OF EXPENDITURE. 14.1. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPI NION THAT AS THE SIMILAR ISSUE IN REVENUE APPEAL IN ITA NO. 1000/HYD/2016, DISCUSSED ABOVE HAS BEEN REMITTED TO T HE FILE OF AO FOR FRESH CONSIDERATION. ACCORDINGLY THIS GROUND IS REMITTED TO THE FILE OF AO ON SIMILAR DIRECTION. 15. THE NEXT GROUND IN REVENUES APPEAL IS AS FOLLOW S: 3. THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.9,10,000/- MADE BY AO BEING THE PRIOR PERIOD EXPENDITURE WHICH NOT RELATABLE TO AY IN CONSIDERATION. ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 24 -: 15.1. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPI NION THAT AS THE SIMILAR ISSUE IN REVENUE APPEAL IN ITA NO. 1000/HYD/2016, DISCUSSED ABOVE HAS BEEN REMITTED TO T HE FILE OF AO FOR FRESH CONSIDERATION. ACCORDINGLY THIS GROUND IS REMITTED TO AO FOR FRESH CONSIDERATION. 16. THE NEXT GROUNDS IN REVENUES APPEAL IS AS FOLLO WS: 4. THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.1,42,02,401/- MADE U/S 40(A)(IA) OF THE IT. ACT. A. THE CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1,00,00,000/- MADE U/S. 40(A)(IA) OF THE IT. ACT ON THE GROUND TH AT IT IS A MERE PROVISION AND HENCE NO TAX IS DEDUCTIBLE AT SOURCE. B. THE CIT(A) OUGHT TO HAVE ENHANCED THE INCOME, AS THE SAID EXPENDITURE IS NOT AN ASCERTAINED LIABILITY AND ITS BEING A MERE PROVISION. 16.1. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPI NION THAT AS THE SIMILAR ISSUE IN REVENUE APPEAL IN ITA NO. 1000/HYD/2016, DISCUSSED ABOVE HAS BEEN REMITTED TO T HE FILE OF AO FOR FRESH CONSIDERATION. ACCORDINGLY THIS GROUND IS REMITTED TO AO ON SIMILAR DIRECTIONS. 17. THE NEXT GROUND IN REVENUES APPEAL IS AS FOLLOW S: 5. THE EARNED CIT(A) ERRED IN DELETING THE ADDITION MADE U/S40(A)(IA) FOR SHORT DEDUCTION OF TAX, OBSERVING THAT SHORT DE DUCTION OF TAX DOES NOT ATTRACT THE PROVISION OF SECTION 40(A)(IA) OF T HE IT. ACT. 17.1. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPI NION THAT AS THE SIMILAR ISSUE IN REVENUE APPEAL IN ITA NO. 1000/HYD/2016, DISCUSSED ABOVE HAS BEEN DISMISSED. ACCORDINGLY THIS GROUND IS DISMISSED AS INFRUCTUOUS. ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 25 -: 18. IN THE RESULT, APPEAL OF REVENUE IN ITA NO.1001/HYD/2016 (AY. 2011-12) IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 992/HYD/2016 AY.2011-12 (ASSESSEES APPEAL ): 19. GROUND-WISE DISCUSSION IS AS UNDER: 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITI ON MADE OF RS.5,64,273/- AS SUCH PAYMENTS WERE MADE BY THE APP ELLANT THROUGH THE BANKING CHANNELS FOR THE PURPOSE OF APP ELLANT'S BUSINESS. 19.1. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPI NION THAT THIS GROUND DOES NOT REQUIRE ANY ADJUDICATION AS TH E SIMILAR ISSUE OF REVENUE APPEAL DISCUSSED ABOVE HAS BEEN RE MITTED TO THE FILE OF AO FOR FRESH CONSIDERATION. ACCORDINGLY THI S GROUND IS DISMISSED AS INFRUCTUOUS. 20. THE NEXT GROUND IN ASSESSEES APPEAL IS AS FOLLO WS: 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER TO DELETE THE DISALL OWANCE OF EXPENDITURE RS.28,19,190/- WITHOUT REQUIRING ANY FU RTHER VERIFICATION AS THE PAYMENTS DO NOT ATTRACTS THE PR OVISION OF SEC.194C OF THE INCOME TAX ACT, 1961. 20.1. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPI NION THAT THIS GROUND DOES NOT REQUIRE ANY ADJUDICATION AS TH E SIMILAR ISSUE OF REVENUE APPEAL DISCUSSED ABOVE HAS BEEN RE MITTED TO THE FILE OF AO FOR FRESH CONSIDERATION. ACCORDINGLY THI S GROUND IS DISMISSED AS INFRUCTUOUS. ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 26 -: 21. THE NEXT GROUND IN ASSESSEES APPEAL IS AS FOLLO WS: 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING ADDITION OF RS.1,50,000/- WHICH WAS ACTU ALLY PAID DURING THE PREVIOUS YEAR. 21.1. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPI NION THAT REGARDING THIS PAYMENT, THE LD.AR OF ASSESSEE DID N OT RAISE ANY ARGUMENT CONTROVERTING THE FINDINGS OF CIT(A). ACC ORDINGLY, THIS GROUND OF APPEAL IS DISMISSED. 22. IN THE RESULT, APPEAL OF ASSESSEE IN ITA NO. 992/HYD/2016 (2011-12) IS DISMISSED. 23. TO SUM-UP, BOTH THE APPEALS OF REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AND BOTH THE APPEALS O F ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH AUGUST, 2017 SD/- SD/- (P. MADHAVI DEVI) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD, DATED 7 TH AUGUST, 2017 TNMM ITA NOS. 1000 & 1001/HYD/16 & ITA NOS. 991 & 992/HYD/16 :- 27 -: COPY TO : 1. THE ADDL. COMMISSIONER OF INCOME TAX, CENTRAL RA NGE-3, HYDERABAD. 2. THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL C IRCLE- 3(2), HYDERABAD. 3. M/S. HILL COUNTY PROPERTIES LTD., (FORMERLY MAYT AS PROPERTIES LTD.,) C/O. SRI S. RAMA RAO, ADVOCATE, F LAT NO. 102, SHRIYAS ELEGANCE, 3-6-643, STREET NO. 9, HIMA YAT NAGAR, HYDERABAD. 3. CIT (APPEALS)-11, HYDERABAD. 4. PR.CIT(CENTRAL), HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.