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2022 (2) TMI 1142 - AT - Income TaxPayment towards interest in land - assessee had treated the same as a part of the cost of land - whether said payment was not the part of the cost of the land and was outside the purview of section 37(1) - CIT-A deleted the addition - HELD THAT:- It is an undisputed fact that during the FY 2007-08, the assessee had requirement to purchase contiguous piece of land for its housing project and has entered into memorandum of understanding/ agreement with SBPL to provide contiguous piece of land which in turn it was to be acquired from various farmers and land owners - MOU entered on 17.04.2007 clearly shows that there was an arrangement/understanding between the SBPL and the land owners and SBPL was paid for assigning/relinquishing/transferring all its present and future rights in the land to be registered in the name of the assessee. Most important fact was that, all these payments were made in the FY 2007-08. Now, in the AY 2013-14, AO held that the MoU and the payments made in the FY 2007-08 cannot be allowed. In other words, the expenditure incurred in AY 2008-09 was disallowed in AY 2013-14 and that to be u/s 37(1) of the Act. On this ground alone, we do not find any basis or the reason as to how the payments and the cost with regard to FY 2007-08 (AY 2008-09) is disallowable in AY 2013-14. The terms of Agreement and MoU entered into between the assessee and SBPL and the conduct of the parties and the transactions undertaken with the land owners clearly show that there was clear cut understanding and arrangement between the assessee, SBPL and the land owners and the same cannot be termed as self-serving document as held by the Assessing Officer, because such an agreement has duly acted upon - agreement reveals that SBPL has got the land transferred directly in favour of the assessee and it is provided that SBPL was paid consideration for assigning, relinquishing and transferring all its present and future rights in the said land. All these documents and the conduct that the payment made to SBPL, cannot be held to be a make-believe arrangement and such payment cannot be disallowed. Accordingly, the order of the ld. CIT (A) deleting the said disallowance is upheld. TDS u/s 194H - Disallowance on protective basis u/s 40(a)(ia) - commission or brokerage paid by the assessee company - CIT-A deleted the addition - HELD THAT:- Addition is baseless because payments made to the consolidators of land have been made for the purpose of renouncing right/interest in the land and thus the assessee and the consolidator are transacting on principal to principal basis and cannot be regarded as commission or brokerage. Therefore, the assessee cannot be held to be liable to deduct tax at source in terms of section 194H of the Act as certainly its not in the nature of any commission or brokerage. Accordingly, the ld. CIT (A) deleting the said disallowance is upheld. Revenue appeal dismissed.
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