TMI Blog2015 (2) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... e of sale to date of encashment of postdated cheques - where ever the date of PDCs are extended interest is paid @ 15% per annum in cash out of books of accounts which are evident from seized material - therefore, interest on PDCs to the extent of extension period appears to quite reasonable and logical - The ground raised by the Revenue is misconceived because CIT(A) has not deleted the addition but has only directed to recalculate the interest - Decided against revenue. Deemed dividend - CIT(A) deleted the addition - Held that:- Find considerable cogency in the contention of the Ld. Counsel of the assessee that the issue in dispute in the present case has been squarely covered in favor of the assessee by the decision of the Hon’ble Delhi High Court in CIT vs. Ankitech P Ltd. [2011 (5) TMI 325 - DELHI HIGH COURT ] stating that the legal fiction of section 2(22)(e) does not extend to “shareholder”. The fiction is not to be extended further for broadening the concept of shareholders. - Decided in favour of assessee. - I.T.A. No. 1532/Del/2013, I.T.A. NO. 1756/Del/2013 - - - Dated:- 23-1-2015 - SHRI S.V. MEHROTRA AND SHRI H.S. SIDHU, JJ. For the Appellant : S h. Robin Rawa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 147 taken in the hands of the appellant based on such seized material. 3. That on the facts and circumstances of the case and in law the CIT(A) erred in holding to quote, 'that seized documents definitely proves that interest is paid on PDC' despite that the seized record on the basis of which above finding was given, even according to his own finding by the CIT(A), did not belong to the appellant and, ii. that no enquiries were made from any of the alleged recipients of the interest and none was confronted with relevant document(s) . 3.1 That the finding of the CIT(A} is based on mere surmises and conjectures without proof and corroboration by independent evidence. 4. That on the facts and circumstances of the case and in law the CIT{A} erred in not accepting the appellant's contention that Additional Payments having not been claimed as deduction by appellant, no disallowance could, have been made in the hands of the appellant. 4.1 That without prejudice the ClT{A} erred in upholding the disallowance of Additional Payments made to the recipients who were not the owners of land and to the payment made in cash. 4.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the CIT(A) that the deduction of the purchase of land having not been claimed by the appellant, no disallowance could be made. The CIT(A) did not accept this contention viz., that the assessee having not claimed the deduction no disallowance could be made. He however, gave certain directions to quantify the disallowance to be made. As per these directions while giving appeal effect the entire claim of ₹ 20,09,701/- is to be allowed. 7.1 He further submitted that the contention in Ground No. 4 however, is that the assessee having not claimed the expenditure, the same cannot be disallowed. Similar disallowance was made in the case of Westland Developers Pvt. Ltd for the AY 2006-07 and was partly confirmed by the CIT(A). The Hon'ble Tribunal vide order referred to supra deleted the addition vide para 13 passed in ITA No.1752/Del2/013 in the case of Westland Developers Pvt. Ltd. vs. ACIT (Page 67 of the Paper Book). Copy of the ITAT order is at page 34-68 of the PB. For the sake of convenience the issue raised in Ground No. 3 and finding of the Tribunal in Para 13 of the said order is reproduced as under:- 13. We have heard the rival submissions and peruse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 138-143). 8. Ld. DR did not have any raised any objection to the aforesaid proposition of the ld. Counsel of the assessee. 9. We have heard the both parties and perused the relevant record available with us specially the impugned order passed by the Revenue Authorities; Paper Book filed by the assessee, we find considerable cogency in the contention of the ld. Counsel of the assessee that the issue raised in ground no. 4 is squarely covered by the Order dated 22.8.2014 of the ITAT, Delhi H Bench passed in ITA No. 1752/Del/2013 (A.Y. 2006-07) in the case of M/s Westland Developers Pvt. Ltd., vs. ACIT wherein the Tribunal held that Ground No. 3 on the facts available on record considering the judicial precedent referred to in detail wile deciding Ground NO. 4 has to be decided in favor of the assessee. Respectfully following the precedent as aforesaid, we allow this ground of the assessee. We find that in view of the above decision, the Ground No. 4.1, 4.2 and 4.3 become inconsequential. 10. With regard to ground No. 5 5.1 raised by the assessee relating to disallowance of ₹ 1,00,000/- made u/s. 40A(3) and confirmed by the CIT(A). Ld. Counsel of the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 26,69,785/- made by the AO on account of interest on PDCs paid out of books of account is concerned, it is was submitted by the Ld. Counsel of the assessee that this was the interest calculated @ 15% p.m. on PDCs from the date of issue (sale deed) to the date of encashment. We find that CIT(A) held in para 5.4 at page 17 of his order that If it is not possible to work out the extension of PDCs in each case then A.0. is directed to recomputed interest on P DCs after six months from date of issue of PDCs i.e. date of sale, as six months is taken as reasonable period for giving PDC as per sale deed . Ld. Counsel of the assessee further submitted that since the PDCs were encashed in less than six months from the date of issue, entire interest of ₹ 26,69,785/- was deleted in pursuance to the order of CIT(A). Copy of appeal effect by way of revised Tax Computation is enclosed at page 98-99 of the PB. He further submitted that the the matter in the present appeal is covered by the order of the Tribunal 'C' Bench Delhi in the case of a sister concern viz., M/s IAG Promoters and Developers Pvt. Ltd dated 31.10.2014 passed in ITA No. 1674/De1l13 1765/De1l13 for AY 2008-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Delhi) vide order dated 11.5.2011 and hence, the issue raised by the Revenue may be dismissed. 20. Ld. DR did not have any raised any objection to the aforesaid proposition of the ld. Counsel of the assessee. 21. We have heard the both parties and perused the relevant record available with us specially the impugned order passed by the Revenue Authorities; Paper Book filed by the assessee, we find considerable cogency in the contention of the ld. Counsel of the assessee that the issue raised in ground no. 3 raised in the Revenue s Appeal is squarely covered by the Order of the Hon ble Delhi High Court in the case of CIT vs. M/s Ankitech Pvt. Ltd. (340 ITR 14) and also reported in [2011] 11 Taxmann.com 100 (Delhi) vide order dated 11.5.2011 wherein the Hon ble Court has held as under:- According to section 2(22)(e) of the Income Tax Act, 1961, the following conditions are to be satisfied : (i) the payer company must be a closely held company; (ii) it applies to any sum paid by way of loan or advance during the year to the following persons : (a) a shareholder holding at least 10 of the voting power in the payer company; (b) a company in which such share holder ..... 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