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2015 (5) TMI 351 - ITAT DELHI

2015 (5) TMI 351 - ITAT DELHI - TMI - Disallowance u/s 40A(3) - Held that:- Facts in the case of the assessee are similar to the facts involved in the case of M/s Glitz Builders and Promoters Pvt. Ltd. (2015 (5) TMI 384 - ITAT DELHI) we, therefore, by respectfully following the said order delete the impugned addition made by the AO and sustained by the ld. CIT(A) also agreeing with the contention of the assessee has not claimed any deduction in respect of cost of the purchase of the land, whethe .....

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papers seized at the time of search at the assessee’s premises, it was noticed that interest is paid on the PDCs only during the period of extension of PDCs and, therefore, he directed the Assessing Officer to recompute the interest on PDCs at the time of extension of the PDCs. He has further observed that if it is not possible to work out the extension of PDCs in each case, then the Assessing Officer is directed to recompute interest on PDCs after six months from the date of issue of the PDCs. .....

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en routed as an expense in assessee’s P&L A/c has been wrongly added as an addition in assessee’s hands. - Decided in favour of assessee.

Addition on account of deemed dividend - CIT(A) deleted addition - Held that:- the assessee had shown the impugned amount in its balance sheet as current liability which was received as an advance against the purchase of suitable land. The AO although invoked the provisions of Section 2(22)(e) of the Act but could not bring any material on record to .....

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2013, ITA No. 1672/Del/2013 - Dated:- 24-4-2015 - Sh. G. C. Gupta And Sh. N. K. Saini JJ. For the Appellant : Sh. V. S. Rastogi, Adv. For the Respondent : Smt. Parwinder Kaur, Sr. DR ORDER Per N. K. Saini, AM: These are the cross appeals by the assessees and the Department against the separate orders dated 18.12.2012 & 22.01.2013 for the assessment years 2007-08 & 2008-09 respectfully in the case of Green Valley Housing and Land Development Pvt. Ltd and the order dated 18.12.2012 for the .....

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ounds have been raised: 1. That on the facts and circumstances of the case and in law the CIT(A) erred in rejecting appellant s contention that assessment order made by Assessing Officer was bad in law and void ab-initio on the ground that it ought to have been made u/s153C of the Income Tax Act, and not, as was done u/s 143(3) of the Income Tax Act. 2. That without prejudice, on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the action of the Assessing Officer .....

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ng 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 Addi .....

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upholding the disallowance u/s40A(3) in respect of which no deduction was claimed by the appellant. 5.1 That even on merits the disallowance was not justified. 6. That the orders passed by the Assessing Officer and Commissioner of Income Tax (Appeals)-XXXIII, New Delhi are bad in law and void ab-initio. 7. The appellant craves permission to add, amend, alter or vary all or any grounds of appeal on or before the date of hearing of the appeal. 3. Ground Nos. 1 to 3, 6 & 7 were not pressed as s .....

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e of M/s Glitz Builders and Promoters Pvt. Ltd. Vs ACIT Delhi (copy of the said order was furnished). In her rival submissions, the ld. DR although supported the orders of the authorities below but could not controvert the aforesaid contention of the Ld. Counsel for the assessee. 5. After considering the submissions of both the parties and carefully going through the material available on the record, it is noticed that a similar issue has already been adjudicated by this Bench of the Tribunal vi .....

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us, we agree with the contention of the Ld. Counsel that the assessee has not claimed any deduction in respect of cost of the purchase of the land, whether original or additional payment. When the cost of the land, as well as additional payment is not claimed by the assessee as deduction, the question of any disallowance u/s40A(3) or otherwise in the case of the assessee does not arise. We, therefore, delete the entire disallowance made by the Assessing Officer u/s 40A (3) as well as additional .....

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to this issue, the ld. Counsel for the assessee at the very outset stated that this issue is covered vide order dated 02.01.2015 in ITA No. 1747/Del/2013 in the case of M/s Glitz Builders and Promoters Pvt. Ltd Vs ACIT (Supra). In her rival submissions, the Ld. DR although supported the orders of the authorities below but could not controvert the aforesaid contention of the Ld. Counsel for the assessee. 9. After considering the submissions of both the parties and the material available on the re .....

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unsel that any payment which has not been claimed by the assessee as an expenditure cannot be disallowed. He stated that the assessee purchased the land for an on behalf of CWPPL and any payment for the purchase of land or for additional payment has been debited to the account of CWPPL. Therefore, when no deduction is claimed by the assessee for purchase of land or for additional payment, the disallowance u/s 40A(3) or for additional payment cannot be made in the hands of the assessee. 8. Ld. DR .....

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ng Officer should be sustained. 9. We have carefully considered the submissions of both the sides and perused relevant material placed before us. The assessee has produced the collaboration agreement before the Assessing Officer and has submitted as under:- Based on the aforesaid Agreement the assessee purchased land for which the (M/s Countrywide Promoters Pvt. Ltd.) has reimbursed all costs and expenses with respect to the acquisition of the said land and also in conformity with the Collaborat .....

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ed fixed remuneration i.e. ₹ 35,000/- per acre. Thus, we agree with the contention of the Ld. Counsel that the assessee has not claimed any deduction in respect of cost of the purchase of the land, whether original or additional payment. When the cost of the land, as well as additional payment is not claimed by the assessee as deduction, the question of any disallowance u/s40A(3) or otherwise in the case of the assessee does not arise. We, therefore, delete the entire disallowance made by .....

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e our findings given in former part of this order for the assessment year 2007-08 in ITA No. 1771/Del/2013 shall apply mutatis mutandis. 12. Now we will deal with the appeal of the Department in ITA No. 1533/Del/2013 for the assessment year 2007-08. Following grounds have been raised in this appeal. 1. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of ₹ 93,47,930/- made by the Assessing officer on account of interest on PDCs paid out of boo .....

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ourse of the hearing of the appeal. 13. Ground Nos. 3 & 4 are general in nature, so, do not require any comments on our part. Vide Ground No. 1, the grievance of the Department relates to the deletion of addition made by the AO on account of interest on post dated cheques (PDC) paid out of books of accounts. As regards to this issue, the ld. Counsel for the assessee at the very outset stated that this issue is covered vide order dated 9/1/2015 of the ITAT F Bench, New Delhi in the case of AC .....

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f the ITAT Bench C New Delhi, the similar findings given by the Ld. CIT(A) as have been given in the impugned order, had been confirmed by observing in Para 7 of the aforesaid order dated 09.01.2015 which read as under:- 7. We have considered the submissions of both the parties and carefully gone through the material available on the record. It is noticed that the facts of the present case are identical to the facts involved in the case of M/s IAG Promoters and Developers Pvt. Ltd. (supra). The .....

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s not deleted the addition of ₹ 5,06,625/- but has only directed to recalculate the interest. We have carefully gone through the order of the Ld. CIT(A) and also the submissions of both the parties and we do not find any infirmity in the order of the Ld. CIT(A). After examining the loose papers seized at the time of search at the assessee s premises, it was noticed that interest is paid on the PDCs only during the period of extension of PDCs and, therefore, he directed the Assessing Office .....

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the order of the CIT(A). The CIT(A) directed to recalculate the interest on PDCs and there was a sound logic for such direction. His direction is based on material found and seized at the time of search. In view of the above, we do not find any justification to interfere with the order of Ld. CIT(A) in this regard and accordingly, we reject Ground No. 1 of the Revenue s appeal. 15. Since the facts in the present case are similar to the facts involved in the case of ACIT Vs M/s Pricison Infrastr .....

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his issue is covered in favour of the assessee vide order dated 22/8/2014 in the case of M/s West Land Developers Pvt. Ltd Vs ACIT in ITA No. 1752/Del/2013 for the assessment year 2006-07. The ld. DR although supported the order of the AO but could not controvert the aforesaid contention of the Ld. Counsel for the assessee. 18. After considering the submissions of both the parties and perusing the material available on the record, it is noticed that a similar issue was involved in the aforesaid .....

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P&L A/c of the assessee and were also like the earlier payment were made to the claimants of the land holdings and for the assessee these were re-imbursements. The issue has been considered by the CIT(A) in paras 5.3.1 to paras 5.3.8 however he has restored the matter with certain directions referring to facts which were not relatable to the assessee. Addressing these facts Ld. AR submitted the arguments herein also remain the same as these were payments for the purchase of land and have no .....

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e Ld. AR that the AO has recorded certain findings in paras 4 to 4.6 of the assessment order to search on BPTP It was contended and he gave no indication in the course of the hearing that he would be referring to the facts pertaining to the search on BPTP. It was his submission that it is a matter of record that no search operation took place on the assessee and this fact has been noted by the AO himself. In this background it was contended that the CIT(A) wrongly in paras 5 to 5.3.8 has incorpo .....

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ed on 24.03.2008 is stated to be extracted in the assessment order is refereed to whereas in the assessment order under consideration it was pointed out there is no such reference or for that matter to any such statement having been recorded. It was his submission that all arguments advanced in Ground No-4 contending that section 40A(3) is wrongly invoked would fully apply here. Herein also it was submitted additional payments were never claimed by the assessee as expenses. Since the said issue .....

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e CIT(A), that cost of land is assessee s expenditure is challenged for identical reason as in Ground No-4 (supra). It is contended that cost of land cannot be considered in the hands of the assessee and resultantly the directions contained in para 5.3.8 are non-issue in the hands of the assessee. IT is prayed that the assessee s contention be allowed, viz that no disallowance u/s 37(1) can be made in the hands of the assessee. 12.1. In the said background it was submitted that these additional .....

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this similarity of facts qua the arguments for Ground No-3 with Ground No.-4, it was submitted that the assessee has specifically challenged vide Ground No-2 the action of the CIT(A) who no doubt was dealing with multiple cases of search and has virtually cut and pasted in his order facts which are not even emerging from the assessment order as such keeping in mind the fact that AO never gave any hint during the hearing that he would refer to BPTP Ltd. group cases which were searched where asse .....

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P Ltd and its group companies. Although assessee is a group company no search was carried on it. It is also a matter of record that no document was seized in the course of such search which belonged to the assessee and which was treated as incriminating. This follows from the fact that no action was taken u/s 153C in the hands of the assessee. (ii) In the present assessment made u/s 143(3), the AO in paras 4.3 & 4.4 has referred to certain seized record belonging to M/s BPTP Ltd and its grou .....

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case of Abhay Kumar Shroff vs. CIT 290 ITR 14 (Jhar.) (Copies being filed; reference para 20). From the fact that the assessment was made u/s 143(3) it is to be taken that AO admits that no seized material belonged to the assessee. Hence, the entire observations in para 4.3 & 4.4 of the order of the AO are to be expunged. (iii) The order of the CIT(A) suffers from factual errors and legal infirmity. Firstly, in clauses (ii) and (iii) of para 5.2 he has referred to some submissions allegedly .....

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ere mentions that any part of the seized material belong to appellant company". The CIT(A) therefore himself gives a finding that no material seized belonged to the assessee and was utilized in making the assessment. (v) However, notwithstanding having stated as above, the CIT(A) justifies in para 6.4, the utilization of alien material seized from a different assessee in the hands of an assessee in making assessment u/s 143(3) by relying on the judgment in Pooran Mal vs. CIT 93 ITR 505 (SC) .....

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he High Court, that the search and seizure were in contravention of the provisions of section 132 of the Income Tax Act, still the material seized was liable to be used subject to law before the income tax authorities against the person from whose custody it was seized." (Copy of order being furnished.) The CIT(A) is plainly wrong and incorrect in extending the scope of the judgment by saying that such material can be used in an assessment u/s 143(3) in the hands of a totally different pers .....

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at there was no obligation on the assessee to make the payments accordingly the same could not be allowed as business expenditure. 13. We have heard the rival submissions and perused the material available on record. The case law relied upon by the parties has been taken into consideration. On a consideration of the same we are of the view that since in the facts of the present case the material issue is that the said expenditure was never claimed as assessee s business expenditure the occasion .....

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ference that here the entire amount is added u/s 37 as opposed to part of the expenditure disallowed u/s 40A(3) is not so material as the finding is arrived at taking cognizance of the material fact that herein also no such claim of expenditure has been made. The fact that the additional payments were warranted in order to avoid potential disputes amongst the claimants of the land holding which have been passed through to the land holders from generation to generation wherein there may be inform .....

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r of the assessee. Ground No.3.1 and 3.2 as such need not be adjudicated in the present case. Qua Ground No-2 the observation and findings to the extent that general observations based on material found during BPTP group of companies which were searched does not have any bearing. The material not having been confronted to the assessee in the face of the argument that even otherwise has no nexus has not been rebutted by the Revenue by any evidence or argument as the thrust of the parties attentio .....

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on Ground No-2 in terms of the above observation is left open for want of necessary evidences and arguments based on evidences. 19. Since the facts of the present case are similar to the facts involved in the aforesaid referred to case of M/s West Land Developers Pvt. Ltd. Vs ACIT, so respectfully following the said order dated 22.08.2014. We do not see any merit in this ground of the departmental appeal. 20. In the departmental appeal for the assessment year 2008-09 in ITA No.2690/Del/2013. Vid .....

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itted that this issue is covered in favour of the assessee by the judgment of the Hon ble Jurisdictional High Court in the case of CIT Vs. Ankitek Pvt. Ltd. reported at 11 Taxman.com 100 (copy of the said order was furnished which is placed at page nos. 123 to 142 of the assessee s paper book). The ld. DR in her rival submissions supported the order of the AO. After considering the submissions of both the parties and the material available on the record, it is noticed that the AO made the additi .....

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sessee before the AO was that the amount was an advance for the purpose of suitable land and that the said amount was shown in the balance sheet as current liability. However, the AO did not find merit in the submissions of the assessee and made the impugned addition. However, the ld. CIT(A) deleted the addition by following the judgment of the Hon ble Jurisdictional High Court in the case of CIT Vs. Ankitek Pvt. Ltd. (2011) 11 Taxman.com 100 wherein at paras 25 to 27 it has been held as under: .....

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d be obvious, viz., loan or advance given under the conditions specified under Section 2(22)(e) of the Act would also be treated as dividend. The fiction has to stop here and is not to be extended further for broadening the concept of shareholders by way of legal fiction. It is a common case that any company is supposed to distribute the profits in the form of dividend to its shareholders/members and such dividend cannot be given to non-members. The second category specified under Section 2(22)( .....

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the arguments of the learned counsels for the Revenue would stand answered, once we look into the matter from this perspective. 26. In a case like this, the recipient would be a shareholder by way of deeming provision. It is not correct on the part of the Revenue to argue that if this position is taken, then the income is not taxed at the hands of the recipient . Such an argument based on the scheme of the Act as projected by the learned counsels for the Revenue on the basis of Sections 4, 5, 8 .....

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artment is in appeal. After considering the submissions of both the parties and the material available on the record, it appears that the assessee had shown the impugned amount in its balance sheet as current liability which was received as an advance against the purchase of suitable land. The AO although invoked the provisions of Section 2(22)(e) of the Act but could not bring any material on record to substantiate that the amount in question was a loan or deposit and not the advance received f .....

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e will deal with the departmental appeal in ITA No. 1672/Del/13 for the A.Y 2007-08. Following grounds have been raised in this appeal: 1. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of ₹ 17,89,219 out of total addition of ₹ 35,78,438/-, made by the Assessing Officer on account of interest on PDCs paid out of books of account. 2. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of  .....

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velopment Pvt. Ltd for the assessment year 2007-08. Therefore, our findings given in the former part of this order in the aforesaid case, shall apply mutatis mutandis. In that view of the matter, we do not see merit in this appeal of the Department. 25. Now, we will deal with appeal of the assessee in ITA No. 1770/Del/2013. Following grounds have been raised in this appeal: 1. That on the facts and circumstances of the case and in law the CIT(A) erred in rejecting appellant s contention that ass .....

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the case of the appellant and, ii. That, the CIT(A) himself holding that such material did not belong to the appellant. 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 prove that interest is paid on PDC despite:- i. 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 .....

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