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The DCIT, Circle 1 (3) , Hyderabad Versus M/s. Bhargavi Real Estates (P) Ltd., Hyderabad

2015 (6) TMI 206 - ITAT HYDERABAD

Disallowance of land development charges - CIT(A) deleted the disallowance - Held that:- Claim of the assessee for such development expenses was disallowed by the A.O. on the ground that the relevant details to show the exact nature of expenses incurred were not furnished by the assessee and the onus to prove that the said expenses were incurred in connection with the concerned projects of the assessee was not satisfactorily discharged. As rightly contended by the Learned D.R., this specific rea .....

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expenses and the onus in this regard is on the assessee to establish on evidence that the land development expenses were incurred wholly and exclusively for the purpose of its business. Thus restore the matter to the file of the A.O. for deciding the same afresh - Decided in favour of revenue for statistical purposes.

Disallowance of commission expenses - assessee had not discharged its onus to prove that the expenses were incurred for its business - CIT(A) deleted the disallowance - .....

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deciding the same afresh - Decided in favour of revenue for statistical purposes.

Disallowance made u/s. 40A(3) - CIT(A) deleted the disallowance - Held that:- The payments made by the assessee to the land lords in cash were found to be covered by the Ld. CIT(A) by exceptional circumstances specified in Rule 8DD of I.T. Rules inasmuch as the same were made in respect of projects of the assessee located in remote villages where banking facilities were not in existence. At the time of .....

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t : None ORDER Per P.M. Jagtap, A.M. This appeal is preferred by the Revenue against the Order of the Ld. CIT(A)-V, Hyderabad dated 28.06.2013. 2. The assessee in the present case is a company which is engaged in the business of real estate. The return of income for the year under consideration was filed by it on 27.11.2006 declaring total income of ₹ 20,19.030. The income so declared was in respect of three projects viz., Ganesh Millennium City, Ganesh City and Ganesh Pearl City undertake .....

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med by it and also to furnish the relevant details along with books of accounts and relevant vouchers/bills to establish that the same were incurred wholly and exclusively for the purpose of its business. In reply, it was submitted by the assessee that out of the total land development expenses of ₹ 48,00,863, a sum of ₹ 32,00,000 was spent towards development expenses in respect of Ganesh Millennium City Project and the said amount was paid to M/s. Manish Estates after deducting TDS .....

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partly by cheque and partly by cash. As regards the commission expenses, it was submitted by the assessee that the payment on account of commission was made by cheque after deducting tax at source. Copy of relevant TDS certificate was also filed by the assessee in support. 2.1. The A.O. did not find merit in the explanation offered by the assessee in respect of its claim for land development charges, commission and payment towards land to be satisfactory. As regards the payment made towards land .....

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relevant vouchers/bills were not produced by the assessee to establish the exact nature of work done by M/s. Ganesh Estates. As regards the balance expenditure of ₹ 16,00,863 claimed to be incurred by the assessee on fencing, road cutting, guards etc., the A.O. found that the same was supported only by self-made vouchers, which did not bear either the name or signature of the payee or even the relevant details to show the exact nature of work done. As regards the commission expenditure, t .....

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al before the Ld. CIT(A) disputing the disallowance made by the A.O. on account of expenditure claimed by it on land development, commission and payment towards land. During the course of appellate proceedings before the Ld. CIT(A), additional evidence was filed by the assessee in the form of affidavits from land lords who were paid the additional compensation by the assessee. The same was forwarded by the Ld. CIT(A) to the A.O. seeking his remand report and after confronting the remand report r .....

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s deleted by the Ld. CIT(A) for the following reasons given in paragraph 8.2 of his order. 8.2. I have carefully considered the remand report and the submissions of the appellant. It is an undisputed fact accepted by the Assessing Officer that the amount of ₹ 32 lakhs was paid by the appellant to M/s. Ganesh Estates, which is a proprietary concern of Sri U. Rajendra Prasad, for the development of Ganesh Millennium City with an extent of 250 acres, but only has doubts over the services real .....

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ted by him and he stated that he was assessed with ITO, Ward 6(3), Hyderabad. As rightly argued by the appellant, no prudent business company will pay such a huge amount of ₹ 32 lakhs to any other company including sister concern without any services being rendered by the recipient. If the A.O. had doubts over the services rendered by Sri U. Rajendra Prasad for Ganesh Millennium City, he should have caused independent enquiries to prove the same. In absence of such cogent evidence, relianc .....

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expenses on account of commission payments amounting to ₹ 5,44,525 is deleted. 2.4. As regards the expenditure of ₹ 46,00,000 incurred on payment towards land as additional compensation to the land lords, the A.O. stated in the remand report that the said payments confirmed by the concerned land lords were partly made in cash to the extent of ₹ 26,50,000. It was therefore suggested by the A.O. in the remand report that the said payments made in cash exceeding ₹ 20,000 sh .....

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not called for. The Ld. CIT(A) thus allowed substantial relief to the assessee by deleting the various disallowances made by the A.O. and aggrieved by the order of the Ld. CIT(A), the Revenue has preferred this appeal before the Tribunal on the following grounds : 1. The order of the CIT(A) is erroneous in law and facts of the case. 2. The Ld. CIT(A) erred in deleting the disallowance of land development charges of ₹ 32 lakhs paid to M/s Ganesh Estates, a proprietary concern belonging to .....

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.T. Act amounting to ₹ 5,30,000/- even though it was established by AO that the cash payments were made to persons who were having banking accounts and these payments were not covered by exception laid down in Rule 6DD of I.T. Rules. 5. Any other ground that may be argued at the time of hearing. 3. In this case, the appeal of the Revenue was fixed for hearing on various dates i.e., 08.01.2014, 29.04.2014, 18.08.2014 and 18.12.2014. However, nobody appeared on behalf of the assessee on thes .....

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respondent-assessee after hearing the arguments of learned D.R. and perusing the relevant material on record. 4. Ground Nos. 1 and 5 raised by the Revenue in this appeal are general in nature seeking no specific decision from us. As regards the issue involved in ground No.2 relating to the claim of the assessee for land development charges of ₹ 32,00,000 paid to M/s. Ganesh Estates, it is observed that the claim of the assessee for such development expenses was disallowed by the A.O. on th .....

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lowed by him only on the basis that the payment of such charges was made by the assessee to M/s. Ganesh Estates, by cheque after deducting tax at source. In our opinion, the mere fact that the relevant payment was made by the assessee to M/s. Ganesh Estates by cheque after deducting tax at source is not sufficient to allow the claim of the assessee for the said expenses and the onus in this regard is on the assessee to establish on evidence that the land development expenses were incurred wholly .....

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