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Asstt. Commissioner of Income Tax Central Circle 23, New Delhi Versus Fragrance Construction (P) Ltd. and Vica-Versa

Disallowance u/s 40A (3) - Held that:- Section 40A(3) of the Act has been wrongly invoked as admittedly no expenses relatable to the addition has been claimed and the assessee has not claimed any expenses relatable to addition & the payments were not claimed as expenditure as is noted by AO - Decided in favour of assessee.

Addition on on account of interest on Post Dated Cheques alleged to have been paid outside the books of accounts - CIT(A) deleted the addition - Held that:- The dat .....

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togi, AR ORDER PER T.S. KAPOOR, ACCOUNTANT MEMBER These are cross appeals filed by the assessee and revenue respectfully against the order of Ld. CIT(A) dated 22.1.2013. The assessee has taken eight grounds of appeal. However at the time of hearing, Ld. AR stated that he will not be pressing ground No. 1,2,3,6,7 and 8 & therefore these grounds are dismissed as not pressed. Regarding ground No. 4 & 5 the Ld. AR submitted that these grounds involve two issues namely additional payments mad .....

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tion to para 13 of the said order. Ld. AR submitted that facts and circumstances in the present case are exactly similar and therefore these issues are covered in favour of the assessee. Ld. AR further submitted that relying upon this order in another group company M/s. IAG Promoters and Developers Pvt. Ltd similar disallowances were deleted by the Tribunal vide its order dated 2.1.2015 in ITA No. 1747/Del/2013. Ld. DR acceded to the facts brought in before us by the Ld. AR. As regards the reven .....

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ard rival submissions and have gone through the material available on record. We find that assessee is engaged in the business of land development alongwith its various group companies. A search & seizure operations was carried on upon assesee & its group company wherein various additions were made . We find that similar issues were involved in another group companies of assessee wherein the issues raised in these appeals were decided in favour of assessee by the Hon ble Tribunal. Regard .....

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p; Fertilizers is applicable to the facts of the present case has not been set out in the order of the authorities nor has the Ld. DR been able to address the applicability of the said judgment to the issue at hand. We have taken ourselves through the said judgment and seen that it proceeds on entirety different facts and circumstances and has no applicability to the facts of the present case. Consequently, it is seen that from the ratio of the judgments relied upon before the CIT(A) and also be .....

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we hold for the detailed reasons given hereinabove that Section 40A(3) of the Act has been wrongly invoked as admittedly no expenses relatable to the addition has been claimed and the assessee has successfully demonstrated that the payment were reimbursement made by CWPPL. Accordingly Ground No. 4 is allowed. We find that in the present case also the assessee has not claimed any expenses relatable to addition & the payments were not claimed as expenditure as is noted by AO in para 4.3 & .....

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ere not owners of land. We find that this issue of additional payments has also been raised by revenue in its appeal which the Hon ble Tribunal in the case of Westland Developers Pvt. Ltd. has decided in favour of asseseee and therefore ground No. 4 and 4.1 has become infructuous and therefore dismissed. In view of the above the appeal filed by the assesssee is partly allowed. 5. Now coming to the appeal filed by the revenue. The revenue is aggrieved by the action of Ld. CIT(A) by which he had d .....

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er group companies of assessee. For the sake of convenience para 13 of such Tribunal order dealing with the issue of additional payments is reproduced below :- 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 arc 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 b .....

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ld fully apply here also. The difference 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 gener .....

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d No-4 has to be decided in favour of the assessee. Ground No.3.1 and 3.2 as such need not be adjudicated in the present case. 6. We find that the facts and circumstances in the present case are similar. Therefore respectfully following the above Tribunal order ground No. 2 of revenue s appeal is dismissed. Regarding the ground No. 1 we find that Ld. CIT(A) in para 6.4 had directed the AO to recompute interest on PDCs after six months from date of issue of PDCs and the AO in pursuance of such di .....

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r the sake of convenience the relevant findings of the Tribunal are reproduced below. :- "REVENUE'S APPEAL 14. As regards ground No. 1 raised by the Revenue relating to deletion of addition of ₹ 26,69,7851- 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 CI .....

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leted 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 PR. He further submitted that 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/De1/13 & 1765/De1/13 for AY 2008-09. (Extract copy is enclosed at pages 69-73 of the PR. Ld. Counsel for the assessee .....

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