TMI Blog2015 (9) TMI 840X X X X Extracts X X X X X X X X Extracts X X X X ..... PDCs at the time of extension of the PDCs - if it is not possible to work out the extension of PDCs in each case, then the AO is directed to recomputed interest on PDCs after six months from the date of issue of the PDCs – the order of the CIT(A) is upheld – Decided against revenue. Disallowance on account of additional payments for the purchase of land - Held that:- As decided in the case of M/s Westland Developers Pvt. Ltd. Vs ACIT [2014 (12) TMI 254 - ITAT DELHI ]Section 40A(4) starts with the non-obstante clause setting out that the provisions of this section shall have effect notwithstanding anything to the contrary contained in any other provisions of the Act relating to the computation of income under the head ‘profits and gains of business or profession’ – if a transaction is embodied in a document, the liability to tax depends upon the meaning and content of the language used i.e. the Court has to look to the terms of the contract between the parties as to what is the true nature and effect of the terms embodied in an agreement between the parties - the assessee claimed relying upon the agreement entered that the assessee had acquired various lands through farmers/vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of CIT(A) s order 1748/Del/2013, 1734/Del/2013, 1753 1754/Del/2013, 1759/Del/2013 1252/Del/2013, 1367/Del/2013, 1529 1670/Del/2013, 1534/Del/2013 24.12.2012 24.12.2012 24.12.2012 17.12.2012 2. Some common issues are involved in these appeals which were heard together, so these are being disposed off by this consolidated order for the sake of convenience and brevity. 3. First we will deal with the cross appeals pertaining to M/s Sunaina Tower Pvt. Ltd. for the assessment year 2006- 07. In the assessee s appeal in ITA No. 1748/Del/2013, following grounds 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/s 153C of the Income Tax Act, and not, as was done u/s 143(3)/147 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 and in making the assessment in pursuance th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of additional payment in violation of Stamp Duty Act, 1899. 3. The order of the CIT(A) is erroneous and is not tenable on facts and in law. 4. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal. 5. Ground Nos. 1, 2, 2.1, 5 6 of the assessee s appeal were not pressed, therefore, these grounds are dismissed as not pressed. 6. Vide Ground Nos. 3 3.1 of the assessee s appeal and Ground No. 1 of the departmental appeal relates to the addition made by the AO on account of interest on Post Dated Cheques (PDCs). 7. The facts related to this issue in brief are that the AO made the addition of ₹ 28,42,472/- on account of interest on Post Dated Cheques for the part payment of purchase of land. He calculated interest @ 15% per annum from the date of issue (sale deed) to the date of encashment of the cheque and made the addition in the hands of the assessee. 8. Being aggrieved the assessee carried the matter to the ld. CIT(A) who held that if it is not possible to work out the extension of PDCs in his case then the AO is directed to recompute interest of PDCs a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 learned CIT(A) in this regard and accordingly, we reject ground No. 1 of the Revenue s appeal. 12. Since the facts of the present case are identical to the facts involved in the aforesaid referred to case of M/s IAG Promoters and Developers Pvt. Ltd. So, respectfully following the aforesaid referred to order dated 31.10.2014, we do not see any valid ground to interfere with the findings given by the ld. CIT(A). Accordingly, we do not see any merit in the grounds of the assessee as well as the department, on this issue. 13. Next issue vide Ground Nos. 4 to 4.2 of the assessee s appeal and Ground No. 2 of the departmental appeal relates to the disallowance on account of additional payments for the purchase of land. 14. The facts related to this issue in brief are that the AO made a disallowance of ₹ 15,66,979/- on account of additional payments made for the purchase of land by observing that said payment was in violation of Stamp Duty Act and such expenditure was hit by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d through its P L A/c. In the circumstances, the occasion to make an addition of the same by way of a disallowance in these peculiar facts and circumstances of the case does not arise. The reasoning and finding given while considering the arguments qua Ground No-4 would 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 generation wherein there may be informal arrangements of ownership and or the payments were for commercial expediency to facilitate peaceful possession and registration of the land holding; where by the time Registry was made the landholders felt a higher payment was necessitated due to increase in value are issues which are not required to be addressed in the present proceedings. GroundNo-3 on the facts available on record consideri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e vide Ground Nos. 2 2.1 relates to the confirmation of the disallowance made by the AO u/s 40A(3) of the Act. As regards to this issue the ld. Counsel for the assessee submitted that it has been decided in favour of the assessee in the case of M/s Westland Developers Pvt. Ltd. (a group company) in ITA No. 1752/Del/2013 for the assessment year 2006-07 and relevant findings have been given in para 10.10 of the said order dated 22.08.2014. The aforesaid contention of the ld. Counsel for the assessee was not controverted by the ld. DR. 21. After considering the submissions of both the parties and the material available on the record, it is noticed that an identical issue having similar facts was a subject matter of adjudication by the ITAT Delhi Bench H , New Delhi in the case of Westland Developers Pvt. Ltd. Vs ACIT in ITA No. 1752/Del/2013 for the assessment year 2006-07 wherein relevant findings have been given in para 10.10 of the order dated 22.08.2014 which read as under: 10.10. We have also taken ourselves through the judgment of the Jurisdictional High Court in the case of CIT Vs Industrial Engineering Projects Pvt. Ltd. (cited supra) which has been relied upon befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53/Del/2013, Ground Nos. 1, 2, 5 and 6 were not pressed, therefore, those grounds are dismissed as not pressed. 25. Vide Ground Nos. 3 to 3.2 the grievance of the assessee pertains to the additional payment made to the person who were not the owners of the land. A similar issue we have adjudicated in ITA No. 1748/Del/2013 in the case of M/s Sunaina Tower Pvt. Ltd., New Delhi Vs ACIT, Central Circle-23 in the former part of this order. Therefore, our findings given therein shall apply with the same force to these grounds raised by the assessee. Accordingly, we do not see any merit in these grounds of the assessee. 26. Vide Ground Nos. 4 4.1 the issue agitated by the assessee relates to the confirmation of disallowance u/s 40A(3) of the Act. A similar issue was involved vide Ground Nos. 2 2.1 of the assessee s appeal in ITA No. 1734/Del/2013 in the case of M/s Sunglow Overseas Pvt. Ltd. Vs ACIT which we have already adjudicated in the former part of this order. Therefore, by giving the same reasoning this issue is decided in favour of the assessee. 27. Now we will deal with the appeal of the assessee in ITA No. 1754/Del/2013 and the departmental appeal in ITA No. 1670/De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 has at least 20 per cent of the voting power; (c) a concern (other than company) in which such share holder has at least 20 per cent interest; (iii) the payer company has accumulated profits on the date of any such payment and the payment is out of accumulated profits; (iv) the payment of loan or advance is not in the course of ordinary business activities. By a deeming provision it is the definition of dividend which is enlarged. The legal fiction does not extend to shareholder . The fiction is not to be extended further for broadening the concept of shareholders. Circular No. 495, dated September, 22, 1987, issued by the Central Board of Direct Taxes is not binding on the High Court. During the assessment proceedings, the Assessing Officer noticed that the assessee company had received advances of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, our findings given in the former part of this order while adjudicating the said case shall be applicable mutatis mutandis. Accordingly, we do not see any merit in the grounds of the assessee as well as the department. 37. Ground No. 4 of the assessee s appeal relates to the sustenance of disallowance u/s 40A(3) of the Act. This issue is similar to the issue involved in the case of M/s Sunglow Overseas Pvt. Ltd. (supra). Therefore in view of our findings given in the said case in the former part of this order the disallowance sustained by the ld. CIT(A) is deleted. 38. The remaining issue involved in the departmental appeal vide Ground No. 2 relates to the deletion of addition of ₹ 8,47,366/- made by the AO u/s 2(22)(e) of the Act on account of deemed dividend. The facts related to this issue are identical to the facts involved in the departmental appeal in the case of M/s Super Growth Construction Pvt. Ltd. in ITA No. 1670/Del/2013 (supra) which we have already adjudicated in the former part of this order. Therefore, our findings given therein shall apply with the same force for this assessee s case also. Accordingly, we do not see any merit in this ground of the de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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