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2015 (12) TMI 496 - ITAT MUMBAI

2015 (12) TMI 496 - ITAT MUMBAI - TMI - Addition representing settlement amount paid by a third party, on behalf of the assessee, considering the same as covered u/s 40a(ia) - Held that:- The payment in question was not in consequence of any work carried out by the contractor for the assessee, but it was agreed payment to get the title of the property cleared, by way of out of court settlement of the suit filed by the contractor. Thus, the assessee was correct in not making TDS on the amount pai .....

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contract but was made to get a clear title of the property.

For the above discussion, the grievance of the assessee is found to be justified and is accepted as such. The addition made by the A.O., as confirmed by the ld. CIT(A), is cancelled. - Decided in favour of assessee. - I .T.A. No. 6764/Mum/2013 - Dated:- 29-7-2015 - SHRI A.D. JAIN, JM AND SHRI N.K. BILLAIYA, AM Appellant by Shri Haridas Bhatt Respondent by : Shri Pavan Kumar Beerla ORDER PER A.D. JAIN, J.M. : This is assessee .....

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truct the building, as per approved plan, for a consideration of ₹ 6,75,60,000/-. The requirement of obtaining building usage permission having not been met by the developer, the remaining amount of ₹ 70,00,000/- was withheld by the assessee. The developer filed a civil suit against the assessee. However, the dispute was settled by an agreement dated 20-5-2009, out of court and the assessee agreed to pay an amount of ₹ 75 lacs to the developer, as development charges. This amou .....

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account of the assessee, was disallowed. The ld. CIT(A) confirmed the disallowance. 3. Before us, the ld. Counsel for the assessee contended that the ld. CIT(A) has erred in confirming the addition of ₹ 75 lacs u/s 40(a)(ia) of the Act, though it represented settlement amount paid by the third party on behalf of the assessee and it was not paid against any contract, but was out of court settlement paid to clear the title of the property. 4. The ld. D.R. has placed strong reliance on the i .....

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d that it remains undisputed that the contractor filed a civil suit against the assessee. However, the dispute was settled out of court by an agreement dated 20-5-2009 whereby, the assessee agreed to pay ₹ 75 lacs to the contractor, as development charges. This amount was paid to the contractor, on behalf of the assessee, by M/s Silver Line Enterprises, the purchaser of the building. TDS, however, was not made thereon. The relevant recital in the Deed of cancellation is as follows:- As per .....

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