TMI Blog2013 (4) TMI 801X X X X Extracts X X X X X X X X Extracts X X X X ..... w Delhi is bad in law and wrong on facts. 2. That on the facts and circumstances of the case, the learned Commissioner of Income-tax (Appeals)-XXI has erred in law in upholding the action of the Assessing Officer in making disallowance u/s 40 (a) (ia) of the Income-tax Act, 1961 amounting to ₹ 54,66,051/- paid by the assessee to the consolidator for transfer of rights. 2.1 That on the facts and circumstances of the case, the learned Commissioner of Income-tax (Appeals)-XXI has erred in holding that the consolidator was working as an agent of the assessee and hence the assessee ought to have deducted TDS on amount paid to the consolidator u/s 194C or 194H of the Income-tax Act, 1961. 3. That on the facts and circumstances of the case, the learned Commissioner of Income-tax (Appeals)-XXI has erred in law in not appreciating that the disallowance of said sum of ₹ 54,66,051/- which is included in purchases during the year has no impact on appellant s profit liable to tax as the entire purchases form part of closing stock of the appellant at the year end. 3. The facts are that the assessee is a private limited company incorporated on 30.03.2006 and is engaged in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Del) in the case of Finian Estates Developers (P) Ltd. (copy at pages 40-50 of the appeal file). The ld. counsel for the assessee has contended that in Finian Estates Developers (P) Ltd. (supra), under similar circumstances, the provisions of Section 40(a) (ia) of the IT Act have been held to be not applicable. 7. The Ld. DR, on the other hand, has strongly relied on the impugned order. It has been contended that the assessee has not been able to rebut the categorical findings of the CIT (A) to the effect that the provisions of Section 40(a)(ia) of the Act are squarely attracted and the assessee is guilty of contravention of such provisions, since the relationship between the assessee and M/s VEEL has not been established to be that of principal and principal; that rather, this relationship is that of principal and agent; that M/s VEEL was acting like an agent between the seller of the property and the assessee company, which finding of the authorities below has also not been successfully controverted by the assessee; that therefore, the findings of the Ld. CIT (A) in the cases of both the assessees are well placed, requiring no interference whatsoever; and that both the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he right of Vikram Electric Equipment P. Ltd., 2% of the cost of land (in some cases, even a higher amount) was to be paid to Vikram Electric Equipment P. Ltd., as mutually agreed. This was the mutually agreed price. Vikram Electric Equipment P. Ltd. worked for land acquisition and after scrutiny of the concerned documents of the land, Vikram Electric Equipment P. Ltd. would suggest the appropriate land for purchase by the assessee. Vikram Electric Equipment P. Ltd. thus acted with the farmers on its own account rather than for and on behalf of the assessee, on principle to principle basis, with the farmers on the one hand and the assessee on the other. The assessee contends that this being so, the provisions of neither section 194 C , nor section 194 H get attracted to the payment made by the assessee to Vikram Electric Equipment P. Ltd. The payment along with payment made to the farmers directly represented the purchase of the cost of land and had been correctly treated as such in the assessee s books of account. It has been contended that alternatively, in any case, the payment made to Vikram Electric Equipment P. Ltd. has not affected the taxable profits of the assessee during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it evident that unless the assessee decided to procure less than 27 acres of land through Vikram Electric Equipment P. Ltd., Vikram Electric Equipment P. Ltd., was to procure 27 acres of land for the assessee, failing which, no payment was to be made by the assessee to Vikram Electric Equipment P. Ltd. 29. This clearly shows that Vikram Electric Equipment P. Ltd. was transacting on a principle to principle basis and it cannot be said that the payment was made by the assessee to Vikram Electric Equipment P. Ltd. for rendering of any service. The provisions of section 194 H of the Act are, therefore, not at all applicable. 30. Moreover, the amount paid to Vikram Electric Equipment P. Ltd. was duly reflected by the assessee in the purchases closing stock. No sales had been made during the year under consideration. It has not been shown to be otherwise. In such a scenario, in our considered opinion, no disallowance is called for. 31. Further still, the chart at page 16 of the assessee s paper book shows that almost 2% of the sale value was being paid by the assessee to Vikram Electric Equipment P. Ltd. as consideration for transferring Vikram Electric Equipment P. Ltd. s rig ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
