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Philia Estate Developers Pvt. Ltd. Versus ITO, New Delhi

2016 (5) TMI 483 - ITAT DELHI

TDS u/s 194C or u/s 194H - Amount paid to the consolidator on purchase of land - Held that:- The amounts paid to the consolidator i.e. M/s. Vikram Electric Co. (P) Ltd. was duly accounted by the assessee in the purchases and closing stock. Undisputedly no sales have been made by the assesee during the period under consideration. In view of above scenario and facts we concur with the conclusion of the coordinate bench of the Tribunal in the case of the Philana Builders & Developers P. Ltd. (2016 .....

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n purchase of land attracts the TDS provision of section 194C or section 194H of the Act - Decided in favour of assessee - ITA No. 1950/Del/2011 - Dated:- 28-4-2016 - Shri Chandra Mohan Garg, Judicial Member And Shri L. P. Sahu, Accountant Member For the Appellant : Shri R.S. Singhvi, CA For the Respondent : Shri Ashis Chandra Mohanty, Sr. DR ORDER Per Chandra Mohan Garg, Judicial Member This appeal has been filed by the assesee against the order of the Commissioner of Income Tax (Appeals) - XVI .....

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g the amount payable to the consolidator amounting to RS.37,22,734/- as non genuine expenditure. 2.1 That on the facts and circumstances of the case, the learned Commissioner of Income-tax(Appeals)XVII 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 RS.37,22,734/- paid by the assessee to the consolidator for transfer of rights. 2.2 That on the facts and circumstances of the case, the learned Commissio .....

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act on appellant's profit liable to tax as the entire purchases form part of closing stock of the appellant at the year end. 3.1 That the order of learned CIT(Appeals) is erroneous and self contradictory, The learned CIT(Appeals) has erred in confirming the addition after holding that closing stock also needs to be reduced. The learned CIT(Appeals) ought to have held that the transaction of RS.37,22,734/- does not result into any taxable income as same is neither includible in purchases or c .....

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AO also observed that the assesee company has paid an amount of ₹ 11,98,10,938/- to two land owners and stamp duty of ₹ 71,86,690/-. The AO further noticed that in addition to these two amounts the assessee company also claimed a sum of ₹ 37,22,734/- as an amount payable to the consolidator. After seeking explanation from the assessee the AO made addition of said amount by observing that no TDS has been deducted on the said payment. Thus it would not be allowed as deduction in .....

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nded that on the identical set of facts and circumstances similar issue has been decided in favour of the assessee by the ITAT F Bench in ITA No. 1949/Del/2011 in the similar asstt. year 2007-08 in the case of Philana Builders & Developers P. Ltd. vs. ITO order dated 11.2.2016. The Ld. AR further contended that the assessee and Philana Builders & Developers P. Ltd. belong to a same group company and in the similar facts and circumstances ITAT H Bench Delhi in the case of Zebina Real Esta .....

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ely covered in favour of the assessee by the order of the coordinate bench of the Tribunal. 5. Replying to the above Ld. DR strongly supported the action of the AO as well as the first appellate order but he could not show us any other order of the Tribunal or any other higher forum to show us the order of the ITAT Delhi Bench F in the case of Philana Builders & Developers P Ltd. vs. ITO (supra) have either been modified or set aside by any competent authority. Ld. AR contended that the cons .....

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f facts, the issue has been decided in favour of the assessee and against the revenue by the D Bench of the ITAT in ITA No. 2361/D/2011 and ITA No. 1953/D/2011 for the AY 2007-08 in the case of M/s Finian Estate Developers P. Ltd. order dated 5th October, 2011. We further submit that the H Bench of the Tribunal in the case of Zebina Real Estate P. Ltd. vs. ITO in ITA No. 1429/D/2011 and 1430/D/2011 order dated 12.4.2013 followed the judgment of Tribunal in the case of Finian Estates Developers P .....

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f Panthea Builders and Developers (supra) in ITA No. 270/2005 before the Hon ble Jurisdictional High Court. The Hon ble High Court at para 11 has observed the following facts: 11. In its order dt. 5 th October, 2011, the ITAT examined the nature of the MoU between Finian and VEEPL with particular reference to the clauses therein and concluded that Finian was transacting with VEEPL on a principal to principal basis and that it could not be said that the payment to VEEPL was for rendering services .....

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in terms of Clause 3.2 of the MoU and it had not been shown that such payment was not a fair compensation. 12. As already noticed hereinbefore, no appeal was filed by the Revenue in this Court against the decision of the ITAT on the above aspect in the case of Finian. 13. ……..It is submitted that while in the case of Finian the Consolidator invested its own funds for purchasing the land for the acquirer in the present case of ZREPL the acquirer paid from its own funds. However, ld .....

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inguish it in relation to the case of ZREPL, the Court is not inclined to interfere with the impugned order of the ITAT which, in the opinion of the Court, has rightly relied upon its earlier decision in the case of Finian. 16. Having considered at length the submissions of ld. Counsel for the Revenue, the pleadings and the documents not only in the case of PBDPL but also in the case of Finian, the Court is unable to find any distinction between the two cases as far as the clauses in the MoU bet .....

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ccount of transfer of certain rights of Vikram Electric Equipment P. Ltd. in the lands transferred to the assessee, and was not towards any services rendered. The ld.AR submitted that as a consolidator, Vikram Electric Equipment P. Ltd. was to contact the local farmers in and around Gurgaon, who were willing to sell their land. 7.4. He submitted that Vikram Electric Equipment P. Ltd. was making payments from its account to the farmers and thereto have certain rights in the land. On the ultimate .....

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ikram Electric Equipment P. ltd. would suggest the appropriate land for purchase by the assessee. He submitted that 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. 7.6. The ld.AR further submitted that this being so, the provisions of neither section 194C nor section 194H get attracted to the payment made by the assessee .....

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the Taxing authorities also and the effect of adjustment with regard to the amount paid to Vikram Electric Equipment P. Ltd. would arise only on and in the instances of sale of land by the assessee. It is thus submitted that no disallowance u/s 40(a)(ia) of the Act is called for much less any consequential action u/s 201 of the Act. It has been contended that Vikram Electric Equipment P. Ltd. had an important role to play as a consolidator, since the assessee required contiguous land holdings in .....

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igned by the assessee and Vikram Electric Equipment P. Ltd. lays down that Vikram Electric Equipment P. ld. Makes it clear that Vikram Electric Equipment P. Ltd. was acting as an agent of the assessee, rendering services, for which, the provisions of section 194H of the Act are applicable and it is correctly applied by the ld. CIT(A). 9. We have perused the agreement in this regard. It is seen that clause 3.2 of the MOU between the assessee and Vikram Electric Equipment P. Ltd. makes it clear th .....

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