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Pr. Commissioner of Income Tax-4 Versus Invecon Pvt. Ltd.

2016 (9) TMI 305 - DELHI HIGH COURT

TDS u/s 194H - non deduction of tds - genuineness of the transaction - Held that:- Although the entire MOU was placed before the AO there was no discussion of the MOU to support the conclusion that the agreement between the Assessee and VEEPL was a sham agreement. The second difficulty is that although the AO has raised questions regarding the genuineness of the transaction it does not appear to be based on any enquiry undertaken by the AO. The AO could have easily invoked the statutory power to .....

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consolidator and a broker has not been addressed by the AO. - Court is satisfied that such payments could not be characterized as brokerage only for the purposes of bringing it within the ambit of Section 194H of the Act. In that sense, the basic background facts concerning the MOU entered into by the Assessee with the VEEPL is no different from the MOU entered into by the Assessees in the similar cases with VEEPL as aforementioned. - Decided in favour of assessee - ITA 324/2016 - Dated:- 1 .....

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e same question as was raised before the ITAT which is set out in first para of the impugned order, viz., whether the Commissioner of Income Tax (Appeals) [ CIT(A) ] erred in deleting the additions made by the Assessing Officer ( AO ) on account of failing on the part of the Assessee company to deduct tax under Section 194 H of the Income Tax Act, 1961 ( Act ) in respect of the payments made to Vikram Electric Equipment Pvt. Ltd. ( VEEPL ). 3. In the impugned order the ITAT has relied on its ear .....

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). Accordingly, the ITAT held that the case was covered squarely by its decision in Finian Estate Developers (supra). It held that the expenses incurred by the Assessee towards consolidation of land was not liable to deduction of tax at source under Section 194 H of the Act and disallowance under Section 40(a) (ia) of the Act. 4. At the outset, it was pointed by Ms. Kavita Jha, learned counsel for the Assessee, that there is a series of orders passed by the ITAT in relation to the similarly plac .....

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ecember 2015 in ITA No. 928 of 2015 930 of 2015) ii. Principal Commissioner of Income Tax v. Nayef Estate Pvt. Ltd (order dated 18th November 2015 in ITA No. 885 of 2015) iii. CIT v. Zebian Real Estate (order dated 5th November 2015 in ITA No. 257 of 2015) iv. CIT v. Panthea Builders & Developers P. Ltd. (order dated 5th November 2015 in ITA No. 270 of 2015). v. CIT v. Finian Estates Developers Pvt. Ltd. and CIT v. First India Estate and Services Pvt. Ltd. (order dated 26th August 2015 in IT .....

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emorandum of Understanding ( MOU ) entered into by the Assessee with VEEPL in the present case, pursuant to an identical agreement between the Assessee and the DLF Commercial Project Corporation, is no different from the MOUs entered into by the aforementioned Assessees with VEEPL. 6. The Court in its order dated 5th November 2015 noticed that although the ITAT had decided the question that has been urged in the case of Finian Estate Developers (supra) in favour of the Assessee and against the R .....

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he aforementioned cases. In the first place, he urged that merely because the Revenue did not question the finding of the ITAT in the case of Finian Estate Developers (supra), should not preclude the Revenue from challenging the decision of the ITAT in the present case although it may have followed its own decision in Finian Estate Developers (supra).He submitted that the terms and conditions under which the payment was made by the Assessee to VEEPL would have to be individually examined to dete .....

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of the transaction between the Assessee and the VEEPL and this was the basis on which the AO proceeded to hold that the tax had to be deducted at source under Section 194 of the Act. 8. There is a difficulty in accepting the above submission of the learned counsel for the Revenue. In the first place, the Court finds that although the entire MOU was placed before the AO there was no discussion of the MOU to support the conclusion that the agreement between the Assessee and VEEPL was a sham agree .....

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