9911796707
TMI Blog2015 (11) TMI 1565X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee company to deduct tax u/s 194H of the I.T. Act, 1961." 2. The facts, in brief, are that return declaring nil income was filed by the assessee on 31-3-2008. The case was selected for scrutiny and notice u/s 143(2) of the Income-tax Act, 1961 (in short "Act"), was issued. In the assessment order, passed u/s 143(3) of the Act, the ld. Assessing Officer made disallowance of Rs. 7,43,37,863/- in terms of section 40(a)(ia) of the Act, holding that payment made to consolidator M/s Vikram Electric Equipment Pvt. Ltd., for procuring land was liable for deduction of tax at source, but the assessee has failed to deduct the tax. 3. At the outset, the ld. authorized representative of the assessee submitted that the case of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord. We find that the assessee company was incorporated and engaged in the business of real estate and other allied activities. The assessee had appointed M/s. Vikram Electric Equipments (P) Ltd. as consolidator for procuring land for the assessee company and the role of consolidator was on principal to principal basis. The assessee had paid commission to M/s. Vikram Electric Equipments (P) Ltd. for procuring land and the A.O. held that the payment represented the commission for purchase of land and, therefore, was liable for TDS which the assessee had not done and therefore he made disallowance u/s 40(a)(ia) of the Act. We find that in the cases as relied upon by Ld. A.R., the payment to Vikram Electric & Equipments Pvt. Ltd. under similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the assessee that the Ld. CIT(A) directed the A.O. to verify the actual amount involved. 25. It has been maintained by the assessee all through that the payment to Vikram Electric Equipment P. Ltd. was on account of transfer of certain rights of Vikram Electric Equipment P. Ltd. in the lands transferred to the assessee and was not toward any services rendered. 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. 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 transfer of land to the assessee through Vikram Electric Equipment P. Ltd., the final ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land by the assessee. It is as such that it has been claimed 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 order to develop a colony. In case any land which was agreed to be acquired by Vikram Electric Equipment P. Lt. was not found to be suitable, it was Vikram Electric Equipment P. Ltd. which would have to bear the consequences, indicating that Vikram Electric Equipment P. Ltd. Was not acting as an agent on behalf of the assessee, but was working on a principle to principle basis, independently. 26. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ric Equipment P. Ltd., Vikram Electric Equipment P. Ltd., was to procure 27 acres of land for ht 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 194H 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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