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TMI Blog2020 (5) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... red on facts and in law in following the order for assessment years 2009-10, 2010-11 and 2011-12 and holding that the disbursement of income as per the revenue sharing agreement with M/s Emaar MGF Land Limited (hereinafter referred to 'EMLL'), was not diversion of income by overriding the title, but application of income. Ground No. 2: The Ld. CIT(A) erred on facts and in law in not appreciating that in essence, under the arrangement between parties, the entire project was awarded and executed on the strength of EMLL and EMLL had, in fact, paid 75% of the total consideration to the appellant. Ground No. 3: The Ld. CIT(A) erred on facts and in law in not allowing deduction of expenditure incurred towards services obtained from EMLL, at 25% of revenue, actually paid as per the terms agreed between appellant and EMLL, and instead allowing deduction of cost/ expenses incurred by EMLL in providing support to the appellant. Ground No. 4: The Ld. CIT(A) erred on facts and in law in adopting its own method of computing reasonable expenditure that ought to have been incurred by the appellant in relation to services obtained from EMLL, which is not permissible in law." 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he disallowed the above sum. The main reasons for disallowance were:- i. Reliance upon agreement dated 74 2008 is an afterthought. This document never existed and surface for the first time during present assessment proceedings. ii. Contents of the agreement dated 8/file/2008 mentioned in schedule 19 of the balance sheet are contradictory to the contents of agreement dated 7/4/2008. In spite of repeated opportunities, the assessee failed to furnish agreement dated 8/file/2008. iii. Holding company of the assessee company was already paid interest cost towards deployment of funds and hence adequately compensated. iv. The holding company being the shareholder virtually owning the entire shareholding of the assessee company was in any case, responsible for arranging the funds required for executive the CW G Village project. Even without there being an agreement to this effect, it was the responsibility of the owners of the company to arrange for the funds. By virtue of being the owner of the assessee company, the holding company had already assumed the inherent risk associated with the project. Therefore, such assumption of risk could not be a factor for revenue sharing betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned authorised representative Shri I.P. Bansal, advocate submitted a detailed chart that identical disallowance has been made in the case of the assessee for assessment year 2009 - 10 to assessment year 2014 - 15. He submitted that the coordinate bench has already decided the issue for assessment year 2009 - 10 to assessment year 2014 - 15 as per order dated 26 December 2019 reported in (2020) 113 Taxman.com 275 (Delhi - tribunal) and therefore the appeal of the assessee as well as of the revenue is covered by that decision. 8. The learned departmental representative vehemently objected to the fact, it is altogether a new case made out by the learned assessing officer, and therefore the earlier decision of the coordinate bench does not apply to the facts of the present case. 9. We have carefully considered the rival contention and perused the orders of the lower authorities. The identical issue has been decided by the coordinate bench in case of the assessee for assessment year 2009 - 10 to assessment year 2014 - 15 on 26 December 2019. We also perused grounds of appeal of all these years, which are identical to the appeals of the assessee as well as of the revenue. The c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere the income required to be applied to discharge an obligation after such income reaches the assessee, the same consequence, in law, does not follow, it is the first hind of payment which can truly be excused and not the second. The second payment is merely an obligation to pay another a portion of one's own income, which has been received and is since applied. The first is a case in which the income never reaches the assessee, who even if he were to collect it, does so, not as part of his income, but for and on behalf of the person to whom it is payable. In our opinion, the present case is one in which the wife and children of the assessee who continued to be members of the family received a portion of the income of the assessee, after the assessee had received the income as his own. The case is one of application of a portion of the income to discharge an obligation and not; a case in which by an overriding charge the assessee became only a collector of another's income.'' In Dalmia Cement Ltd. v. CIT [1999] 104 Taxman 97/237 ITR 617 (SC) assessee-owner of factory had, by an agreement dated 24.07.1962, agreed to sell same to 'M' and agreement, provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s belonging to the transferee and not the transferor-otherwise, the net amount paid alone ought to have been taken as the sale price. The High Court's judgment, therefore, not only suffered from apparent inconsistency but on a totality of the situation was inherently Contradictory. The profits arising from the working of the two cement factories situated in Pakistan for the year October 1, 1962 to September 30, 1963, and for the year October 1, 1963 to September 30, 1964, were not taxable in the hands of the assessee-company." The Hon'ble Kerala High Court in Sarala Devi (K.) (Smt.) Vs. Commissioner of Income-tax 1996 222 ITR 211 (Ker) held that it nature of obligation which is a decisive factor. It held as under: "In order to determine whether there has been a diversion of income by overriding title the true test is whether the amount Sought to be deducted, in truth, never reached the assessee as his income. Obligations, no doubt, there are in every case, but it is the nature of the obligation which is the decisive fact. There difference between an amount which a person is obliged to apply out of his income and an amount which by the nature obligation cannot be said to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to EMLL cannot be said to be correct based on the facts and the judicial pronouncements." 10. In view of the above finding of the coordinate bench in case of assessee itself based on the same agreement, we do not find any merit in the appeal of the assessee in deleting the addition made by the learned CIT - A holding that the agreement between the holding company as well as the assessee was not sham agreements. Accordingly, we dismiss the appeal of the learned assessing officer. 11. Now we come to the appeal of the assessee. The coordinate bench has also dealt with the issue whether the payment of the disbursement income to the holding company was diversion of income by overriding title or merely on application of income. The coordinate bench has held in paragraph number 51 of the order of the coordinate bench, it has been held that the payment made to the holding company is obligated the in diversion of income by overriding title. The coordinate bench also after considering the contribution made by the holding company and keeping in view the amounts that have been already offered for taxation in the hands by the respective entities the above expenditure is allowable in the hands ..... X X X X Extracts X X X X X X X X Extracts X X X X
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