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TMI Blog2021 (1) TMI 687X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is engaged in the business of property development. For Assessment Year 2011-12, the assessee filed return of income on 28.9.2011 declaring Nil income. The assessment was completed under section 143(3) of the Act by order dated 28.3.2014, accepting the return of income filed by the assesseee. The CIT, in exercise of the powers under section 263 of the Act was of the view that the aforesaid order of the AO was erroneous and prejudicial to the interest of the Revenue for the following 2 reasons: 1) As per 3CD report, TDS has not been deducted on Rs. 2,24,000/- and the same has not been disallowed. 2) A sum of Rs. 50,00,000/- has been debited towards advances written off in P & L (Schedule 13, Operating and Other Expenses). The sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 50 lakhs. The assessee produced a letter dated 6.7.2009 from Mr. Rakesh Rastogi wherein he had mentioned that he has not incurred any expenses or paid any advance for acquiring lands pursuant to the MoU dated 1.5.2007. Another letter dated 23.4.11 of Mr. Rakesh Rastogi stating and confirming that the advance paid by the assessee was being forfeited as the assessee did not make further payments as required by Mr. Rakesh Rastogi. The assessee claimed that the aforesaid expenses were in connection with the business of the assessee and ought to be allowed as deduction while computing income from the business and was rightly allowed as a deduction by the AO. In support of the claim of the assessee, the assessee also placed reliance on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any advance or incurred any expense pursuant to the MoU dated 1.5.2007. Further, under clause 7 of the MoU, there is no right for Mr. Rakesh Rastogi to forfeit the amount received from the assessee. CIT also referred to clause 20 of the agreement which provided that Mr. Rakesh Rastogi has to refund unutilized amount out of the advance received from the assessee. The CIT referred to clause 23 of the MoU under which assessee was obliged to give further advance of Rs. 50 lakh on utilization of the first instalment of the advance. Since Mr. Rakesh Rastogi has not spent any sum or paid any advance out of the first instalment of Rs. 50 lakhs, there was no question of his demanding the second instalment of Rs. 50 lakhs as per clause 23 of the MoU. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 40(a)(ia) of the Act. Form 3CD report clearly mentioned a sum of Rs. 2,24,000/- as the sum on which TDS was not made. The plea of the Assessee that the aforesaid sum is the sum total of all small payments made to different persons and that each of the payment was below the threshold limit of sum on which TDS has to be made as per law, has not been substantiated by the Assessee. In these circumstances, we confirm the order of CIT regarding this addition. 9. As far as the addition of Rs. 50 lakhs made by the CIT in the impugned order is concerned, the conclusion of the CIT is based on the reading of the different clauses of the MoU. We are of the view that the parties are at liberty to agree on terms even contrary to the MoU dated 1.5.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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