TMI Blog2021 (5) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... est calculated on the PDC by the AO is without any basis or evidence. Hence, we direct the addition made by the AO be deleted. - ITA Nos. 6343 and 6304/Del/2013 - - - Dated:- 4-5-2021 - K. N. Chary, Member (J) And Dr. B.R.R. Kumar, Member (A) For the Appellant : Nidhi Srivastava, CIT, DR For the Respondents : Ajay Bhagwani, CA ORDER Dr. B.R.R. Kumar, Member (A) 1. The present appeals have been filed by the revenue and the assessee against the orders of the Ld. CIT(A)-XXXII, New Delhi dated 16.07.2013. 2. The brief facts of the case are that the assessee is a part of the BPTP group and engaged in the business of land aggregation and consolidation. A search u/s. 132 of the Income Tax Act, 1961 was conducted on the BPTP group and some other companies on 15.11.2007. Assessment in the case of the assessee has been completed u/s. 153A. 3. The appeals of the revenue and the assessee consist of following grounds: 1. Interest on PDC paid outside the books of accounts. 2. Additional payment made in violation of Stamp Duty Act. 4. The appeal of the assessee comprises the following grounds: 1. Disallowance u/s. 40A(3) of ₹ 1,70,875/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the books of the account. The Ld. Assessing Officer relying on these seized documents held that the interest expenditure is nothing but undisclosed expenditure of the assessee. After relying upon the decision of Hon'ble Supreme Court in the case of H.M. Esufali H.M. Abduli vs. Commissioner of Sales Tax, (1973) ITR 271, the Assessing Officer held that the interest payment in cash to the vendors on the amount of PDCs should be calculated @ 15% per month (i.e. 1.25% per month) which he treated to be expenditure outside the books of accounts and accordingly, computed the interest amount to be added at ₹ 27,11,797/-. The detailed discussion of the Assessing Officer in this regard appears from pages 2 to 12 of the assessment order. 4. Before the Ld. CIT(A), the assessee's case on merits was that postdated cheques (PDCs) were part and parcel of the terms of sale deed, therefore, there was no question of payment of interest on PDCs. The Ld. CIT(A) after considering fee findings of the Assessing Officer as well as the entire seized material on this count came to the following conclusions which are being summarized as under:- (i) The analysis of the seized documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer to work put the interest on PDCs after 6 months date of issue of PDCs. This direction of the Ld. CIT(A) tantamount to setting aside of the assessment order which is beyond the power of CIT(A). 5. On the other hand, the Ld. counsel for the assessee submitted that this issue had come up for consideration in many of the group companies of the assessee, wherein the order of the Ld. CIT(A) on exactly similar direction has been confirmed. He strongly referred and relied upon the decision in the case of M/s. AIG Promoter Developers Ltd., in ITA No. 1674/Del/2013 for A.Y. 2008-09 and placed reliance on following observations: We have heard the arguments of both the sides and perused, relevant material placed before us. At the outset, the ground raised by the Revenue is misconceived because learned CIT(A) has not deleted the addition of ₹ 75,06,625/- but has only directed to recalculate the interest We have carefully, gone through the order of the learned CIT(A) and also the submissions of both, the parties and we do not find any infirmity in the order of the learned CIT(A). After examining the loose papers Seized at the time of search at the assessee's p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. counsel. Hence in view of binding judicial precedents on the same set of facts, we do not any merit on the ground raised by the Revenue and hence, same is dismissed. 7. As regards the second issue, relating to addition of ₹ 1,05,86,958/- on account of additional payment made to various farmers/land owners, the brief facts are that, the assessee company purchased land from farmers/land owners and transfer the same to one of the flagship company of BPTP group, viz., M/s. Country Wide Promoters Pvt. Ltd., (CWPPL) under the collaboration agreement for development. For arranging the land the assessee company receives ₹ 35,000/- per acre from CWPPL which is over and above the cost of land, reimbursed by CWPPL. The Ld. Assessing Officer noted that BPTP group has given more than ₹ 45.02 crores to the vendors of the land which is over and above the sale consideration and these payments has been made much after the execution, of the sale deed. He noted that in the present, case also the additional payment made to various persons over and above sale consideration aggregated to ₹ 1,05,86,958/-. Before the Assessing Officer the assessee made various contentions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the order of the Assessing Officer as well as material on record allowed the said expenditure as business expenditure. 9. Before us the Ld. Sr. DR after referring to the various observations made by the Assessing Officer and referring to assessee's various contentions submitted that the assessee could not discharge the primary onus for claiming the expenditure. After relying upon various decisions, he stressed that the law on this point is absolutely clear that the onus is heavily upon the assessee to show that expenditure incurred is for the business purpose or not and if such an onus has not been discharged then expenditure claimed cannot be allowed. The observation and the finding of the Ld. CIT(A) is not in any harmony with the discussions and observations, made by him, therefore/the order of the Assessing Officer should be Upheld. 10. On the other hand, the Ld. counsel for the assessee submitted, that this issue stands squarely covers by the decision of the Tribunal in the group companies like in the case of M/s. Westland Developers Pvt. Ltd. in ITA No. 1752/Del/2013, wherein on same issue matter was decided in favour of the assessee. Not only that this decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made in the hands of the assessee. In the Westland Developers Pvt. Ltd. (supra), the Tribunal has dealt exactly with the similar issue in the following manner: We have heard the rival submissions and perused the material available on record. The case law relied upon by the parties has been taken into consideration. On a consideration of the same we are of the view that since in the facts of the present case the material issue is that the said expenditure was never claimed as assessee's business expenditure the occasion to make a disallowance of the same does not arise. On this fact there is no dispute as admittedly, the expenditure was never claimed as an expense by the assessee and consequently has not been routed through its P L A/c. In the circumstances, the occasion to make an addition of the same by way of a disallowance in these peculiar facts and circumstances of the case does not arise. The reasoning and finding given while considering the arguments qua Ground No. 4 would fully, apply here also. The difference that here the entire amount is added u/s. 37 as opposed to part of the expenditure disallowed u/s. 40A(3) is not so material as the finding is arrived at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee might have also paid interest on post dated cheques given towards purchase of land. This issue is settled by the co-ordinate bench in case of Westland Developers Pvt. Ltd. in ITA No. 1757/Del/2013 vide order dated 23.11.2015 wherein it was held by the Tribunal that in absence of any cogent, definite material which belonged to the assessee or any evidence demonstrating the payment of interest by the assessee on PDCs, reasons recorded for initiation of proceedings u/s. 147 were not in consonance with law having been based on mere suppositions, surmises and extrapolation of material seized. The bench completely discarded the argument of AO and Ld. CIT(A) of common management and the assessee belonging to the same group and held that it cannot be equated with existence of incriminating seized material belonging to the assessee. In this case also, there is no seized document found which belongs to the assessee and it is so confirmed by the Ld. CIT(A) also in his order. No statement of any vendors of land is recorded by the AO. Statement of Shri Chottu Ram is referred to although the assessee has denied to have purchased any land from Shri Chottu Ram. The statement of Shri Chottu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of Appeal No. 5 is related to disallowance u/s. 40A(3) of Income Tax Act, 1961 of ₹ 12,31,160/- in respect of cash payment made by the assessee for purchase of land. The Ld. AR has submitted that the assessee has not claimed the amount paid for purchase of land as amount paid is neither debited to the Profit Loss a/c nor claimed as deduction in the Computation of Taxable income as the assessee has received reimbursement of amount from M/s. Countrywide Promoters Pvt. Ltd. He has further stated that the issue is covered by the decision of the co-ordinate bench of the ITAT 'H' bench, New Delhi in case of M/s. West Land Developers Pvt. Ltd. in ITA No. 1752/Del/2013 vide order dated 22.08.2014. He has further stated that no appeal was filed by the department against this order before the Hon'ble Delhi High Court. It has further been stated that this issue is decided in favour of various assesses by the co-ordinate benches of the Tribunal in 31 other appeals of group companies of BPTP. On the other hand, the Ld. Sr. DR has placed reliance on the concurrent findings of the lower authorities. It is seen that the issue of disallowance u/s. 40A(3) is decided by several ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y not be disallowed to the extent of 20% as provided in the supra section. 10. The Assessing Officer has so caused the assessee for invoking disallowance u/s. 40A(3) of I.T. Act and after considering the reply of assessee, the A.O. has made addition A.Y. 2006-07 of ₹ 32,28,037/- A.Y. 2007-08 of ₹ 1,70,875/- respectively. The main contention of assessee before A.O. was that there is claim of expenditure in assessee's Books bf a/c's as assessee is getting reimbursement of this expense from collaborator i.e. M/s. BPTP Ltd. Therefore, Section 40A(3) is not applicable. 11. The main reason for not accepting assessee's claim by A.O. is summarized as under: (i) The appellant is in the business of real estate development as per its auditors report. (ii) Land purchased by appellant company is stock in trade in its hand. (iii) The appellant receives ₹ 40,000 per acre of Land, therefore the appellant company is in business of real estate therefore cost of Land is indirect Expense in its hand. (iv) The A.O. has placed reliance on the applicability of See 40A(3) on the decision of Supreme Court in the case of Attar Singh Gurumukh Singh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... @ ₹ 40,000 per acres as consolidated fees for which license was actually acquired by M/s. BPTP Ltd. Therefore, the Ld. AR has argued that the assessee only receives the cost of land as reimbursement and relied on the following judicial pronouncements that as no expenditure is incurred, Section 40A(3) is not applicable. i) CIT vs. Motilal Khatri (2008) 218 ITR 602 (Raj) ii) CIT, Faridabad vs. Alpha Toyo Ltd. (2008) 174 Taxman 427 (Puri and Haryana) iii) CIT vs. Banwari Lal Bansidhar 229 ITR 229 (All) 16. Further, Ld. AR has relied upon the judicial pronouncement by Hon'ble Supreme Court that reimbursement under no circumstances can be regarded as revenue receipt. Case relied upon is cited as CIT vs. Tejaji Farasram Kharawalla Ltd. (1968) 67 ITR 95 (SC). This judgment has been followed by jurisdictional High Court in CIT vs. Industrial Engineering Projects (P) Ltd. 202 ITR 1014 (Del). 17. Heard the arguments of both the parties and perused the material available on record. 18. We have gone through the agreement between the assessee and the BPTP and find that the payments have been duly recorded and the amounts have been reimbursed by the BPTP and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, New Delhi details of which are given above where similar disallowance by following the order in case of M/s. Westland Developers Pvt. Ltd. (supra) as aforesaid is deleted by various coordinate benches of the Tribunal, New Delhi, the ground No. 5 is allowed and disallowance of cash payment made under section 40A(3) is deleted as assessee has not claimed any deduction in respect of cash payment made. 19. In the absence of any material change in the facts of the case and since the amounts are in the nature of reimbursement, not debited to P L account of the assessee, no disallowance u/s. 40A(3) is called for. Addition of account of seized material: 20. Page 16 of the Annexure A-25/Party BO-III is a copy of cheque No. 355542 dated 07.03.2007 for ₹ 25,00,000/- drawn on PNB, Mewla Maharajpur, Faridabad. On the bottom of the said page, it is written 'Received - Loan A/c - From Baljeet'. The assessee claimed that the said cheque was received by it from one Mr. Ranjeet Singh as deposit for purchase of suitable property but the transaction could not be materialized and the amount was returned to the party on 11.06.2007. The assessee also furnished a copy of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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