TMI Blog2023 (12) TMI 1115X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of M/s SEH Realtors Pvt. Ltd, following the decision of our Coordinate Bench [ 2023 (4) TMI 1276 - ITAT DELHI] we hereby affirm the findings of the CIT(A) on the issue in dispute and accordingly the Appeal of the Revenue for Assessment Year 2006-07 is hereby dismissed. Assessment u/s 153A - disallowance u/s. 14A - CIT(A) deleted addition as observed that there is no incriminating material unearthed during the search, on the basis of which, the said disallowance has been made by the AO - HELD THAT:- In our view, in the absence of any material to dislodge the factual finding of the CIT(A) that the disallowance u/s. 14A is not based on any incriminating material found during search, the action of the CIT(A) in applying the ratio of the judgement of the Hon ble Delhi High Court in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] cannot be faulted. Moreover, the judgment in the case of Kabul Chawla (supra) has since been approved by the Hon ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] Accordingly, the order of the CIT(A) on this issue is also affirmed, and the Ground No. 5 raised by the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the other group entities had actually entered into the loan agreements with the entities of Vatika Group, whereas such transactions were otherwise camouflaged as transactions of sale and purchase of properties. The Assessing Officer has referred to such seized / impounded materials at some length in the assessment order and has ultimately come to a finding with respect to two deals styled NH Deal and Jaipur Deal , that the same were not in the nature of property transactions, but were loan transactions from which assessee had suppressed income to the tune of Rs. 5.75 crores for the period relevant to the assessment year under consideration. 3.2 Pertinently the assessee and other entities in the Group had reflected such transactions as purchase and sale of land attracting capital gains. The impugned assessment was initiated by the AO by issuance of notice under section 147/148 of the Act on 30.03.2013 and thereafter finalized the same on 28.03.2014 whereby the addition of Rs. 5.75 crore has been made to the returned income. 3.3 The assessee carried the matter in appeal before the CIT(A) who has since affirmed the position as canvassed by the Assessee. The CIT(A) consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t plans for the project have been submitted for securing of sanctions, and that the requisite sanctions were expected to be received within 3 months. (iii) The seller is willing to sell residential plots, which are free of all encumbrances, to the appellant @ Rs. 3400/- p. sqyd, inclusive of development charges and license fees. Accordingly, the parties agreed that the appellant would purchase 44,120 sq. yds, valued at Rs. 15,00,00,000/- (iv) Rs. 15,00,00,000/- was paid by the appellant by cheque dated 11.06.2005. (v) Each of the residential plots purchased by the buyer totalling 44,120 Sq. Yards shall be of such measurement location as may be identified, preferred and communicated by the purchaser, and that communication shall be form part of this MOU. (vi) It was irrevocably and unconditionally agreed that, at the option of the purchaser (the appellant), the seller (Vatika) would, at the end of 2 years, purchase back the plots @Rs.5100/- . In case Vatika fails to discharge this obligation, the appellant had the right to seek specific performance of the same. (vii) However, if the value of the property increases beyond Rs. 5100/- p. sqyd., the appellant ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 74,760/- plus 18% calculated on annualized quarterly compoundable basis till the date of actual repurchase, so as to compensate the buyer (appellant) to any delay in completing the transaction. It is mentioned that the appellant has made full and complete payments of the cost of the plots (including preferential location charges). It was further agreed that till 10.06.2010, the appellant has full liberty to sell/dispose of / transfer the said plots to any other third party, as the agreement did not limit its liberty to dispose of the plots. To secure its obligation, Vatika also provided PDCs dated 11.06.2010 for the amount of sale value of Rs. 49,89,19,326 is @ Rs. 9,250/-. Vatika's obligations were further secured by a personal guarantee of Sh Anil Bhalla, along with a PDC for Rs. 49,89,19,326/- (being the previously agreed price @ Rs. 9250/- p. sq.ft plus 18% calculated on annualized quarterly compoundable basis till 18.5.2010). The appellant agreed to execute the necessary documents to transfer the property to Vatika and / or its nominees on receipt of the final sale amount. In the event of dishonor of this cheque, Vatika would be liable to pay the amount mentioned in the ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whisper of any loan or any whisper of any interest receivable on the sale consideration unless there is failure on part of the seller to hand over the plots to the buyer. There is a clause of a resale to Vatika, at a pre-determined rate. However, the appellant is not bound to sell to Vatika, and has the right to sell to any outside party. The completion of re-sale is at the option of the appellant solely, in case the actual market price of the land exceeds the agreed resale price. This clause indicates that the resale clause is to only secure an assured return on investment to the appellant, but the appellant is free to realize a higher return. The introduction of a guarantor and PDCs too is only an instrument to secure its minimum assured return from Vatika. In my opinion, a promise of assured return upon a re-sale to which only Vatika is bound, does not prove that the transaction is one of loan. In any case, the appellant was not bound to sell the property to Vatika, but had the unhindered right to sell to an outside party. In fact, vide the amendatory agreement dated 05.06.2007, the appellant had the liberty to sell the plots to any outside party even before the due date of exer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f interest, and not the regular interest payable on the sum of Rs. 15,00,00,000/- 4.2.1.12 Extrinsic evidence to determine the effect of an instrument is permissible where there remains a doubt as to its true meaning. In case of doubt, evidence of the acts done under it, is a guide to the intention of the parties in such a case and particularly when acts are done shortly after the date of the instrument. {Abdulla Ahmed vs Animendra Kissen Mitter dt 14.03. 1950 ( 1950 AIR 15, 1950 SCR 30)}. Thus, the conduct of the parties after signing of the agreements is not a conclusive tool of interpretation of a contract, and does not override the express terms of the contract. Nevertheless, it would be seen that even in the balance sheet of the appellant-company for the A. Y. 2006-07 to 2011-12, (i.e. period over which the agreement was extended repeatedly) the appellant has constantly in its audited balance sheet depicted this amount under the head Property booking Vatika Landbase P. Ltd (Under Loans advances ). It has not reflected any interest receivable in its books. This is quite indicative of the commercial understanding that the parties to the contract had. It is also seen that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. A seizure of these agreements does not automatically make them incriminating documents to be used against the appellant nor do they, as discussed above, constitute incriminating material. What has to be seen is that whether the department has seized/unearthed any evidence related to the transaction between appellant and Vatika group, which would prove or even indicate that the transaction was not really a purchase transaction but one of loan, on which interest has been received/receivable. The details of the assessment order have been discussed in the preceding paras of this order. To my mind, none of the other evidence referred to by the A.O., either individually or collectively, can be said to indicate that the specific transaction between the appellant and Vatika was actually a loan transaction. Even the fact that in an internal email dated 08.10.2010 of the U.K. Paints group, sent by Sh. Vinod Kaushik to Sh. Naveen Choudhary, CFO of the U.K. Paints group, amount of Rs. 43 crores shown as due to U.K. Paints P. Ltd. for a similar transaction with Vatika Ltd. is classified as an 'ICD', cannot be held against the applicant. 4.2.1.16 Finally, it is necessary to exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l gains accrued to the appellant. 4.2.1.17 The A.O. also mentions that there is no reason why the appellant should agree to take sale consideration which is less than the principal plus accrued interest amount. This is a valid suspicion, but I am afraid it is nothing more than that. This suspicion, if corroborated by any evidence, would lead to a suitable inference. But by itself, this suspicion does not make any case for the inference that the appellant has actually received an undisclosed amount, over and above the sale consideration. No businessman can be compelled to maximize his profit. The A.O. cannot put himself in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own viewpoint but that of a prudent businessman CIT v. Dalmia Cement (B.) Ltd. [2002] 254 ITR 377(Del). Given the long-standing business relationship between the parties, there could be any commercial expediency (including an inability of the appellant to sell the plots to an outside party at the price of Rs. 9,250/- p. sqyd. at that point of time, or any other market condition) for the appellant agreeing to not insist on the higher ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty in the hands of the appellant commenced from 11.06.2005 as per the terms of the MOU dated 11.06.2005. The interest income added by the A.O. for the assessment year 2006-07 is deleted. 4.2.1.20 In view of my directions deleting the additions in respect of the Jaipur transaction, these grounds of appeal succeed. 4. In this background, we have heard both the sides. It was a common point between the parties that another Group concern namely M/s SEH Realtors Pvt. Ltd. had also entered into similar transactions with the Vatika Group of cases and in the said case also the findings of the AO qua such property transactions was similar to those made in the instant assessment, and, in that case too the CIT(A) had disagreed with the Assessing Officer. Such findings of the Assessing Officer in the case of M/s SEH Realtors Pvt. Ltd. (Supra) came up before our Coordinate Bench and vide its order dated 20.04.2023 (Supra), the conclusion of the CIT(A) has been upheld by way of the following discussion:- Jaipur Project 37. The total loan was Rs. 50 Cr. from four parties including SEH Realtors Pvt. Ltd. The ld. CIT(A) deleted the unaccounted interest payment brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , U. K. Paints Pvt. Ltd., Span India Pvt. Ltd, S.S. Dhingra (HUF) and Smt. Heminder Kumari and the assessee filed appeal against the confirmation of unaccounted interest payment. 39. The arguments in writing of the ld. DR is as under: Sub: Written submission on merits in the above case - reg. I. Addition on unaccounted interest on WHS Deal:- Facts:- 1. During the course of search action u/s 132 and survey action 133A on UK Paints/Dhingra Group, Shahi Group, Span Group and Vatika Group and others on 16.01.2013. Various documents pertaining to money advanced by U.K. Consortium of lender viz. UK Paints/Dhingra Group, Shahi Group, Span Group, Harman Singh Dhingra Group together with Smt. Harminder Kumari entered into a financial deal with Vatika Ltd. 2. Brief description of seized documents relied by the Assessing Officer while making addition. i. Initial separate loan agreement entered by various members of the consortium with Vatika Ltd. in 2005. One of such agreement is detailed as under: - Lender Borrower Date of execution Pages No. Annexure No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vatika Landbase Pvt. Ltd. Buzz Estates Pvt. Ltd. 31.03.2006 (1) 107 to 99 (2) 158 to 149 (3) 48 to 10 (1) A41 (2) A43 (3) A4 (1 2) Vatika Triangle Sushant Lok-1, M.G. Road, Gurgaon (3) 19 DDA commercial complex, zamrudpur, Kailash Colony, New Delhi Heminder Kumari Vatika Landbase Pvt. Ltd., Wonder Developers Pvt. Ltd. 31.03.2006 55 to 46 A41 Vatika Triangle Sushant Lok-1, M.G. Road, Gurgaon Span India Pvt. Ltd. Vatika Landbase Pvt. Ltd., Buzz Estates Pvt. Ltd. 31.03.2006 35 to 30 A41 Vatika Triangle Sushant Lok-1, M.G. Road, Gurgaon v. The lender and Borrower group concern entered into again guarantee agreement to secure right of lenders and obligations of the borrower assumed in amendatory loan cum purchase agreement. Such agreements are detailed as under:- Lender Borrower Date of the agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22 to 20 A41 Vatika Triangle Sushant Lok-1, M.G. Road, Gurgaon vii. Subsequently the extension agreement was entered between the lender group namely SEH Realtors Pvt. Ltd., U.K. Paints India Pvt. Ltd., Span India Pvt. Ltd., Sohan Singh Dhingra (HUF), Harminder Kumari which is seized documents during Search conducted at 16.01.2013 page 127, 83, 37 and 19 of annexure A-41 (seized from Vatika Triangle, Sushant Lok, MG Road, Gurgaon) which extended the terms of repayment upto 30.03.2007. viii. Lender and Borrowers concerns entered into another extension agreement which were seized from during the course of Search detailed as under:- Lender Borrower Date of the extension Page No. Annexure No. Seized from SHE Realtors Pvt. Ltd. Vatika Ltd. and Wonder Developers Pvt. Ltd. As confirming party agreement 29.06.2007 160 to 157 A41 Vatika Triangle, Sushant Lok-1, M.G.Road, Gurgaon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement of sale seized during the Search is tabulated as under:- Intending Seller Intending Buyer Date of the agreement to sell Page No. Annexure No. Seized from Span India Pvt. Ltd. Lincoln Developers Pvt. Ltd. 03.02.2011 74 to 71 A12 Vatika Triangle, Sushant lok-1, MG Road, Gurgaon U.K. Paints India Pvt. Ltd. Lincoln Developers Pvt. Ltd. 03.02.2011 (1) 70 to 67 (2) 103 to 100 (1) A2 (2) A30 (1) Vatika Triangle, Sushant Lok-1, MG Road, Gurgaon (2) 19, DDA Commercial Complex, kailash colony, zamrudpur, New Delhi Sohan Singh Dhingra (HUF) Lincoln Developers Pvt. Ltd. 03.02.2011 (1) 66 to 63 (2) 63 to 60 (1) A12 (2) A5 (1) Vatika Triangle, Sushant Lok-1, MG Road, Gurgaon (2) 85 Golf Links, New Delhi SEH Realt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 VatikaLtd. 28.04.2011 5,00,000 SohanSingh Lincoln 31.05.2011 1,00,00,000 UKPI Lincoln 31.05.2011 1,10,00,000 VatikaLtd. 02.06.2011 1,50,00,000 SohanSingh Lincoln 02.06.2011 1,50,00,000 VatikaLtd. 06.06.2011 1,00,00,000 SpanIndia Lincoln 06.06.2011 1,00,00,000 08.06.2011 1,00,00,000 SpanIndia Lincoln 08.06.2011 1,00,00,000 VatikaLtd. 10.06.2011 1,00,00,000 SpanIndia Lincoln 10.06.2011 1,00,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rguments of Ld. AR: Arguments of Ld. AR are summarized as under: 1. There is no evidence of payment of interest by M/s Vatika Ltd. to the lenders of the group, while making the addition. 2. The Department has assessed the transaction as transfer of land transaction and addition added interest too. 3. Such expenditure which is impugned addition has never been recorded. 4. The Assessing Officer has given the finding that assessee has incurred liability of interest expenditure proceeded to invoke Section 69C to make addition. 5. Ld. CIT(A) has erred in confirming the entire addition for NH-8 deal for A.Y. 2011-12 without any evidence. 6. For unabated assessment, no addition can be made u/s 153A in absence of incriminating materials found as a result of search. 7. In enhancement notice CIT(A) has not quantified the enhancement notice. My submission on the issue of addition of interest in NH-8 are as under: 1. All lenders have entered into agreement with advancing of money to the assessee initially as loan agreement except SEH Realtors Pvt. Ltd. where initial agreement is Loan cum Purchase agreement. In all other cases the initial lend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch lesser amount compared to the amount due principal plus interest. Such acceptance of lower buy back prices by the lender without any dispute proves the payment of unaccounted interest on principal. Ld. ARs argument that the Assessing Officer has accepted the assessee s contention in assessment year 2011-12 that the transaction is a purchase and sale transaction, therefore, there is contradiction in treating the transaction as loan transaction and payment of interest for same transaction. The revenue s stand is the payment of unaccounted interest which is not reflected and recorded in Books of Accounts. Therefore, unaccounted interest payments has no bearing in recorded transactions. If the transaction is held to be loan transaction and unaccounted interest payable is upheld, to the extent of change in work in progress due to buy back of property, set off can be given from the interest. Ld. ARs argument that the section 69C has been wrongly involved by the Ld. AO is not tenable as from the conduct of assessee by accepting buy back value less than principal and interest at buy back proves the assessee has paid unaccounted interest and therefore such expenditure has incu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement there was option to purchase the plots by the lender. In fact from the initial date of agreement, the loan and purchase agreements were simultaneously entered. Therefore, CIT(A) was of the view that these agreements were basically in the nature of purchase agreements where as in other lenders can in NH 8 deals initial agreements was a loan agreements. Accordingly Ld. CIT(A) deleted the addition of unaccounted interest made by the AO. My Submission against deletion of unaccounted interest in case of SEH Realtors Pvt. Ltd. (Revenue s Appeal): In substance, the agreements between the assessee and U.K Paints other are similar to agreements entered between the assessee SEH Realtors Pvt. Ltd. Only change of date of agreements and initial agreement in the case U.K Paints Ltd. other being loan agreements and loan cum purchase agreement in the case of SEH Realtors Pvt. Ltd will not change the basic character of the transaction. Basic Characters of the transaction are as under which are common in both transaction either with U.K paints other with SEH Realtors Pvt. Ltd. 1. In both the cases the amount of principle with interest is guaranteed by a guarante ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er annum in the books of accounts. During the Course of search proceedings at 1st floor, 19, DDA commercial complex Zamrupin, Kailash Colony Extn., G.K.-I New Delhi in the group Case of U. K. Paints group on 24.11.2011, Various documents agreements deeds of loan / ICD including the hand written dairy in the handwriting of Sh. Naveen Choudhary was seized from this cabin marked as annexure AA-1 AA-2 respectively. Contents of various pages of AA-1 AA-2 has been analyzed by AO and where ever 'M / Material' is written, on such pages has been held as Cash interest paid by M/S Vatika Ltd. AO s finding in supported by interest calculation of interest which comes @ 36% per annum, 15% interest has been disclosed in the books of accounts and balance interest has been paid in cash by M/s Vatika ltd. Content of the seized documents of Page No. 12 of AA1, Page 52 of annexre-AA1, Page 53 of AA1, Page 12 of Annexure-AA1, Page 52 of Annex AA-1 which contains the interest calculation of loan advanced by lender group and interest Calculation is codified with M / Material has been scanned reproduced in the assessment. Sh. Naveen Choudhary, CFO of U.K. Paints Ltd has ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der:- 1. The addition has been made by the AO on the basis of documents Seized from third parties without recording the Satisfaction notes invoking provisions of Section 153C. 2. The documents relied for making addition namely AA-1, AA-2 from the premises of U.K. paints group are dumb documents. 3. No opportunity to cross examine the person has been given by the AO. Before utilizing the such statement. 4. During the present search, no incriminating documents were seized, therefore, no addition Can be made for non abated assessment u/s 153A relying on the decisions of Hon ble Delhi in the case of Kabul Chawla. My arguments in support of additions made for unaccounted interest on ICDs Confirmed by (CIT (A) against the arguments of Ld. AR: 1. Ld. AR has raised the issue of invoking provisions of Section 153C for utilizing the seized documents AA-I, AA-2 seized from the premise of Zamrupur, from third party on U. K. Paint group on 24.11.2011 for invoking addition argued, that without invoking provisions of See 153C, such evidences cannot be used. The primary issue is whether during the present Search where M/s Vatika ltd U.K. Paints, group w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... simultaneous search, section 153C is required to be involved to use documents seized from one person in the hands of other person, then there will be multiplicity of proceedings u/s 153A and 153C. Further, comprehensive view of evidence gathered during search operation u/s 132 cannot be taken if each separate evidence is analyzed for undisclosed income separately, Such interpretation will jeopardies the operation of present search and assessment scheme u/s 153 A 153C. (iii) I rely on the decision of Hon ble Supreme Court in the case of Sh. Vinod Gupta 2018-TIOL-350 (SC) Where Hon ble Supreme Court has upheld the use of evidence gathered from one person in the hands of other person in simultaneous search. In view of the above the contention of Ld. AR is not tenable that satisfaction should have been recorded u/s 153C proceedings should have been taken u/s 153C before utilizing the seized documents of one persons in the hands of other person when both person were simultaneously searched being part of same group by virtue of common satisfactions and proceedings are pending u/s 153A for same block period. ii. Second arguments of Ld. AR is that these documents are dum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) has confirmed the appeal on the issue of unaccounted interest on ICD case of M/s UK Paints Pvt. Ltd. and M/s Wang Investment Pvt. Ltd. but deleted the addition made for the interest paid on ICD in case of other lender of UK Groups, Shahi Group, Span Group. The Ld. CIT(A) has deleted the addition in case of other lender for unaccounted interest on ICD on the ground that there is no evidences in case of another lender. Evidence is only for U.K. Paints and Wang Investment (Para 4.6.10 of CIT(A) s order). Hon ble CIT(A) has over looked the findings of AO on page 49 for A.Y. 2007-08 which contains the scanned copy of page 81 82 of annexure A-13 seized during the search on page 49 50 of AO (for AY 2007-08). Scanned copies of page 49 50 shows that Sh. Naveen choudhary was in possession of interest cheques for M/Sarla fabrics Pvt. Ltd. (Shahi group), Span Holdings P. Ltd. (Span group) Wang Investment Finance P. Ltd. Similar findings in given for all AYs. Therefore, in seized documents for all three group of lenders namely U.K. Paints group, Spangroup and Shahi group, interest cheques are mentioned. Sh. Naveen Choudhary used to coordinate all lenders for interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of Rs. 45 crores. Findings of CIT(A) Ld. CIT(A)has considered the evidences in form of email relied by the Id. AO and held that the contents of mail is in proposal form and does not constitute evidence of payment for the agreement to sale under consideration. The Ld. CIT(A) has given his findings in para 4.8.7, 4.8.8 4.8.9 where he has deleted the addition mainly on 3 counts. 1. In the emails the rate of sale for land are different. Therefore, the mails are in proposal form. 2. The figure mentioned in accounted payment in case of Scorpio research consultant shows entire payment of accounted is 35 crores as per RTGS, as per seized mail there is accounted payment of Rs. 3 crore before 20.001.2010. Therefore, even accounted payment does not match hence email is a proposal only not in respect of agreement to sale. 3. No statement was recorded u/s 132(4) in respect of these seized paper. My submission on this issue:- 1. Undisputedly M/s Vatika Ltd. has entered into 3 agreements of sale to 3 group companies of Shahi, Dhingra Span group as tabulated in earlier paragraph of AO s findings. The period of such agreements of sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs 29,33,39,906/- Rs. 5,66,60,094/- on 21.01.2010 (RTGS). Therefore, entry in the books of accounts of M/s Vatika Ltd. does not match with agreement to sale. Hence on this basis above, the contents of mail cannot discarded. In view of the above, the contents mentioned in the mail is not estimated figure but have a correlation with actual deal of agreement to sale between Vatika three groups. Now coming to figure B which has been deciphered by black or unaccounted, there is a coherency in the mail i) In the documents attached with the mail dated 13.01.2010. Total Black/unaccounted fund already given group wise as under: a. SHAHI Group B Rs. 1.50 crore b. U.K Paint Group B Rs. 3.00 Crore c. SPAN Group B Rs. 12.00 crore (Page No. 68 69 of AO) ii) In the documents attached the mail dated 20.01.2010. total black/unaccounted fund already given/to be given is as under: a) SHAHI Group B 8.50 Crore B+ - 6.50 crore (to be given) b) . U.K paint funding B - Rs. 7.00 crore B+ - Rs. 8.00 crore(to be given) c) . SPAN funding B - Rs. 12.00 crore B+ - Rs. 3.00 crore(to be given) (Pg No 72 73 of AO) Tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd therefore such expenditure has indeed been incurred and hence Section 69C can be invoked. At this juncture, it is pertinent to mention that this interest has been held to be chargeable in the A.Y. 2011-12 by the ld. CIT(A) instead of A.Y. 2006-07. The ld. CIT(A) held that all the interest was paid at the time of buy-back and all the liability of the assessee got discharged towards the lender. 42. The ld. AR argued that the transactions with U.K. Paints Pvt. Ltd., Dhingra Group, Span India Pvt. Ltd. and Heminder Kumari are business transactions and there was no evidence that the assessee made any actual payment, be it A.Y. 2006-07 or 2011-12, in the case of NH8 Project. It was argued that the assessee received advance against the sale both in respect of Jaipur Deal and NH8 deal and that against such advances, the plots of land have been allotted, the same have been reflected in the regular books of accounts and then sold and offered to tax as income on the basis of percentage completion method. It was argued that the revenue has accepted the income so offered by the assessee while framing assessment, thus, accepting that the transactions have been accepted as that of sale. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the very first agreement and the accounting treatment given in the books of the parties also proves the same. We affirm the finding of the CIT(A) that none of the evidences referred to by the A.O. either individually or collectively, can be said to indicate that the specific transaction between the buyer and the assessee was actually a loan transaction. 45. With regard to NH8 Deal, the five customers namely, UK Paints Pvt. Ltd., SS Dhingra (HUF), Span India Pvt. Ltd., M/s SEH Realtors Pvt. Ltd and Smt. Heminder Kumari have lent monies for purchase of space in NH-8 Gurgaon known as Vatika India Next , which aggregate to Rs. 25 crores and learned CIT(A) had held that out of the five customers, amount advanced by four customers i.e. other than M/s SEH Realtors Pvt. Ltd., was on account of loan till the date of allotment of the plot and the amount advanced by M/s SEH Realtors Pvt. Ltd. was on account of purchase of space, as such, proportionate interest in respect of sum received as advance of Rs. 10 crores from M/s SEH Realtors Pvt. Ltd. was deleted. Whereas, the proportionate interest in respect of sum of Rs. 15 crores received from 4 customers/lenders has been sustained o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of interest originally agreed to be taken from the assessee. This fact itself shows that the original loan agreements, at this juncture, were effectively converted into an agreement to sell/purchase of plots, and hence accrual of any interest does not arise at all. It is a fact that as per the terms of the Amendatory Loan cum Purchase Agreement, on exercise of the option to purchase the residential plot, the loan agreements and Amendatory Loan cum Purchase Agreement shall be deemed to be an agreement to sell and purchase of the residential plots. Under the loan agreements, Amendatory Loan cum Purchase Agreement and Extension Agreements, PDCs were given to the lender/customer in respect of principal amount and interest amount. However, since the lenders/customers never treated the agreement as loan agreement but always wanted to purchase the plot, as such, PDC s were never encashed. Had it been a case of loan instead of advance then obviously the allottees of the land, instead of taking the delivery of plots would have enchased the PDCs. The PDCs were given only as a security pending allotment so that the amounts are secured. 47. It is an undisputed fact that ultimately the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any unaccounted interest, as there can be none, since the investors were allotted the plot of land as was stipulated in the Amendatory Loan cum Purchase Agreement and Extension Agreements. 50. In the result, we decline to interfere with the order of ld. CIT(A) pertaining to the interest chargeable in case of SEH Realtors Pvt. Ltd. and unaccounted interest payment on account of Jaipur Project. With regard to NH8 Project, since the plots have been duly allotted as per the modified agreements and in the absence of any material found and seized/impounded suggesting interest payment in cash/unaccounted, we hold that no interest can be taxed on notional basis. 4.1 The aforesaid discussion brings out that our Co-ordinate Bench has affirmed the finding of the CIT(A) to the effect that evidences relied upon by the AO could not be considered to indicate that the property transactions between the Vatika group and the assessee were actually loan transactions. Thus, the Tribunal has upheld the action of the CIT(A) in deleting the addition made by the Assessing Authority on account of interest income as being misplaced. In view of the similarity of the case set up by the AO in the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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