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TMI Blog2024 (8) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... the flats was to be considered and since the agreement value was more than the ready reckoner value as on the date of booking, no addition u/s 43CA was warranted. 3] The learned CIT(A) erred in confirming the disallowance of Rs. 9,27,000/- on the ground that the assessee had failed to deduct the TDS on the said payment and hence, disallowance u/s 40(a)(ia) was warranted. 4] The learned CIT(A) failed to appreciate that the amount of Rs. 9,27,000/- paid to Dipps Hospitality Pvt. Ltd was not in the nature of interest and it was in the nature of compensation and hence, no TDS was required to be deducted on the said amount. 5] The learned CIT(A) failed to appreciate that the assessee company was not required to deduct TDS on the compensation paid to Dipps Hospitality Pvt. Ltd. and hence, the disallowance made u/s 40(a)(ia) was not warranted. 6] Without prejudice the assessee submits that if any disallowance is warranted u/s 40(a)(ia), the same should be restricted to 30% of the expenditure claimed and the action of the A.O. in disallowing entire expenditure is not justified. 3. The first issue raised in the grounds of appeal No.1 and 2 relates to the order of the CIT(A) / NFAC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see is in appeal before the Tribunal. 8. The Ld. Counsel for the assessee drew the attention of the Bench to the copy of the agreements entered into with the third parties and submitted that the assessee has already received booking advance by cheque as per agreement and the registration has been made accordingly at a later date. Referring to the provisions of sub-clauses (3) and (4) of section 43CA of the Act, he submitted that where the amount of consideration or a part thereof has been received by way of an account payee cheque or an account payee bank draft on or before the date of agreement for transfer of the asset, no addition can be made u/s 43CA of the Act merely because the registered value is higher than the agreed value. 9. Referring to page 49 of the paper book, he submitted that an amount of Rs. 1,00,000/- was received from Shri Hakimuddin Aziz on 27.11.2009 vide cheque No.436924 which was deposited into the IDBI Bank account maintained by the assessee towards booking advance. Referring to the copy of the sale deed placed at pages 2 to 16 of the paper book, he drew the attention of the Bench to page 8 of the paper book and submitted that the total consideration incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of provisions of section 43CA of the Act and no addition is called for. We find some force in the above argument of the Ld. Counsel for the assessee. Sub-clauses (3) and (4) of section 43CA of the Act are as under: "43CA (1).... (2)..... (3) Where the date of agreement fixing the value of consideration for transfer of the asset and the date of registration of such transfer of asset are not the same, the value referred to in sub-section (1) may be taken as the value assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer on the date of the agreement. (4) The provisions of sub-section (3) shall apply only in a case where the amount of consideration or a part thereof has been received by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account [or through such other electronic mode as may be prescribed on or before the date of agreement for transfer of the asset." 14. A perusal of the details filed by the assessee in the paper book reveals that the assessee has received advances by cheque in respect of those three flats as per agreement and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent in respect of properties held as stock in trade has been introduced only from A.Y. 2018-19 onwards. Hence the said provisions cannot be made applicable upto A.Y. 2017-18. Relief on the decision of the Hon'ble Tribunal, the AO is directed to delete the addition made in respect of deemed rent. Hence, the ground No.4 to 9 of the appeal are allowed." 18. The Ld. Counsel for the assessee at the outset referring to the decision of the Hon'ble High Court of Kerala in the case of Beacon Projects (P.) Ltd. vs. CIT (2015) 62 taxmann.com 177 (Ker) submitted that the excess payment made on cancellation of booking of apartment could not be qualified to be interest as defined u/s 2(28A) of the Act and therefore, the payer / builder will not have any TDS obligation. Relying on various other decisions, he submitted that the amount of Rs. 9,27,000/- paid by the assessee to the purchaser on cancellation is nothing but compensation and cannot be characterized as interest and therefore, the assessee is not liable for deduction of any TDS. 19. The Ld. DR on the other hand heavily relied on the orders of Assessing Officer and CIT(A) / NFAC. 20. We have heard the rival arguments made by both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orkable or totally irreconcilable with the rest of the statute' is to be considered. If this is the principle to be borne in mind, the term 'interest' as defined in section 2(28A) of the Act has to be construed strictly. On such literal construction, it can be seen that before any amount paid is construed as interest, what is required to be established is that the sum paid is in respect of any money borrowed or debt incurred and that there is debtor-creditor relationship between the parties. These are the necessary ingredients of section 2 (28A). 9. The scope of this provision came up for consideration before various High Courts as well as the Apex Court. In Bikram Singh v. Land Acquisition Collector [224 ITR 551(SC)], in the context of interest paid on delayed payment of compensation due under the Land Acquisition Act, the Apex Court held that such payment is a revenue receipt and that section 194A of the Income Tax Act has no application. Commissioner of Income-tax v. Sahib Chits (Delhi) (Pvt.) Ltd. [(2010) 328 ITR 342 Delhi] is a case where the question considered was whether section 2(28A) was attracted in the case of surplus on discount of chit funds. In that jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or-creditor relationship and that payments are made in discharge of a pre-existing obligation. 12. In so far as these cases are concerned, facts stated by us itself would show that the purchaser had paid certain amounts to the appellant. At a later point of time, the purchaser opted out of the agreement and the appellant entered into fresh agreements with new buyers for prices that are higher than what was agreed with the purchasers. Out of the receipts from the new buyers, the appellant refunded to the purchasers the amount paid by them and a portion of the excess amount received. The amount thus refunded to the purchasers represents the consideration the purchasers paid towards the undivided shares in the property agreed to be purchased and also the cost of construction of the apartment, which work was entrusted to the appellant, being the builder. Such a relationship does not spell out a debtor-creditor relationship nor is the payment made by the appellant to the purchaser one in discharge of any pre-existing obligation to be termed as interest as defined in section 2(28A). 13. Further, there is no finding in the assessment order or in the order of the Tribunal that the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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