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Issues involved: Appeal against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2007-08 challenging disallowance u/s 40(a)(ia) of the Income Tax Act, 1961.
Summary: 1. The appellant challenged the order of the Commissioner of Income Tax (Appeals) alleging it was bad in law and factually incorrect. 2. The dispute revolved around the disallowance u/s 40(a)(ia) of the Act amounting to Rs. 1,28,00,000 paid to a consolidator for transfer of rights, with a contention that TDS deduction was not required. 3. The appellant argued that the consolidator was not an agent but acting on a principal-to-principal basis, similar to a previous case where the Tribunal ruled in favor of the assessee. 4. The Assessing Officer treated the difference in land acquisition costs as commission to the consolidator and disallowed the amount due to lack of TDS deduction by the assessee. 5. The Tribunal found similarities with a previous case where the Tribunal had deleted a similar addition made by the Assessing Officer, based on the nature of the transactions and the absence of TDS deduction. 6. The Tribunal noted that the consolidator was to procure a minimum of 27 acres of land for the assessee, failing which no payment was due, and since no sales were made, no disallowance was warranted. 7. Relying on the previous ruling and the identical nature of the transactions, the Tribunal allowed the appeal of the assessee, emphasizing the principal-to-principal relationship and lack of TDS requirement. Judges: SMT. DIVA SINGH, JUDICIAL MEMBER and SHRI T. S. KAPOOR, ACCOUNTANT MEMBER.
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