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2018 (5) TMI 1949 - AT - Income TaxPayment of interest on PDCs - Part relief given by the ld. CIT(A) on account of interest and PDCs - HELD THAT - We find the ld. CIT(A) following his decision in the case of M/s Business Park Promoters Pvt. Ltd. 2015 (5) TMI 507 - ITAT DELHI for assessment year 2006-07 directed the Assessing Officer to compute the interest on the PDCs after a period of six months from the sale deed, as a result of which only an amount of ₹ 2,92,851/- was sustained and the balance amount was deleted. We further find the Tribunal in the case of M/s IAG Promoters and Developers Pvt. Ltd. 2014 (12) TMI 216 - ITAT DELHI for assessment year 2008-09 and in the case of M/s Countrywide Promoters Pvt. Ltd. 2017 (11) TMI 1132 - ITAT DELHI has taken similar view and the appeal filed by the Revenue on this issue has been dismissed. Therefore, respectfully following the decisions of the Coordinate Benches of the Tribunal in the case of sister concern, we do not find any infirmity in the order of the ld. CIT(A). Accordingly, the ground raised by the Revenue is dismissed Addition u/s 40A(3) - assessee company has made payment of ₹ 1,00,000/- in cash to various farmers from whom land has been purchased - HELD THAT - It may be stated that terms of collaboration agreement has not be overridden by A. O.. He has only analyzed the terms of the agreement, and by analyzing the term of agreement, he has given the finding that appellant is in the business of acquiring land and its development through CWPPL and therefore, payment made to farmer/seller of land is an expenditure in applicant's hand. Accordingly Section 40A (3) is applicable. After considering entire facts and circumstances of the case, uphold the addition made by Assessing Officer
Issues Involved:
1. Addition on account of unaccounted interest payment on post-dated cheques (PDCs). 2. Disallowance under Section 40A(3) of the Income Tax Act. Detailed Analysis: 1. Addition on Account of Unaccounted Interest Payment on PDCs: The core issue revolves around the addition made by the Assessing Officer (AO) on the basis of unaccounted interest payments on PDCs. The AO observed that the assessee was associated with the BPTP group, which was found to be involved in paying unaccounted interest on PDCs during a search operation conducted on 15.11.2007. The AO made an addition of ?38,06,534/- to the assessee's total income, based on the precedent set in earlier assessments of BPTP group companies. On appeal, the CIT(A) provided partial relief by directing the AO to compute unaccounted interest on PDCs after six months from the date of the sale deed, resulting in a sustained addition of ?2,92,851/-. The CIT(A) reasoned that interest payments were made in cash out of the books of accounts for the extension period of PDCs, as evidenced by seized documents. This approach was consistent with the CIT(A)'s findings in similar cases within the BPTP group. The Tribunal upheld the CIT(A)'s decision, citing consistent rulings in similar cases, such as M/s Business Park Promoters Pvt. Ltd. and M/s IAG Promoters and Developers Pvt. Ltd., where the computation of interest on PDCs after six months from the sale deed was deemed reasonable and logical. The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s methodology. However, the Tribunal found merit in the assessee's argument that the company was incorporated on 30.12.2009, postdating the initial search, and that no incriminating material related to the assessee was found during the subsequent search. Consequently, the Tribunal allowed the assessee's appeal, deleting the sustained addition of ?2,92,851/-. 2. Disallowance under Section 40A(3): The AO made an addition of ?1,00,000/- under Section 40A(3) on the grounds that the assessee made cash payments exceeding the prescribed limit for land purchases. The assessee contended that the payments were not claimed as deductions and that the cost of land was reimbursed by M/s Countrywide Promoters Pvt. Ltd. The CIT(A) upheld the AO's addition, reasoning that the ownership of the land remained with the assessee, and the payments made were considered as expenses in the assessee's hands, thus attracting the provisions of Section 40A(3). The Tribunal, however, referred to its decision in the case of M/s Countrywide Promoters Pvt. Ltd., where similar disallowances under Section 40A(3) were deleted on the grounds that no such expenditure was claimed in the Profit & Loss Account. Following this precedent, the Tribunal deleted the disallowance of ?1,00,000/- made by the AO and sustained by the CIT(A). Conclusion: The Tribunal allowed the assessee's appeal, deleting the addition of ?2,92,851/- on account of unaccounted interest payment on PDCs and the disallowance of ?1,00,000/- under Section 40A(3). The Revenue's appeal was dismissed. The Tribunal's decision was based on consistent rulings in similar cases within the BPTP group and the absence of incriminating material related to the assessee for the relevant assessment year.
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