2018 (5) TMI 2071 - AT - Income Tax

Computation of interest on post dated cheques - computation from the date after the six months of issue of such post dated cheques i.e. from the date cheques i.e. from the date of execution of sale-deed - HELD THAT - On the issue of interest the issue is squarely covered in favour of the assessee in one of the group cases in case of M/s IAG promoters and developers private limited 2014 (12) TMI 216 - ITAT DELHI wherein held that the ground raised by the revenue is misconceived because Ld. CIT (A) is not deleted the addition but has only directed to recalculate the interest. We have carefully gone through the order of the Ld. CIT (A) and the submissions of both the parties and we do not find any infirmity in the order of the Ld. CIT (A). After examining the loose papers seized at the time of search and the assessee s premises, it was noted that the interest is paid on the post dated cheques only during the period of extension of post dated cheques and therefore he directed the assessing officer to recompute the interest on post dated cheques at the time of extension of the post dated cheques -CIT (A) directed to recalculate the interest on post dated cheques and was a sound logic for such direction. His direction is based on material found and seized at the time of search. In view of the above we do not find any justification to interfere with the order of the Ld. CIT (A) - Decided against revenue. Additional payment made to the owners of the land is allowable as an expenses u/s 37 - disallowance of expenditure being amount paid to the various landowners over and above the actual price of the land - HELD THAT -This issue is squarely covered in favour of the assessee by the decision of M/s westland developers private limited 2014 (12) TMI 254 - ITAT DELHI for the assessment year 2006 07 is in that case such addition was deleted. DR could not controvert the above fact and further more that decision of the coordinate bench is further followed in several decisions by the coordinate bench wherein the similar issue was involved in the case of the group concerns. In view of this the above judicial precedent binds us and therefore respectfully following the decision of the coordinate bench we also direct the Ld. assessing officer to delete the addition made in the hands of the assessee. Consequently, we confirm the order of the Ld. CIT (A) and dismiss ground No. 2 of the appeal of the revenue.

Summary

Issues:
1. Computation of interest on post-dated cheques
2. Allowability of additional payments made to landowners as expenses under section 37

Analysis:
1. The appeal by the revenue challenged the CIT(A)'s order for the Assessment Year 2010-11. The assessment stemmed from search and seizure operations at various premises of a group concern, including the assessee. The issue revolved around the payment of part consideration for land purchases at the time of sale deed execution, with the balance paid through post-dated cheques, attracting interest. The AO made additions due to unaccounted interest on post-dated cheques. The CIT(A) directed the AO to compute interest based on a previous case's direction, leading to the appeal. The Tribunal cited a similar case where interest calculation was directed only beyond 6 months, upholding the CIT(A)'s decision and dismissing the appeal.

2. Another aspect involved additional payments made to landowners, over and above the sale consideration, post-sale deed execution. The AO treated these payments as non-genuine, increasing the land cost. The CIT(A), differing from a coordinate bench, allowed these payments as expenses under section 37 based on a prior decision. The Tribunal, following precedent, upheld the CIT(A)'s decision, directing the AO to delete the addition. The assessee's arguments, supported by previous cases, were deemed valid, leading to the dismissal of the revenue's appeal.

In conclusion, the Tribunal affirmed the CIT(A)'s orders on both issues, emphasizing adherence to legal precedents and prior decisions in similar cases. The revenue's appeal was dismissed, and the decisions were pronounced in open court on 07/05/2018.