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TMI Blog2013 (4) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... T (A)-XXI, New Delhi. The issue involved in both these appeals is however, common. ITA No.1429/Del/2011. 2. The grounds of appeal raised are as follows:- "1. That the impugned order dated 13.01.2011 passed by the learned Commissioner of Income-tax (Appeals)-XXI, New Delhi is bad in law and wrong on facts. 2. That on the facts and circumstances of the case, the learned Commissioner of Income-tax (Appeals)-XXI has erred in law in upholding the action of the Assessing Officer in making disallowance u/s 40 (a) (ia) of the Income-tax Act, 1961 amounting to Rs.54,66,051/- paid by the assessee to the consolidator for transfer of rights. 2.1 That on the facts and circumstances of the case, the learned Commissioner of Income-tax (Appeals)-XXI has erred in holding that the consolidator was working as an agent of the assessee and hence the assessee ought to have deducted TDS on amount paid to the consolidator u/s 194C or 194H of the Income-tax Act, 1961. 3. That on the facts and circumstances of the case, the learned Commissioner of Income-tax (Appeals)-XXI has erred in law in not appreciating that the disallowance of said sum of Rs.54,66,051/- which is included in purchases during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the year end. 6. The ld. counsel for the assessee has further placed reliance on the Tribunal decision (authored by one of us - the JM), dated 05.10.2011, in ITA No.2361/Del/2011 and 1953/Del/2011 for Assessment Year 2007-08 reported as 142 TTJ 545 (Del) in the case of 'Finian Estates Developers (P) Ltd.' (copy at pages 40-50 of the appeal file). The ld. counsel for the assessee has contended that in 'Finian Estates Developers (P) Ltd. (supra), under similar circumstances, the provisions of Section 40(a) (ia) of the IT Act have been held to be not applicable. 7. The Ld. DR, on the other hand, has strongly relied on the impugned order. It has been contended that the assessee has not been able to rebut the categorical findings of the CIT (A) to the effect that the provisions of Section 40(a)(ia) of the Act are squarely attracted and the assessee is guilty of contravention of such provisions, since the relationship between the assessee and M/s VEEL has not been established to be that of principal and principal; that rather, this relationship is that of principal and agent; that M/s VEEL was acting like an agent between the seller of the property and the assessee company, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment P. Ltd. was making payments from its account to the farmers and thereto have certain rights in the land. On the ultimate transfer of land to the assessee through Vikram Electric Equipment P. Ltd. , the final payment was to be made to the farmers. Towards the right of Vikram Electric Equipment P. Ltd., 2% of the cost of land (in some cases, even a higher amount) was to be paid to Vikram Electric Equipment P. Ltd., as mutually agreed. This was the mutually agreed price. Vikram Electric Equipment P. Ltd. worked for land acquisition and after scrutiny of the concerned documents of the land, Vikram Electric Equipment P. Ltd. would suggest the appropriate land for purchase by the assessee. Vikram Electric Equipment P. Ltd. thus acted with the farmers on its own account rather than for and on behalf of the assessee, on principle to principle basis, with the farmers on the one hand and the assessee on the other. The assessee contends that this being so, the provisions of neither section 194 C , nor section 194 H get attracted to the payment made by the assessee to Vikram Electric Equipment P. Ltd. The payment along with payment made to the farmers directly represented the purchase of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yer Company (unless the Buyer Company decides to procure less than 27 acres through the Consolidator) and all the issues relating to possession and mutation of such land are settled to the satisfaction of the Buyer Company." 28. The above clause also makes it evident that unless the assessee decided to procure less than 27 acres of land through Vikram Electric Equipment P. Ltd., Vikram Electric Equipment P. Ltd., was to procure 27 acres of land for the assessee, failing which, no payment was to be made by the assessee to Vikram Electric Equipment P. Ltd. 29. This clearly shows that Vikram Electric Equipment P. Ltd. was transacting on a principle to principle basis and it cannot be said that the payment was made by the assessee to Vikram Electric Equipment P. Ltd. for rendering of any service. The provisions of section 194 H of the Act are, therefore, not at all applicable. 30. Moreover, the amount paid to Vikram Electric Equipment P. Ltd. was duly reflected by the assessee in the purchases closing stock. No sales had been made during the year under consideration. It has not been shown to be otherwise. In such a scenario, in our considered opinion, no disallowance is called fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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