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TMI Blog2015 (2) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO in view of the provisions of Section 37(1) of the Income Tax Act, 1961 on account of additional payment in violation of Stamp Duty Act, 1899. 3. The facts in the circumstances of the case, the CIT(A) has erred in deleting the addition of Rs. 1,00,000/-, made by the AO in view of the provisions of section 2(22)(e) of the Income Tax Act, 1961 on account of deemed dividend. 4. The order of the CIT(A) is erroneous and is not tenable on facts and in law. 5. The appellant craves leave to add, alter or amend any / all of the grounds of appeal before or during the course of the hearing of the appeal." 3. The grounds raised in the Assesee's Appeal No. 1756/Del/2013 (A.Y. 2006-07) read as under:- "1. That on the facts and circumstances of the case and in law the CIT(A) erred in rejecting appellant's contention that assessment order made by Assessing Officer was bad in law and void ab-initio on the ground that it ought to have been made u/s 153C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Rs. 20,09,701/- on account of additional payments as recorded in books of account of appellant company as against amount of Rs. 18,03,701/- paid on account of additional payment and recorded in books of accounts." 5. That on the facts and circumstances of the case and in law the CIT{A) erred in upholding the disallowance u/s 40A(3) in respect of which no deduction was claimed by the appellant. 5.1 That even on merits the disallowance was not justified. 6. That the orders passed by the Assessing Officer and Commissioner of Income Tax (Appeals)-XXXIII, New Delhi are bad in law and void ab-initio. 7. The appellant craves permission to add, amend, alter or vary all or any grounds of appeal on or before the date of hearing of the appeal." 4. The facts narrated by the revenue authority are not disputed by both parties, therefore, no need to repeat the same for the sake of convenience. The AO completed the assessment u/s 143(3)/147 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties has been taken into consideration. On a consideration of the same we are of the view that since in the facts of the present case the material issue is that the said expenditure was never claimed as assessee's business expenditure the occasion to make a disallowance of the same does not arise. On this fact there is no dispute as admittedly the expenditure was not claimed as an expense by the assessee and consequently has not been routed through its P&L A/c. In the circumstances, the occasion to make an addition of the same by way of a disallowance in these peculiar facts and circumstances of the case does not arise. The reasoning and finding given while considering the arguments qua Ground No-4 would fully apply here also. The difference that here the entire amount is added u/s 37 as opposed to part of the expenditure disallowed U/S 40A(3) is not so material as the finding is arrived at taking cognizance of the material fact that herein also no such claim of expenditure has been made. The fact that the additional payments were warranted in order to avoid potential disputes amongst the claimants of the land holding which have been passed through to the land holders fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. ( a group company) (copy at pages 6-14 of the Paper Book) and was confirmed by the CIT(A). He further submitted that the Tribunal dealt with the matter at length vide order dated 22.8.2014 passed in ITA No. 1752/Del/2013 (A.Y. 2006-07)in Para No. 10.10 at page 29 of the Order in the case of M/s Westland Developers Pvt. Ltd., vs. ACIT. He further submitted that the facts of the present case are identical to the facts of the case of Westland Developers Pvt. Ltd. (Supra) and also stated that since the matter is fully covered by the order of the ITAT as aforesaid, the disallowance may kindly be deleted. 10.1 Ld. Counsel of the assesee further submitted that another case of a group company viz. M/s Glitz Builders and Promoters Pvt. Ltd. similar disallowance has been deleted by the ITAT vide order dated 2.12.2015 in ITA No. 1747/Del/2013 vide para no. 10. (copy at pages 138-143). 11. Ld. DR did not have any raised any objection to the aforesaid proposition of the ld. Counsel of the assessee. 12. We have heard the both parties and perused the relevant record available with us specially the impugned order passed by the Revenue Authorities; Paper Book filed by the assessee, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case of M/s IAG Promoters and Developers Pvt. Ltd (supra) are identical to the facts of the case of the assesse and both companies are group/sister companies. 15. Ld. DR did not have any raised any objection to the aforesaid proposition of the ld. Counsel of the assessee. 16. We have heard the both parties and perused the relevant record available with us specially the impugned order passed by the Revenue Authorities; Paper Book filed by the assessee, we find considerable cogency in the contention of the ld. Counsel of the assessee that the issue raised in ground no. 1 raised in the Revenue's Appeal is squarely covered by the Order dated 31.10.2014 of the ITAT, Delhi 'C' Bench passed in ITA No. 1756/Del/2013 (A.Y. 2008-09) in the case of M/s IAG Promoter & Developers (P) Ltd. vs. ACIT wherein the Tribunal held vide para no. 3 at page 5 as under:- "The CIT(A) directed to recalculate the interest on PDCs and there 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 per cent of the voting power; (c) a concern (other than company) in which such share holder has at least 20 per cent interest; (iii) the payer company has accumulated profits on the date of any such payment and the payment is out of accumulated profits; (iv) the payment of loan or advance is not in the course of ordinary business activities. By a deeming provision it is the definition of dividend which is enlarged. The legal fiction does not extend to "shareholder". The fiction is not to be extended further for broadening the concept of shareholders. Circular No. 495, dated September, 22, 1987, issued by the Central Board of Direct Taxes is not binding on the High Court. During the assessment proceedings, the Assessing Officer noticed that the assessee company had received advances of Rs. 6,32,72,265/- by way of book entry from a company, JGPL and the share holders having substantial interest in the assesee company also had 10 per cent of the voting power in JGPL. The Assessing Officer was of the view that as the two Guptas were members holding substantial interest in JGPL which had provided loans and advances to the assessee company and these very persons had substantial interes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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