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TMI Blog2015 (6) TMI 939X X X X Extracts X X X X X X X X Extracts X X X X ..... rtion of the excess amount received. The amount thus refunded to the purchasers represents the consideration the purchasers paid towards the undivided shares in the property agreed to be purchased and also the cost of construction of the apartment, which work was entrusted to the appellant, being the builder. Such a relationship does not spell out a debtor-creditor relationship nor is the payment made by the appellant to the purchaser one in discharge of any pre-existing obligation to be termed as interest as defined in section 2(28A). Further, there is no finding in the assessment order or in the order of the Tribunal that the amount paid by the purchasers, which was refunded, was accounted as deposit or advance received from them or th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a builder which had entered into construction agreements with various customers. A specimen of such an agreement is produced as Annexure I in these appeals. This agreement states that the purchaser of the apartment specified therein has already purchased the specified extent of undivided share in the land owned by the landlord, whose power of attorney is held by the appellant. The agreement provides for construction of a flat by the appellant for and on behalf of the purchaser. Payments are to be made by the purchaser in instalments which are also specified in the agreement. The agreement provides that in the event of any failure on the part of the purchaser to perform or observe any one of his obligations, the appellant shall be entitled t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has to be treated as interest paid on deposit liable for TDS under section 194A of the Act and that having failed to do so, appellant is an assessee in default and accordingly, assessment was completed under section 201 of the Act. The order of assessment was set aside by the first appellate authority. However, the said order was reversed by the Tribunal. It is in this background, these appeals are filed. 5.We heard learned counsel for the appellant Sri.Pratap Pillai and the learned senior standing counsel Sri.P.K.Ravindranatha Menon for the Revenue. 6.As stated earlier, the issue that arises for consideration is whether the amount debited in the P L account of the appellant company under the head 'indirect expenses' being e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rowed or debt incurred and that there is debtor-creditor relationship between the parties. These are the necessary ingredients of section 2 (28A). 9.The scope of this provision came up for consideration before various High Courts as well as the Apex Court. In Bikram Singh v. Land Acquisition Collector [224 ITR 551(SC)], in the context of interest paid on delayed payment of compensation due under the Land Acquisition Act, the Apex Court held that such payment is a revenue receipt and that section 194A of the Income Tax Act has no application. Commissioner of Income-tax v. Sahib Chits (Delhi) (Pvt.) Ltd. [(2010) 328 ITR 342 Delhi] is a case where the question considered was whether section 2(28A) was attracted in the case of surplus on dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest paid/credited by the Housing Board on the amount deposited by the allottees on account of delayed allotment of flats is covered by section 2 (28A). This again was answered by the Himachal Pradesh High Court following the Apex Court judgment in Bikram Singh (supra). Commissioner of Income Tax, Kolkata v. M/s.MKJ Enterprises Limited [2014 (12) TMI 682] is a judgment of the Division Bench of the Calcutta High Court which also considered the question whether section 2(28A) is attracted to discounting charges of bill of exchange or factoring charges of sale. That was also answered in the negative, holding that interest is a term relating to a pre-existing debt which implies a debtor-creditor relationship. 11.From the principles laid do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is any debtor-creditor relationship between the parties, obliging the appellant to pay the amount to the purchasers. There is also no case for the revenue that the excess amount paid by the appellant was based on any agreement between them or that it was quantified at rates that were already agreed between the parties. In such circumstances, the payments made do not qualify to be interest as defined in section 2(28A) of the Act and the appellant did not have the obligation to deduct tax at source as provided under section 194A nor can they be proceeded against under section 201A, treating them as an assessee in default. For the aforesaid reasons, we are unable to sustain the order of the Tribunal which is impugned in these appeals. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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