9911796707
TMI Blog2013 (6) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... New Delhi is bad in law and wrong of facts. 2. That on the facts and circumstances of the case, the Ld. CIT (A) XIII 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 ₹ 1,28,00,000/- paid by the assessee to the consolidator for transfer of rights. 2.1 That on the facts and circumstances of the case, the Ld. CIT (A) XIII has erred in upholding 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 the appellant craves leave to add, alter, amend, substitute, withdraw and/or vary any gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land. The Assessing Officer treated the difference as commission to Vikram Electric Equipment Pvt. Ltd. and held that since assessee had not deducted TDS therefore, he made disallowance u/s 40(a) (ia) of the Act. He further submitted that Assessing Officer wrongly took Vikram Electric Equipment Pvt. Ltd. as agent of the assessee whereas the payee had principal to principal relation with the assessee as rightly observed by the Hon ble ITAT in ITA No.1953 under similar circumstances. 4. The Ld. Departmental Representative relied upon the order of Assessing Officer and CIT (A). 5. We have heard the rival parties and have gone through the material placed on record. The brief facts of the case are that asessee entered into an agreement wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d during the year, the AO disallowed the amount out of purchases. Accordingly, he also reduced the closing stock by a similar amount. The closing stock was thus determined at ₹ 54,03,00,34l. 24. Before the learned CIT(A), the assessee contended that the amount involved was not of ₹ 4,20,15,641, since Vikram Electric Equipment (P) Ltd. had been paid only ₹ 1,24,33,376. It was on this contention of the assessee that the Ld. CIT (A) directed the AO to verify the actual amount involved. 25. It has been maintained by. the assessee all through that the payment to Vikram Electric Equipment (P) Ltd. was on account of transfer of certain rights' of Vikram Electric Equipment (P) Ltd. in the lands transferred to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of account. It has been contended that alternatively, in any case, the payment made to Vikram Electric Equipment (P) Ltd. has not affected the taxable profits of the assessee during the year. The total purchases were lying as dosing stock as observed by the taxing authorities also and the effect of adjustment with regard to the amount paid to Vikram Electric Equipment (P) Ltd. would arise only on and in the instances of sale of land by the assessee. It is as such that it has been claimed that no disallowance under s. 40 (a)(ia) of the Act is called for, much less any' consequential action under s. 201 of the Act. It has been contended that Vikram Electric Equipment (P) Ltd. had an important role to play as a consolidator, since the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor that no sum shall accrue to it on this account till it procures 27 acres of land for the buyer 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 t:quipment (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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by both the authorities below. 33. The provisions of s. 40(a)(ia) of the Act in any case do not apply, the assessee having not claimed any deduction for any expenses on account of payment to Vikram Electric Equipment (P) Ltd., either in its P L a/c or in the computation of taxable income filed. It was only that the Assessing Officer recorded a loss of ₹ 19,700. This obviously, did not include any addition of either ₹ 4,02 crores of ₹ 1,24 crores. 34. In view of the above discussions, the grievance of the assessee is found to be correct and is accepted as such. 7. In the present case, clause 3.2 of agreement with Vikram Electric Equipment Pvt. Ltd. is same as was in the appeal no.1953 relied upon by Ld. AR ..... X X X X Extracts X X X X X X X X Extracts X X X X
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