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TMI Blog2016 (5) TMI 483X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Commissioner of Income-tax(Appeals)XVII 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.37,22,734/- paid by the assessee to the consolidator for transfer of rights. 2.2 That on the facts and circumstances of the case, the learned Commissioner of Income-tax(Appeals)XVII 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)XVII has erred in law in not appreciating that the disallowance of said sum' of RS.37,22,734/- which is included in purchases during the year has no impact on appellant's profit liable to tax as the entire purchases form part of closing stock of the appellant at the year end. 3.1 That the order of learned CIT(Appeals) is erroneous and self contradictory, The learned CIT(Appeals) has erred in confirming the addition after holding that closing stock also needs to be reduced. The learned CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee group. 4. Ld. AR contended that except amount of addition all facts and circumstances of the present case are similar to the case of Philana Builders & Developers P Ltd. vs ITO (supra). Therefore the issue is squarely covered in favour of the assessee by the order of the coordinate bench of the Tribunal. 5. Replying to the above Ld. DR strongly supported the action of the AO as well as the first appellate order but he could not show us any other order of the Tribunal or any other higher forum to show us the order of the ITAT Delhi Bench "F" in the case of Philana Builders & Developers P Ltd. vs. ITO (supra) have either been modified or set aside by any competent authority. Ld. AR contended that the consolidator was not working as an agent of the assessee . Therefore the assessee ought to have deducted TDS on the amount paid to the consolidator either u/s 194c or u/s 194H of the Act. 6. On careful consideration of above submissions from the order of the Tribunal in the case of Philana Builders & Developers P. Ltd. dated 11.2.2016 (supra) we observe that the Tribunal has granted relief to the assessee with following observations and conclusion :- "7. The ld. AR s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ested its own funds for purchasing the land for the 'acquirer' in the present case of ZREPL the acquirer paid from its own funds. However, ld. Counsel for the Revenue has been unable to show any difference in the actual clauses of the MoU between ZREPL and VEEPL when compared to the MoU between Finian and VEEPL. In the circumstances, the Court is unable to appreciate on what basis it could be said that the arrangement between ZREPL and VEEPL was not on a 'principal to principal' basis. With the Revenue having accepted the decision of the ITAT in the case of ITO vs. Finian Estates Developers P. Ltd., and with there being nothing to distinguish it in relation to the case of ZREPL, the Court is not inclined to interfere with the impugned order of the ITAT which, in the opinion of the Court, has rightly relied upon its earlier decision in the case of Finian. 16. Having considered at length the submissions of ld. Counsel for the Revenue, the pleadings and the documents not only in the case of PBDPL but also in the case of Finian, the Court is unable to find any distinction between the two cases as far as the clauses in the MoU between the parties and VEEPL or the payment made to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e total purchases were lying as closing 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 thus submitted that no disallowance u/s 40(a)(ia) of the Act is called for much less any consequential action u/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 assessee required contiguous land holdings in order to develop a colony. The Ld.AR submitted that in case land which was agreed to be acquired by Vikram Electric Equipment P. Ltd. was not found to be suitable by the assessee, it was Vikram Electric Equipment P. Ltd. which would have to bear the consequences, indicating that Vikram Electric Equipment P. Ltd. was not acting as an agent on behalf of the assessee, but was working on a principle to principle basis, independently. 8. On the other hand, the stand of the Ld.DR, has been that MOU signed by the assessee and Vikram Electric Equipment P. Ltd. lays down that Vikram Electric Equipment P. ld. Makes it clear that Vikram ..... X X X X Extracts X X X X X X X X Extracts X X X X
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