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TMI Blog2015 (11) TMI 1565X X X X Extracts X X X X X X X X Extracts X X X X ..... )-XXX, New Delhi, for A.Y. 2007-08. Sole effective ground raised in this appeal is as under: Whether on the facts and in the circumstances of the case in law, Ld. CIT(A) has erred in deleting the addition made by AO on account of failing on the part of the assessee company to deduct tax u/s 194H of the I.T. Act, 1961. 2. The facts, in brief, are that return declaring nil income was filed by the assessee on 31-3-2008. The case was selected for scrutiny and notice u/s 143(2) of the Income-tax Act, 1961 (in short Act ), was issued. In the assessment order, passed u/s 143(3) of the Act, the ld. Assessing Officer made disallowance of ₹ 7,43,37,863/- in terms of section 40(a)(ia) of the Act, holding that payment made to consolid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a), and therefore, the issue has become final. 4. Ld. Senior DR also admitted that case in hand is covered by the said decision, however, relied on the order of the ld. Assessing Officer 5. We have heard rival submissions and perused the material available on record. We find that the assessee company was incorporated and engaged in the business of real estate and other allied activities. The assessee had appointed M/s. Vikram Electric Equipments (P) Ltd. as consolidator for procuring land for the assessee company and the role of consolidator was on principal to principal basis. The assessee had paid commission to M/s. Vikram Electric Equipments (P) Ltd. for procuring land and the A.O. held that the payment represented the commission f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. The closing stock was thus determined at ₹ 54,03,00,341/-. 24. Before the Ld. 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 A.O. 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 assessee and was not toward any services rendered. As a consolidator, Vikram Electric Equipment P. Ltd. was to contact the local farmers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axable profits of the assessee during the years. The 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 the sale of land by the assessee. It is as such that it has been claimed 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. In case any land which was agreed to be acquired by Vikram Electric Equipment P. Lt. w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 ht 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 serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt P. Ltd. on the similar terms and conditions. The Commissioner of Income-tax (Appeals) has in his order demonstrated the similarity of facts of the case of the assessee with the facts of case in M/s Finian Estate Developers Pvt. Ltd. (supra). We agree with the ld. Commissioner of Income Tax(Appeals) that the facts and circumstances of the case in hand are identical to the facts and circumstances with the case of M/s Finian Estate Developers Pvt. Ltd. (supra). Thus, the case in hand being squarely covered by the decision of the ITAT in the case of M/s Finian Estates Developers Pvt. Ltd. (supra), respectfully following the same, we hold that the expenses incurred by the assessee towards consolidation of land was not liable to deduct tax u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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