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TMI Blog2017 (2) TMI 495X X X X Extracts X X X X X X X X Extracts X X X X ..... ligation under any agreement between the appellant, the UBPL and UDHPL to pay monies of any sort to the original allottee, the appellant could not claim the sum of ₹ 6.75 crores towards deduction from income. The AO had further disallowed and disputed the addition of such costs on the ground that no such expenses had at all been incurred by the assessee and the perusal of the Sale Deed showed that the sale consideration was inclusive of all rights. Hence, the costs of transfer of rights alongwith all developments/constructions thereon were included in the sale consideration - Decided against assessee - ITA No. 710/2016 & CM No. 38487/2016 - - - Dated:- 3-2-2017 - MR. S. RAVINDRA BHAT MR. NAJMI WAZIRI JJ. Appellant Through: Mr. Gagan Kumar, Advocate. Respondent Through: Mr.Ruchir Bhatia, Senior Standing Counsel with Mr. Puneet Rai, Advocate. NAJMI WAZIRI, J. (OPEN COURT):- CM No. 38487/2016 (for exemption) Allowed, subject to all just exceptions. The application stands disposed off. ITA No.710/2016 1. The appellant has impugned the order of the Income Tax Appellate Tribunal (hereinafter referred to as the ITAT ) dated 07.03.2016, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnal development charges and conversion charges. Upon sale of one of the two blocks constructed on the said land, on 06.03.2009 the appellant apportioned a sum of ₹ 6,73,76,070/- towards a portion of license fees, conversion charges and external development charges as proportionate cost of the land beneath Block-A. However, the AO disallowed this apportionment cost. Both, in the appeal before the CIT(A) and ITAT, the said disallowance was upheld. The Tribunal examined the MoU dated 01.04.2007 executed between UBPL, UDHPL and the appellant and did not find any such monies or consideration payable by the assessee to either the Seller UBPL or to the original allottee. It reasoned inter alia:- 6.............According to this agreement it is stated that united business park ltd is the owner of the licensed land which was purchased by it from Unitech Ltd on 31August-2004. On 30.3.2006 Unitech business park ltd further entered into the agreement to sale this property to Unitech Developers and Hotels Pvt. Ltd for ₹ 675 lacs only. As unitech developers and hotels Pvt ltd could not pay the price agreed to unitech business park ltd, Unitech Developers and hotel Pvt ltd and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borne and paid by the VENDEE. 6. That all expenses, incurred on registration of this SaleDeed including Stamp Duty and other charges have been borne and paid by the Vendee. 7. According to paragraph No.5 of that sale deed of taxlevies assessment demand or charges which are levied in respect of the said plot of land paid up to the date of Sale deed are to be paid by the vendor and after that by the assessee. Contrary to the statement made by the assessee according to the sale deed in Para No.1 of the sale deed total interest in the land were transferred by Unitech business Parks Ltd to the assessee for ₹ 7.16 only. We failed to understand that if such cost is to be borne by the assessee why it does not find a mention in the sale deed or MOU executed by the parties. Further AO and CIT (A) both have perused these documents and based on that have disallowed these costs to the assessee. Therefore in our opinion merely because the assessee has recorded the cost of external development charges and license fees in the books of account by crediting it to some other parties account and showing it as work in progress i.e. opening stock, it cannot be granted as deduction from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and structure of financial transactions between the parties:- 7. The Court would note that by the Conveyance Deed dated 31.08.2004, the original allottees had, for a consideration of ₹ 6.75 Crores, agreed to convey, sell, transfer and assign all their rights and interest in the aforesaid plot of land to the Vendee i.e. UBPL alongwith all its rights, liberties etc. in the said plot of land. It further recorded that the Vendors are left with no right, lien or claim of any nature whatsoever in the said land. Clauses (5) and (6) of the said Agreement record that all the external development charges up to the date of the said Conveyance Deed had been paid by the Vendee to the original allottees and nothing further remained to be paid in that regard. The taxes, levies, assessments, demands or charges etc. had been paid by the Vendors and all further charges etc. in that regard would be payable by the Vendee, the purchaser. Therefore, as far as the Vendor the original allottee was concerned it had divested itself of all interests in the sold land. The Court is of the view that if the original allottee chose to make any payments in subsequent years towards license fee and devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d hereinabove shall include expenses, such as, License fee, Architect's fee, EDC, IDC, conversion charges, construction cost including materials consumed/unconsumed at site of the Project or any other indirect expenditure incurred in connection with the construction and development of the Said Commercial Complex. 3. That as a consequence of the Understanding as agreedherein, the ATS dated 30.03.2006 and the Supplementary Agreement dated 25.04.2006 shall stand cancelled and the Conveyance Deed of the Said Land shall be executed by 'UBPL' in favour of 'UHSL' within a period of one year from the date hereof. 4. That it is expressly agreed in between the Parties that they shall remain bound by this Understanding and shall take all consequential steps in accordance with the provisions of this MOU. 5. That in the event of any controversy or ambiguitypertaining to or arising out of this MOU, the same shall be referred to the Chairman of the Holding Company i.e. Unitech Limited and the decision of the Chairman of the Holding Company shall be binding on all the Parties. 10. Aforesaid clauses (1) and (2) clearly state that the transfer of expense ..... X X X X Extracts X X X X X X X X Extracts X X X X
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