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TMI Blog2017 (3) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... ies is illegal and therefore, directed to be deleted. Addition on account of difference in closing balance of the assessee and one of the buyers of the property sold by the assessee - Held that:- It is noted that a confirmation has been placed by the assessee on record on behalf of Ms. Rakhi Sawant which is claimed to be signed by one, Shri Dewal Modi. On our enquiry, it was replied by Ld. Counsel that Shri Dewal Modi, happened to be the accountant of Ms. Rakhi Sawant. But nothing was brought on record to support the said claim. However, he requested for giving one more opportunity to bring proper documentary evidence on record. In our considered view also, this issue should go back to the file of the AO. The assessee should place on record confirmation signed by the customer only, i.e. Ms. Rakhi Sawant. If it is signed by some other person, then it has to be established that the said person is duly authorised to sign confirmation on behalf of Ms. Rakhi Sawant. - I.T.A. Nos. 6087 & 6088/Mum/2014 - - - Dated:- 11-1-2017 - SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) Appellant by : Shri Ashok Sutar Respondent by : Shri Vishwas Mund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut considering the facts and submission that the outstanding creditors balance were higher than amount shown in the books of Appellant. 2.2. On the facts of the case and in law, the Ld. CIT(A) erred in confirming the Ld AO's addition of ₹ 305,870 made between the differences in closing balance of ₹ 2,547,880 of the Appellant and closing balance of ₹ 305,870 of Ms. Rakhi Sawant, one of the buyer of property sold by the Appellant. 3. Addition on account of difference in Total Sale Price as per Agreement/AIR and Advances received till the end of the relevant year: 3.1. The Ld. CIT(A) erred in upholding the Ld. AO's additions of ₹ 13,34,452/- on account of differences between the amount received as Advances from Customers till the end of the relevant year and total sale price as shown in the Sale Agreement, without considering the fact that the projects were under construction and not completed till the end of the relevant year under Appeal. This addition has no relevance, as the Profit is worked out on the basis of the Percentage Completion Method based on Work-in-progress (WIP) duly followed by the Appellant consistently over the prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ground that compensation paid for the use of the building / premises / place of the members for construction activities was in the nature of rent. It was observed by the Ld. CIT(A) that this amount was paid as rent for alternative accommodation, therefore, merely because it has been called as compensation, it would not be out of the provisions of section 194I of the Act. Thus, the claim of the assessee was rejected. In the appeal before us, Ld. Counsel has heavily relied upon the judgement of the Tribunal in the case of Sahana Dwellers Pvt Ltd (supra). 8. We have gone through the said judgement and find that identical issue has been decided by the Tribunal in favour of the assessee by holding that the impugned payment was not in the nature of rent, and therefore, provisions of section 194-I were not applicable and, hence no disallowance could have been made u/s 40(a)(ia). Relevant part of observations of the Tribunal is reproduced hereunder:- We have considered the submissions of the parties and perused the material available on record. Undisputedly, the property in question where the tenants were staying earlier was owned by the Brihan Mumbai Mahanagar Palika and the te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) plant; or (f) equipment; or (g) furniture; or (h) fittings, whether or not any or all of the above are owned by the payee; 7. On a plain reading of the aforesaid definition of rent, it becomes clear that the payment made by the assessee does not come within the purview of rent as prescribed in the said provision as the assessee is not making such payment for use of any land, building, etc. On the contrary, if the facts involved are considered as a whole the payment made by the assessee is nothing else but in the nature of compensation. The Tribunal in case of Jitendra Kumar Madan (supra) while considering the nature of payment received for alternative accommodation by the recipients held such payments at their hand as income from other sources instead of income from house property. That being the case, the payment made by the assessee also being in the nature of compensation for alternative accommodation cannot be treated (i.e; rent. Moreover, such compensation cannot be treated as rent for the simple reason that not only the assessee is not using any land and building but it may also be a fact that persons to whom such payment have been made may no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... want though confirmation was available, but the same was not signed, so the same was not accepted by the lower authorities. If an opportunity is given, the proper confirmation can be brought on record and the alleged difference can be reconciled and duly explained before the lower authorities. 12. Per contra, the Ld. DR did not have any objection on that. 13. We have gone through the facts of the case. It is noted that a confirmation has been placed by the assessee on record on behalf of Ms. Rakhi Sawant which is claimed to be signed by one, Shri Dewal Modi. On our enquiry, it was replied by Ld. Counsel that Shri Dewal Modi, happened to be the accountant of Ms. Rakhi Sawant. But nothing was brought on record to support the said claim. However, he requested for giving one more opportunity to bring proper documentary evidence on record. In our considered view also, this issue should go back to the file of the AO. The assessee should place on record confirmation signed by the customer only, i.e. Ms. Rakhi Sawant. If it is signed by some other person, then it has to be established that the said person is duly authorised to sign confirmation on behalf of Ms. Rakhi Sawant. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following grounds:- 1. Disallowance of displacement compensation u/s-40(a)(ia): 1.1. The Learned Commissioner of Income tax (Appeals) ('the Ld. CIT(A)') erred in confirming the Learned Assessing Officer's ('Ld. AO') reduction of Work-in-Progress (,WIP') by withdrawing/disallowing compensation of ₹ 265,000/- paid to the members of society under re-development, which was paid for the alternate accommodation of the members, during the year under consideration, for non-deduction of tax under u/s. 194-1 without considering the facts and legal provision that there don't exist any Landlord-Tenant or Lesser-Lessee relationship for tax required to be deducted on the payment of compensation to such Members. 1.2. The Ld. CIT(A) erred in not considering nor discussing the submission made before him that amount paid to society members is considered as displacement charge and taxed under the head Income from Other Sources, relying on the decision of Shri Jatinder Kumar Madan Vs ITO ITA No.: 69211Muml 2010 AY 2006-07, dated 25.4.2012, wherein the displacement charges are taxed as income from other sources and not rent under the income from h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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