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TMI Blog2017 (11) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... kanal 17 Maria' situated in Faridabad, Haryana to another incorporated company for a consideration of Rs. 12,98,50,000/- in the relevant previous year. As it appears from the assessment order, the said land was purchased in the financial year under consideration for Rs. 6,08,52,081/-. The assessee claimed as expenditure the said sum of Rs. 5,17,48,439/-, which was paid to another corporate entity, Alishan Estates Pvt. Ltd. as compensation in connection with the subject land transaction. The assessee's stand is that the said sum was paid in performance of its obligation under a Memorandum of Understanding (MOU) executed on 10th July, with Alishan. The assessing officer found Alishan to be a "paper/jama kharchi" company, which was used by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing officer as genuine transaction. On the question of invoking the provisions of section 40(a)(ia) of the Act, the assessee's contention was that it was sharing of profit in a joint venture. Assessee's position is that sharing of profit with joint venture partner does not attract TDS provisions. The Commissioner, in his order, observed and held:- "Besides, the AO himself says that M/s. Alishan Estates Pvt. is not showing this amount as income. In fact, his contention is that the appellant is making a false claim as because, M/s. Alishan Estates Pvt. Ltd. has not accounted for this amount at all. The AO has in fact stated that the books of M/s. Alishan Estates Pvt. Ltd. are duly audited and it is impossible that the alleged accrued incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot support the order of the AO for the reasons that the transactions were made by a valid written contract/agreement on various terms and conditions with the two said parties, which are essential for such a joint venture project. This has not been denied by the AO. The AO has not pointed out any defect in the said agreement entered between the assessee and Alishan Estates Pvt. Ltd. In lieu of the said agreement dtd.10/07/2005 M/s. Alishan Estates Pvt. Ltd. was to procure pre-specified land for purchase, to make all the necessary legal arrangements for such land and to find out suitable buyer for the said land and profit was to be shared between the assessee and M/s. Alishan Estates P. Ltd. in ratio 25:75. The profit includes loss as well. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held against the finding of the assessing officer that the said sum of Rs. 5,17,48,439/- was in the nature of expenditure, non-deduction of tax therefrom would lead to disallowance under Section 40(a) (ia) and transaction between the assessee and Alishan was sham to be "perverse, illegal and contrary to law." 6. Five questions were suggested before us for admission of the appeal by the Revenue, but what has been pressed before us at the time of hearing on admission of the appeal, is question No.2 which reads:- "Q.2. Whether having regard to the admitted facts where the assessee could not produce M/s.Alishan Estates Pvt.Ltd. before the assessing officer to prove that the transaction is genuine and the said company is existing, the Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials on record, the Commissioner accepted the assessee's stand that the said sum was not expenditure incurred by the assessee to attract the provisions of Sections 194H or 194J of the 1961 Act. As a consequence, the question of disallowance of payment by applying the provisions of Section 40(a) (ia) could not arise. These findings by the Commissioner are based on appreciation of materials on record. The Tribunal also concurred with the findings of the Commissioner. The Tribunal, in its decision under appeal, observed that the assessing officer did not point out any defect in the "settlement/contract". 9. Mr. Ghoshal submits that the assessing officer was right in expressing his view that the explanation on payment to Alishan was not s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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