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TMI Blog2015 (8) TMI 1414X X X X Extracts X X X X X X X X Extracts X X X X ..... s not a sham transaction as purchase and subsequent sale of land has occurred and the money as called for by the agreement has been paid by the appellant and that there was no violation of provisions contained in Chapter XVII-B of the Act. 2. That the impugned order of the CIT(A) is perverse and deserves to be set aside and the order of the AO to be restored. 3. The appellant craves leave to add, alter or abrogate any ground of appeal at the time of hearing." 3. Brief facts as emanating from the order of the AO, for the sake of convenience are reproduced herein below:- "During the course of assessment proceedings, it was found that the assessee-company paid sum of Rs. 5,17,48,439/- to M/s. Alishan Estates Pvt. Ltd (a Kolkata based pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exure-1. 2.3 The nature of alleged services provided by Shri Ajay Agarwal of M/s. Alishan Estates Pvt. Ltd show that it is highly specialized in nature. Verifying and checking all the title deeds of land and ensuring the authenticity of the title of the seller of land need service of an expert person. Negotiation with seller of land in relation to the prices finalized also requires great negotiation skill. It is also a specialized service. Arrangement of document for the purpose of transfer of land in the name of assessee is also a service provided by M/s. Alishan Estates Pvt. Ltd. Further, identifying the buyer and ensuring realization of highest possible value for the land also need technical and professional skill. Ensuring that profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... So, sum of Rs. 5,17,48,439/- is added to the total income of the assessee. 4. The AO made further discussion in his order vide para 3.1 to 4 that the claim of Rs. 5,17,48,439/- is not allowable for two distinct reasons- firstly under section 40(a)(ia) of Act and secondly, the transaction being a 'sham transaction.' With the discussion in para 3.1 to 3.5 from the AO's order M/s. Alishan Estates Pvt. Ltd is a jamakharchi company This concern is used by the assessee to reduce its profit by Rs. 5,17,48,439/-. The claim of expenditure of Rs. 5,17,48,439/- is not allowable. Accordingly, the AO made the additions of Rs. 5,17,48,439/- to the income of the assessee. 5. The ld.CIT(A) has deleted the additions by holding that the AO has taken the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rangements for such land, to find out suitable buyer for the said land and to undertake all the troubles for the sale of land. It was agreed between the assessee and M/s M/s. Alishan Estates Pvt. Ltd that the total profits arising out from the said joint venture project would be divided between M/s. Alishan Estates Pvt. Ltd and the assessee company in the ratio 75:25. There is no defect pointed out in the said agreement/contract by the AO. Therefore, he was not justified in treating the said amount as expenditure. There is no liability to deduct tax at source and no disallowance on this account could be made. Accordingly, he deleted the addition made by the AO by relying upon decisions of various courts of law. 7. The ld.DR has relied on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the AO would have treated the said transaction as a sham transaction, obviously the answer is No. Since joint venture has earned a profit and same was shared between the said two parties. Therefore, we are of the view that the transaction is completely in lieu of joint venture agreement. The AO is not justified in treating the said payment made by the assessee to the joint venture partner, M/s. Alishan as an expenditure and no TDS is required to be deducted on the profit so shared between the said two joint venture partners. In the circumstances and facts of the present case the addition so made by the AO is without any basis and is purely on surmises and conjectures. The ld.CIT(A) has rightly deleted the addition made by the AO. We ..... X X X X Extracts X X X X X X X X Extracts X X X X
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