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TMI Blog2015 (4) TMI 1216X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O. has noted the date of sale of properties and date of encashment of cheques. Therefore, we find that the facts in the present case are similar in one of the Sister concern i.e. case of M/s IAG Promoters and Development Pvt. Ltd [2014 (12) TMI 216 - ITAT DELHI] therefore, following the Tribunal order in the case of group company, we dismiss this appeal of Revenue. Disallowance an additional payments u/s 37 - main contention of the ld AR is that having not claimed the expenditure, the same cannot be disallowed - Held that:- When the additional payment has not been claimed by the assessee as deduction, then the question of any disallowance. See M/s. Glitz Builders (2015 (5) TMI 384 - ITAT DELHI ) Addition made on account of interest on PDC - Held that:- The ground of revenue is factually incorrect and it was only a direction of ld CIT(A) to AO to re-calculate the interest on PDC’s on the basis of material seized during search and as per the direction the AO has found that there was no interest payable since the PDC were encashed before six months and we have already dismissed the appeal of the revenue on identical ground in earlier years, so on identical reason following t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents having not been claimed as deduction by appellant, no disallowance could have been made in the hands of the appellant. 3.1 That without prejudice the CIT(A) erred in upholding the disallowance of additional payments made to the recipients who were not the owners of land and to the payment made in cash. 4. That on the facts and circumstances of the case and in law the ld CIT(A) erred in upholding the disallowance u/s 40A(3) in respect of which no deduction was claimed by the appellant. 4.1 That even on merits the disallowance was not justified. 5. While the ground raised in the appeal of the revenue is as under. 2. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of ₹ 10,74,959/- made by the Assessing Officer in view of the provisions of Section 37(1) of the Income Tax Act, 1961 on account of additional payment in violation of Stamp Duty Act, 1899. 6. Brief fact of the case as noted by the ld CIT(A) is that during assessment proceeding Assessing Officer noticed that the appellant company is one of the group company of BPTP Group in which land has been purchased mainly in the NCR (National Capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... identical as in the case before us):- 3. Ground Nos.3 4 of the assessee s appeal read as under:- 3. That on the facts and circumstances of the case and in law the CIT(A) erred in not accepting the appellant s contention that Additional Payments having not been claimed as deduction by appellant, no disallowance could have been made in the hands of the appellant. 3.1 That without prejudice the CIT(A) erred in upholding the disallowance of additional payments made to the recipients who were not the owners of land and to the payment made in cash. 3.2 That without prejudice the CIT(A) erred in not himself quantifying the addition to be made. 4. That on the facts and circumstances of the case and in law the CIT(A) erred in upholding the disallowance u/s 40A(3) in respect of which no deduction was claimed by the appellant. 4.1 That even on merits the disallowance was not justified. 4. While, the only ground raised in the appeal of the Revenue reads as under:- On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of ₹ 13,06,377/-, made by the Assessing Officer in view of the provisions of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee purchased the land for and on behalf of CWPPL and any payment for the purchase of land or for additional payment has been debited to the account of CWPPL. Therefore, when no deduction is claimed by the assessee for purchase of land or for additional payment, the disallowance under Section 40A(3) or for additional payment cannot be made in the hands of the assessee. 8. Learned DR, on the other hand, relied upon the order of the Assessing Officer. He stated that the assessee has purchased the land and handed over the same to CWPPL. Thus, it is a case of purchase and sale of land by the assessee to CWPPL. Merely because the assessee has not passed the entry of purchase and sale of the land in its books of account and only accounted for the remuneration from the sale of land, application of Section 40A(3) cannot be avoided. He, therefore, submitted that the order of Assessing Officer should be sustained. 9. We have carefully considered the submissions of both the sides and perused relevant material placed before us. The assessee has produced the collaboration agreement before the Assessing Officer and has submitted as under:- Based on the aforesaid Agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on behalf of CPPL but on its own account. He submitted that if the land was brought on behalf of developer then there was no necessity for entering into this agreement. Thus, in sum and substance, ld DR submitted that purchase of land by assessee and giving it to developer as per collaboration agreement are two separate transactions. Therefore, the entries for purchase of land should have been made in the books of assessee and mere non making of entry in books of account is of no consequence. He, therefore, submitted that disallowance u/s 40A(3) was rightly made by AO. 11. We have heard both the parties and have perused the records of the case, we find considerable force in the contention of the ld AR that issue raised by assessee in ground No.3, 3.1, 4 and 4.1 and Revenue ground No.2 are squarely covered by the order of the co-ordinate bench as reproduced in M/s. Glitz Builders (supra). We concur with the finding of the co-ordinate Bench that when the cost of the land as well as additional payment has not been claimed by the assessee as deduction, then the question of any disallowance under Section 40A(3) or otherwise in the case of the assessee does not arise. We, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aised in the grounds. 17. Ld. AR of the assessee submitted that pursuant to the said direction of the ld CIT(A), AO did the said exercise as directed and found as a matter of fact that since the PDCs were encashed by the sellers in less than six months from the date of issue, entire interest of ₹ 5,14,018/-was deleted. He further submitted that the matter in the present appeal is covered by the order of the Tribunal 'C' Bench Delhi in the case of a sister concern viz., M/s IAG Promoters and Developers Pvt. Ltd dated 31.10.2014 passed in ITA No. 1674/De1l13 1765/De1l13 for AY 2008-09. Ld. Counsel for the assessee stated that the facts of the case of M/s IAG Promoters and Developers Pvt. Ltd (supra) are identical to the facts of the case of the assessee and both companies are group/sister companies. 18. We have considered the submissions of both the parties and carefully gone through the material available on the record. It is noticed that the facts of the present case are identical to the facts involved in the case of M/s IAG Promoters and Developers Pvt. Ltd. (supra). The said company is a sister concerns of the assessee and belonged to the same group companie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at only the assessee has filed the appeal and there is no cross-appeal or cross-objection of the revenue and the ld AR pressed only the same grounds as for Assessment Year 2006-07 i.e. 3, 3.1, 3.2, 4 and 4.1 which are identical to the assessee s appeal for Assessment Year 2006-07. Therefore the same order on these grounds for Assessment Year 2006-07 follows. So, we direct deletion of the entire disallowance made by the Assessing Officer under Section 40A(3) as well as additional payment and thus the assessee s appeal for Assessment Year 2007-08 is allowed. 21. In the result, the Appeal of the assessee for Assessment Year 2006-07 and 2007-08 are partly allowed and appeal preferred by the revenue for Assessment Year 2006-07 stands dismissed. ITA No.1740/Del/2013 (assessee s appeal) (Assessment Year 2006-07) 22. Grounds No.1,2 and 2.1 3, 3.1, 5 and 6, are not pressed so dismissed. 23. Grounds No.4, 4.1, 4.2 4.3 is in respect to disallowance an additional payments u/s 37 of the Act. 24. The ld AR submitted that the AO had made a disallowance on ₹ 2,90,000/- U/s 37 of the Act on account of additional payments for the purchase of land. The assessee had challenged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27. In the light of the aforesaid decision in sister concern on similar facts and circumstances, these grounds of the assessee stands allowed. 28. In the result the appeal of the assessee is partly allowed. ITA No. 1536/ Del//2013 (Department's Appeal):- 29. Ground No.1:- This ground of revenue reads as under:- On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of ₹ 34,52,576/- made by the Assessing Officer on account of interest on PDCs paid out of books of account. 30. The AO made an addition of ₹ 34,52,576/- on account of interest on Post Dated Cheques (PDC) issued for purchase of land as part consideration as per para 2.5 of her order. This was the interest calculated @15% p.m. on PDCs from the date of issue (sale deed) to the date of encashment. 31. Aggrieved by the said order of the AO, the assessee preferred an appeal before the ld CIT(A) who held in para 5.4 at page 16 of his order:- If it is not possible to work out the extension of PDCs in each case then A.O is directed to recomputed interest on PDCs after six months from date of issue of PDCs i.e. date of sale, as six months is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e U/S 40A(3) and confirmed by the CIT(A) and ground Nos.4, 4.1and 4.2 are relating to disallowance on additional payment. The ld AR reiterated similar contentions and ld DR reiterated the contention at Para 10 (supra). 39. We find that similar disallowance was made by AO in the case M/s Glitz Builders and Promoters Pvt. Ltd., ITA No.1747/Del/2013 dated 01.01.2015, wherein the co-ordinate bench deleted the addition made u/s 40A(3) of the Act and on account of additional payment. 40. On similar ground in ITA No.1768/Del/2013 in the case of M/s. Business Pak Builders Pvt. Ltd. (supra) for Assessment Year 2006-07,. We have held as follows:- We have heard both the parties and have perused the records of the case, we find considerable force in the contention of the ld AR that issue raised in ground No.4, 4.1, and 4.2 is squarely covered by the order of the co-ordinate bench. We concur that when the cost of the land as well as additional payment is not claimed by the assessee as deduction, the question of any disallowance under Section 40A(3) or otherwise in the case of the assessee does not arise. We, therefore, delete the entire disallowance made by the Assessing Officer unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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