9911796707
TMI Blog2017 (6) TMI 1228X X X X Extracts X X X X X X X X Extracts X X X X ..... e u/s 40A(3), on account of cash payments of Rs. 12 lakhs each in respect of land in Kh.No. 60/2 & 60/3, P.H. no.46, Mouza-Isanani, The. Higna, District Nagpur. 3. Whether on the facts and circumstances of the case and in law the learned CIT(A)-I, Nagpur erred in deleting the addition of Rs. 9,60,000/- being disallowances of Rent expenses." 2. Brief facts of the case are that the assessee filed his return of income on 29th September 2009, declaring total income to the tune of Rs. 7,94,850. The return of income was processed under section 143(1) of the Income Tax Act, 1961 (for short "the Act") on 5th September 2010. The assessee is engaged in the business of purchasing and selling of land after developing. The business is run by the proprietor concerned in the name and style of "Dream Developers, Nagpur" established in the year July 2007. The assessee also derived his income from interest during the year. The books of account were duly audited and audit report in Form 3CB and 3CD was filed The case of the assessee was selected for scrutiny under CASS. Notices under section 143(2) / 142(1) was issued and served upon the assessee. After verification of the facts of the case, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of payment of commission as such, however, by restricting such payment of commission @ 15% of sales, the A.O. has inferred the excessive payment on account of commission by the appellant. As discussed above, the appellant has furnished before the AO, the names and addresses of the parties to whom the commission has been paid along with the confirmation letters. But, the Ld.AO has omitted to take cognizance of this fact and proceeded to restrict the commission @ 15% of total sales without any cogent basis. It is an undisputed fact as emanated from the order of the AO and the assessment records that the AO has not pointed out any infirmities in the confirmation letters filed by the appellant in support of his claim for payment. 7.2 Coming to the method of accounting of commission and sales, it is found that the appellant has rightly booked the commission on the basis of finalisation of the deal of sale of plot and receipt of advance which is in conformity to the mercantile method of accounting. So far as sales are concerned, the appellant has accounted for the sales on execution of agreements to Sale and delivery of possession. In this regard it is significant to note that the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee. The Assessing Officer disallowed the commission @ 15% without rejecting the claim of the assessee raised in the books of account. The Assessing Officer did not invoke the provisions of section 145 of the Act. THE assessee booked the commission on sale of plot on accrual basis on the finalization of the deal and receipt of advance against the sale of property but the sale has been booked in the subsequent years. The appellant submitted the name and address of the person to whom the commission was paid. Confirmation letters were also produced before the Assessing Officer. The assessee furnished the plot-wise details of commission paid. The payment was made by account payee cheques to all the parties and the parties declared such receipt in their respective return of income filed before the Department which was also accepted by the Department. The books of account have not been rejected. We find no reason to restrict the commission @ 15%. In view of the said circumstances, we are of the view that the learned Commissioner (Appeals) has rightly allowed the commission after going through the record produced by the assessee and by going through the details of each and ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de. The appellant finally argued that the cash paid on purchase of land was not claimed as an expenditure by debiting the same to the Profit & Loss account and the account and the cost of the land was debited to the Work-in-Progress, therefore, contended that the provisions of Section 40A(3) are not applicable to the case of the appellant. 9.2 The appellant in this regard has relied on the decision of the Hon'ble 1TAT Delhi Bench in ITA no.3303/2013 in of Hon'ble ITAT. The facts of the case of the present appellant are squarely covered by the decision of the Hon'ble ITAT, Delhi Bench referred above. The Hon'ble ITAT in that case has held as under :- "The Ld.CIT(A) has not disputed the applicability of section 40A(3) in respect of cash payment made by the assessee. However, any expenditure can be disallowed only when the deduction in respect of expenditure is claimed by the assessee. In this case admittedly, the asaessee has not claimed the expenditure on purchase of land by debiting the same to the Profit & Loss account but he expenditure for purchase of land has been debited to work-in- progress." 9.3 The appellant has reflected the amount as Work-in-Progress i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and Smt. Surekah A. Ahirkar, in connection with one premises i.e., plot no.6, 7 and 8, Vijay Nagar, Behramji Town, Nagpur. Therefore, disallowed the claim of one person i.e., to the tune of Rs. 9.60 lakh and added back to the total income of the assessee. Now, it is to be seen in which circumstances the learned Commissioner (Appeals) has allowed the same. The finding of the learned Commissioner (Appeals) is reproduced herein below:- "11.0 I have carefully gone through the assessment order, the submissions of the AR of the appellant and the material placed on record. On careful examination of the facts, it is seen that the appellant has paid the rent for premises used for the purpose of business through account payee cheques on which TDS has also been made. The Ld. AO has not pointed out any infirmity as regards to the use of the premises for the purpose of business by the appellant and merely based on the physical inspection and hoardings not being displayed on such premises, much after the end of the relevant Financial Year, inferred that the premises were not used by the appellant. The inference drawn by the AO has no legs to stand. It is quite manifest from the material fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
