9911796707
TMI Blog2021 (2) TMI 1008X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Income Tax (Appeals)-54, Mumbai [CIT(A)] vide order dated 29/10/2018 confirmed the stand of Ld. AO. Aggrieved, the assessee is in further appeal before us. The assessee is stated to be engaged in building construction and development. 2. The impugned disallowance stem from the fact that the assessee paid compensation of Rs. 56.61 Lacs to 5 parties against cancellation of flats. The details of the same have been tabulated in para 7.1 of the impugned order. The Ld.AO opined that compensation on cancellation of booking would partake the character of interest payment covered u/s 194A and therefore, the same would require deduction of tax at source. Since the assessee had not deducted tax at source on stated payments, the aforesaid amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elayed payment by purchasers. However, in all case there was no provision for payment of any compensation to the purchaser in the event of cancellation of allotment letters. Further in all cases, the purchasers had requested for cancellation of flats and therefore the assessee was under no obligation to pay any compensation. The assessee returned the booking amount along with additional amount which would be nothing but interest on the amount kept with him. There was no other way this payment could be interpreted because the assessee was under no legal obligation to pay compensation for cancellation of flat, the proposal for which came from the purchaser. The argument that there exists no debtor-creditor relationship was negated by observin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chasers would be nothing but compensatory interest in nature. The buyer-seller relationship was snapped the moment the bookings were cancelled and the relationship of debtor-creditor would commence. As rightly held by Ld. CIT(A), there was no other way this payment could be interpreted because the assessee was under no legal obligation to pay compensation for cancellation of flat, the proposal for which came from the purchaser. Therefore, the impugned order would not require any interference on our part, in this regard. The said adjudication is also supported by assessment order for AY 2017-18 as placed on record by Ld. DR the perusal of which would reveal that the assessee, itself, has deducted tax atsource on such excess payments during t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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