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TMI Blog2021 (3) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... tamp duty, Registration Charges as per Clause 3(b) of Collaboration Agreement. Bases on the agreement the assessee showed the income by way of fees at ₹ 35,000/- per acre in the year in which license on said land was received. While making the addition the Assessing Officer has totally ignored para 3.3 (b) of the Collaboration Agreement which clearly shows that Countrywide Promoters Pvt. Ltd. shall reimbursement of cost and expenses incurred by the assessee with respect to acquisition of land. The assessee has maintained proper books of accounts and all these transactions along with expenses were thoroughly shows in the books of accounts specially that of reimbursement as well. AO at no point of time rejected the books of accounts of the assessee. Though the finding of the Assessing Officer as well as CIT(A) is that the assessee was carrying business of development of real estate. From the perusal of record, it can be seen that these facts are not correct. The assessee is only carrying out acquisition of land and he expenses incurred on transactions of purchase of lands. As decided in WESTLAND DEVELOPERS PVT. LTD. VERSUS ACIT, CENTRAL CIRCLE-23, NEW DELHI [ 2014 (12) TM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t void ab initio. 3. That without prejudice on the facts and circumstances of the case and in law the CIT(A) erred in confirming the addition of ₹ 30,00,000/- as income from undisclosed sources. 4. That the orders passed by the Assessing Officer and Commissioner of Income Tax (Appeals)-XXX, New Delhi are bad in law and void ab initio. I.T.A. No.1351/Del/2015 (A.Y. 2006-07) 1. That the orders passed by the Assessing Officer and Commissioner of Income Tax (Appeals)-XXX, New Delhi are bad in law and void ab-initio. 2. That the CIT(A) erred in utilizing the material seized in the course of search on BPTP group of cases (excluding appellant) on 15.11.2007 which did not belong to the appellant. 2.1 That on the facts and circumstances of the case and in law the CIT(A) has erred in holding that wherever the date of PDCs are extended, interest is to be taken to have been paid @ 15% p.a in cash outside the books of account and is to be treated as undisclosed income. 2.2 That no enquiries were made from any of the alleged recipients of the interest and none was confronted with the relevant document(s). 2.3 That the addition was u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved as accommodation entries and asked the assessee to establish the identity and creditworthiness of these creditor and genuineness of transaction u/s 68. The assessee filed its submission and details before the Assessing Officer. After taking cognizance of the same, the Assessing Officer made additions of ₹ 30,00,000/- which was credited by the assessee in its books of accounts in the form of sale of investment to M/s Namrata Marketing Pvt. Ltd. during Financial Year 2004-05 and treated the same as the deemed/undisclosed income of the assessee u/s 68 of the Income Tax Act, 1961. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A) . The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that a sum of ₹ 30,00,000/- was received by way of sale of shares of M/s Alliance Buildcon (India) Pvt. Ltd. to M/s Namrata Marketing Pvt. Ltd. and sale proceeds were received by cheque from M/s Namrata Marketing Pvt. Ltd. The said shares were allotted to the assessee company in preceding year on 30/03/2003 by making payment through cheque. The copies of the share certificates were filed before the Assessing Officer for referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in the course of the search, or other postsearch material or information available with the AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts paid related to transaction of purchase of land. Stamp Duty. Registration charges etc., as per clause 3(b) of Collaboration Agreement. An agreement was entered into on 15.09.2004 between assessee and M/s Countrywide Promoters Pvt. Ltd (hereinafter CWPP). Based on the agreements, the Assessee showed the income by way of fees @ ₹ 35000/- per acre in the year in which license on said land was received. The Ld. AR submitted that the CIT(A) is totally incorrect in stating that it is difficult to accept the AR's contention that the cost of land is reimbursed by CWPPL. In stating so the CIT(A) totally ignored the fact that para 3(b) of the collaboration agreement clearly shows that CWPP shall reimburse all costs and expenses incurred by the aseessee with respect to the acquisition of said land. In the books of account maintained contemporaneously the sum received from CWPP was shown as reimbursement. The books of accounts are duly accepted by the lower authorities and CIT(A) are not rejected. What the CIT(A) has done is to brush aside the terms of agreement and the fact that the terms of agreement were carried out and that reimbursement was actually made. In disregarding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the CIT(A) is equally wrong in holding that the cost of land is expenditure in appellant s hand. Here again the CIT(A) ignored the settled position as to what constitutes expenditure. The Ld. AR relied upon the decision of Hon ble Supreme Court in case of General Insurance Company of India Ltd vs. CIT 2401TR 139(SC) the court explained the term expenditure. In the present case, the cost of land is not incurred out of assessee s pocket, and more importantly is not something which has gone irretrievably. After it is incurred it is reimbursed to the assessee. Hence, the same does not have the attributes of expenditure . Further in Attar Singh Gurmukh Singh 191 ITR 667 (SC), expenditure was held to mean which have been taken into account while determining the profit u/s 28, and purchase of stock-in-trade is one such outgoing which would be covered by the word expenditure. In the present case, cost of land cannot be taken into determining profit u/s 28 nor for acquisition of stock-in-trade. The Ld. AR also submitted that the decisions in case of Tuticorin Alkali Chemicals Fertilizers (supra) and CIT vs. Sun Engg Works Pvt. Ltd 198 ITR 297 (SC) are not applicable in present cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9; The disallowance made by the Assessing Officer, confirmed by the CIT(A) was deleted by accepting the plea of assessee since assessee has neither debited the amount of cost of land in Profit and Loss account nor claimed any deduction in respect of cost of land through computation. In view of above facts that as amount was not claimed, the issue of disallowance u/s 40A (3) does not arise. The order in Westland Developers Pvt. Ltd (supra) is followed by various coordinate Benches of the Tribunal, Delhi Benches. It is important to mention that disallowance u/s 40A(3) was made by the Assessing Officer relying on order of the CIT(A)-XXX, New Delhi in case of M/s Business Park Promoters Pvt. Ltd in Appeal No.521/2009-10/309 dated 24.12.2012. Appeal filed against the said order in Appeal No.521/09-10/309 dated 24.12.2012 is allowed by the Tribunal, New Delhi Bench 'A vide in ITA No.1732/De/2013 for the AY 2006-07 order dated 20.04.2015. As the very basis of making disallowance does not sustain, the disallowance need to be deleted. The Ld. AR further pointed out that decision of various coordinate Benches of the Tribunal in 34 cases, most of the cases like M/s Countrywide Promo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer at no point of time rejected the books of accounts of the assessee. Though the finding of the Assessing Officer as well as CIT(A) is that the assessee was carrying business of development of real estate. From the perusal of record, it can be seen that these facts are not correct. The assessee is only carrying out acquisition of land and he expenses incurred on transactions of purchase of lands. In case of M/s West Land Developers Pvt. Ltd., the Tribunal has dealt this issue and allowed the similar issue relating to reimbursement made by the Country Wide Promoters Pvt. Ltd. The Ld. DR could not point out the distinguishing facts. Thus, the facts of the present case are also identical. Therefore, Ground No. 4 4.1 are allowed. 14. As regards to Grounds No.3, 3.1 and 3.2 of assessee s appeal relating to the disallowance of additional payment, the Ld. AR submitted that the Assessing Officer had made a disallowance of ₹ 5,92,250/- u/s 37 on account of additional payments for the purchase of land. The assessee had challenged before the CIT(A) that the deduction of the purchase of land having not been claimed by the appellant, no disallowance could be made. The CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wance need to be deleted. It is important to mention here that in one of the group company in case of M/s Vasundra Promoters Pvt. Ltd, Department had filed appeal before Hon ble Delhi High Court on the issue of addition made on account of disallowance of Additional Payment deleted by Tribunal on the said account. Thus, the Ld. AR further submitted that the facts in the case of M/s Westland Developers Pvt. Ltd and M/s Business Park Promoters Pvt. Ltd (supra) and assessee are identical. Order of M/s Westland Developers Pvt. Ltd and M/s Business Park Promoters Pvt. Ltd (supra) has been accepted by the Department and no appeal has been filed by the Department. Even Otherwise, Hon'ble Delhi High Court has not admitted appeal of Revenue on the issue of disallowance of Additional Payment by holding that violation of provisions of Stamp Duty Act does not ipso facto result in disallowance u/s 37(1) of Income Tax Act, 1961. Principles of judicial discipline and doctrine of precedent have been consistently followed by the Coordinate Benches of the Tribunal in following the order of M/s Westland Developers Pvt. Ltd. Hence, the Ld. AR prayed that Grounds No. No.3, 3.1 and 3.2 of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue. The Hon ble Delhi High Court has not admitted the appeal of Department on the issue of disallowance of Additional payment by holding thus:- The second question of law urged is with respect to the payment of ₹ 1,05,86,958/- made by the assessee to the farmer/owners of the agricultural land from whom the land was purchased. It is contended by the Revenue that the ITAT ought not to have gone by the fact that the amount was routed from the books of account and included in the principle loss or that separate amount was used for that purpose. It was submitted that the amounts in fact constituted flagrant violation of law in as much as the provisions of the Stamp Act and other connected laws were sought to be evaded by the sale deed. This Court is of the opinion that the broad interpretation of the Explanation to Section 37(1) of the Act given by the Revenue is in the circumstances of this case not well founded. The other submission is that the such amount has to be taken as falling within the mischief of the said provision, in our opinion, is an incorrect premise. It is not every aliened violation of law, but such violation as results in a penal consequence. determi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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