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TMI Blog2022 (2) TMI 1142X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed in AY 2013-14 and that to be u/s 37(1) of the Act. On this ground alone, we do not find any basis or the reason as to how the payments and the cost with regard to FY 2007-08 (AY 2008-09) is disallowable in AY 2013-14. The terms of Agreement and MoU entered into between the assessee and SBPL and the conduct of the parties and the transactions undertaken with the land owners clearly show that there was clear cut understanding and arrangement between the assessee, SBPL and the land owners and the same cannot be termed as self-serving document as held by the Assessing Officer, because such an agreement has duly acted upon - agreement reveals that SBPL has got the land transferred directly in favour of the assessee and it is provided that SBPL was paid consideration for assigning, relinquishing and transferring all its present and future rights in the said land. All these documents and the conduct that the payment made to SBPL, cannot be held to be a make-believe arrangement and such payment cannot be disallowed. Accordingly, the order of the ld. CIT (A) deleting the said disallowance is upheld. TDS u/s 194H - Disallowance on protective basis u/s 40(a)(ia) - commission or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asuring 15.31251 acres in section 112 of Gurgaon district in Haryana. For this purpose, the assessee entered into an agreement with M/s. Soni Buildcon Private Ltd. (SBPL) who in turn had arrangements/understanding with the land owners with regard to purchase of said land parcels, i.e., it had obtained preferential rights to purchase the land and would further acquire such rights. As per the MOU/ Agreement, the price at which the land would be purchased was fixed at ₹ 3.71 crore per acre of land, irrespective of the price at which such land would be actually purchased from the farmers in terms of sale deeds to be entered into with them. Given this, even if the price as per the actual sale deed was lower than the pre-fixed price, the assessee was required to pay to SBPL, the difference amount on account of transfer of rights held by it in terms of arrangements/ understanding with the land owners. The summary of total payments made with regard to the purchase of the aforesaid land is as under:- S.No. Particulars Amount (in INR) 1 Payment made to owners of land parcels (as instruc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore 17.04.2007, the date on which so-called agreement was entered into by the assessee with SBPL. Apart from that, he also observed that SBPL could not have entered into any kind of understanding/ agreement with the land owners without making any advance payment to them in lieu of the proposed transfer of their land. Thus, he doubted the entire arrangement between the assessee and SBPL and held that claim of the assessee to have paid ₹ 8,10,29,645/- to SBPL for renunciation of its rights in the land is a mere make believe story and assessee s claim cannot be accepted that the said payment made by the assessee for relinquishment of rights of SBPL in the land being purchased by the assessee. After detailed discussion, he held that such a payment claimed towards payment of cost of land cannot be allowed. The entire premise of the AO was disbelief of the arrangement and agreement between the assessee and SBPL which he has held to be self-serving agreement and according to him it is not proved that the nature of payments made to SBPL is an expense done wholly and exclusively for the purpose of business. 5. Without prejudice, Assessing Officer also held that the payment if at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he land owners and SBPL it was specifically provided that upon payment of full consideration as determined between the land owners and SBPL, land owners would get the land registered either in the name of SBPL or its nominees or other person as may be specified by the SBPL. Initially payments were made by the SBPL to reserve its rights in the land and pursuant to such arrangement only, the land owners agreed and executed the sale deeds directly into the name of the assessee. The summary of total payments made by the SBPL and the assessee to the land owners are as under :- Sale Deed No. Name of the land seller SBPL Appellant Total Payment 4099 Mangatram 9,333,333 38,400,001 47,733,334 Daryab Singh 9,333,333 38,400,001 47,733,334 Pratap Singh 9,333,333 38,400,001 47,733,334 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l demand of ₹ 48.71 crores made for the purchase of land, payment amounting to ₹ 9.87 crores was initially made by the SBPL so as to reserve its right and remaining payment of ₹ 38.84 crores were made by the assessee on behalf of the SBPL after the execution of the agreement with the land owners. The details of which are as under:- S.No. Particulars Amount (in INR) 1 Payment made to owners of land parcels (as instructed by SBPL) 38,83,36,259 2 Payment made to SBPL - In respect reimbursement for advances already made to the land owners 9,87,27,847 - For relinquishing its rights 8,10,29,645 3 Stamp duty charges 2,92,23,900 Total 59,73,17,651 8. The copy of bank statement substantiating the said payments made by the assessee was filed be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing and it has been observed that during FY 2007-08, the appellant was required to purchase contiguous piece land. For this purpose, the appellant based on the assurance made by the SBPL that it has got understanding/ agreements with various owners and will provide a contiguous piece of land entered into agreement (i.e. MoU) on 17/04/2007 with SBPL. On perusal of the MoU, it is seen that SBPL had arrangement /understanding with the land owners i.e. was holding rights in the land and SBPL was paid for assigning/relinquishing/transferring all its present and future rights in the land to be registered in the name of the appellant 2.7 The assessing officer in the assessment order has considered the aforesaid agreement (i.e. MoU) to be a self-serving document on the premise that the sale deeds were directly executed between the land owners and the appellant without there being any tripartite party agreement or SBPL being a party to the agreement as confirming party (i.e. witness to the deed). However, careful perusal of the agreement entered into with SBPL reveals that it specifically provides that SBPL will get the land transferred on registration of the sale deed directly in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art from that, the terms of Agreement and MoU entered into between the assessee and SBPL and the conduct of the parties and the transactions undertaken with the land owners clearly show that there was clear cut understanding and arrangement between the assessee, SBPL and the land owners and the same cannot be termed as self-serving document as held by the Assessing Officer, because such an agreement has duly acted upon. In fact, the agreement reveals that SBPL has got the land transferred directly in favour of the assessee and it is provided that SBPL was paid consideration for assigning, relinquishing and transferring all its present and future rights in the said land. All these documents and the conduct that the payment made to SBPL, cannot be held to be a make-believe arrangement and such payment cannot be disallowed. Accordingly, the order of the ld. CIT (A) deleting the said disallowance is upheld. 13. Insofar as the alternative disallowance made by the AO on protective basis u/s 40(a)(ia) of the Act is also baseless because payments made to the consolidators of land have been made for the purpose of renouncing right/interest in the land and thus the assessee and the cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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