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TMI Blog2025 (2) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... is not correct. Accordingly, we do not find any reason to interfere with the impugned order of CIT(A) qua this issue and consequently ground nos.3 & 4 of the Revenue stand dismissed. Disallowance of reimbursement of expenditure - assessee received sum as their share in a JV firm on account of reimbursement of expenses - Addition made as assessee failed to prove actual incurring of expenses - HELD THAT:- Similar issue was came before the co-ordinate bench of the Tribunal in case of Vinod Narappa Reddy [2020 (10) TMI 354 - ITAT BANGALORE], wherein the ITAT has held that "the Revenue cannot take the contrary view, which has been taken in a group of assessees to the determinant to the assessee before us. The law abhor uncertainty and selective approach against any individual." Therefore, without going into the merits of the case, respectfully following the decision (supra), we hold that, the Revenue cannot take the contrary view, which has been taken in case of M/s. YKH, to the determinant to the assessee before us. Addition on account of out of court settlement of their dispute and offered the same as income in their books of account - AO added the same to the total income of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed order is being passed. ITA 478/Hyd/2020 for A.Y. 2016-17 2. The Revenue has raised the following grounds in the appeal : "1. The ld.CIT(A) erred both in law and on facts of the case in allowing relief to the assessee. 2. The ld.CIT(A) erred in deleting the disallowance of expenditure amounting to Rs. 6.49 crores without actually adjudicating the ground raised on this issue. 3. The Ld.CIT(A) failed to appreciate the fact that value was adopted at Rs. 3000/- per s.ft basing on the statement recorded from the Directors of the two companies. 4. The Ld.CIT(A) erred in not relying upon the decision as held by the Hon'ble M.P. High Court in the case of SS Ratanchund Bholanath vs. CIT 210 ITR 682, wherein it was held that "when assessee admitted that a particular income is liable to be included in its total income, assessment made in such admission is valid". 5. The Ld.CIT(A) erred in deleting the addition of Rs. 2,50,00,000 towards reimbursement of expenses when the expenses which was claimed to have been incurred much earlier to receipt of reimbursement expenses and prior to Assessment Year 2011-12. 6. The Ld. CIT(A) ought to have appreciated the fact that mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated to deletion of addition of Rs. 2.5 Crores and ground no.7 is related to deletion of addition of Rs. 83 lakhs. 7. The brief facts related to this appeal are that the assessee entered into Joint Development Agreement ("JDA") with M/s. YKH Builders Pvt. Ltd. ("YKH") and formed M/s. Pavani and YKH Joint Venture firm ("JV firm") exclusively for construction of commercial complex which had been named as "Western Pearl" located at Kondapur, Hyderabad. The JV firm started the development activities and also entered into a development agreement with some other adjacent land owners. The JV firm incurred expenditure on the project work i.e. excavating the sheet rocks for the purpose of cellars, payment of security deposit to land owner, etc. In the meantime, the real estate market slumped and some dispute arises between the partners of JV firm, which causes scarcity of funds in the hands of JV firm. Therefore, the JV firm could not execute any further development work. Later on, both the partners of JV firm settled their dispute and the JV firm and other land owners entered into another JDA with M/s. WC as developer of the property. In lieu of the initial expenditure incurred by the JV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customers in F.Y. 2015-16 @ Rs. 3,000/- per sq. ft.. Therefore, the Ld. DR submitted that, the sale consideration of the commercial space should be adopted @ Rs. 3,000/- per sq. ft. 8.2 Per contra, the Ld. AR submitted that, they have sold all the commercial space through registered sale deed only and have recorded all the sale considerations in their books of account. The sale consideration as per registered sale deed are in line with the value as per stamp duty authority. The Ld. AR further submitted that, the Ld. AO had made the addition merely relying on the statement of other parties without bringing any evidence on record to show that the assessee has actually sold the commercial space @ Rs. 3,000/- per sq. ft. Therefore, the Ld. AR prayed before the bench that the sale price of Rs. 3,000/- per sq. ft. taken by the Ld. AO is without any basis and therefore requires to be set aside. 8.3 We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. The sale consideration of the assessee is based on the registered sale deed, which is in line with the value as per stamp duty authority. However, the Ld. AO relying on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2.5 Crores from M/s. WC as their share in a JV firm on account of reimbursement of expenses incurred by JV firm. The Ld. AO doubted the veracity of incurring of expenses and held that in case had such expenses actually been incurred, the expenses ought to have shown in the returns of JV firm, whereas the same has not been shown separately by the JV firm. As such, the Ld. AO held that the assessee failed to prove the actual incurring of expenses and consequently added Rs. 2.50 Crores in the hands of the assessee. 9.1 Aggrieved with the order of Ld. AO, the assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) deleted the addition made by the Ld. AO. 9.2 Aggrieved by the order of Ld. CIT(A), the revenue is in appeal before us. The Ld. DR submitted that, the incurring of expenses by the JV firm are in doubt because, had the expenses actually been incurred, the expenses ought to have shown in the returns of JV firm, whereas the same has not been shown separately by the JV firm. He further submitted that, as such, the assessee failed to prove the actual incurring of expenses. Therefore, the Ld. DR requested to uphold the order of Ld. AO. 9.3 Per contra, the Ld. AR relied on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same issue in the case of the other partner of the JV Firm i.e. YKH Builders (P) Ltd for the AY 2016-17, vide my order in Appeal No.138/2018-19/CIT(A)-11/Hyd, dated 16.07.2019, wherein, the reimbursement expenses amounting to Rs. 5.50 crores consequent to Memorandum of Understanding dated 15.09.2011, between the new builder Western Constructions and M/s Pavani & YKH JV was received by YKH Builders (P) Ltd was decided. The same is reproduced hereunder for the sake of convenience. "6.2 I have considered the assessment order and the submissions of the appellant. The AO made addition of reimbursement of expenses made by M/s. Western Constructions to the appellant company amounting to Rs. 5.50 Crores (actually Rs. 4.5 crores) while not taking into account the liabilities attached to the appellant company impending payments under the settlement reached between the partners of the JV Firm. observed that the year of receipt of these amounts are in the asst. years It is 2011-12 & 2012-13. These amounts reimbursement of expenditure incurred by the appellant when it was the were reimbursed towards developer and also to clear the liabilities accruing to it as partner of the JV Firm. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /all other advances/investments received from any other prospective buyers, third party investors, unrelated third party demands, etc and ensure that no demands are raised by any person over the Firm or its partners, arising out of the actions of Pavani Structurals P Ltd. ii) YKH Builders P Ltd, shall be liable to deal with and settle the following liabilities. 1) Settle the brokerage charges of Rs. 80,00,000/- to M/s. Octagon Assets P Itd towards finalizing the deal with M/s. Western Constructions. 2) Settle the repayment of Rs. 1,00,00,000/- advance received from M/s. Roxana Developers towards development of project vide MOU dt.20.06.2010. 3) Settle the demands of the land owners towards delayed project to the extent of Rs. 3,00,00,000/-. 4) Settle the demands of land owners towards additional built up areas, to the extent of about 14,500 sq.ft out of the surplus built up areas available from the 45% of the built up areas jointly allocated towards the share of the JV firm, the land owners and other claimants after deducting the super built-up areas allocated to the land owners and the other claimants as per the terms of their respective development agreements/agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ending on the recipient. the said payment is reimbursement of expenditure to the JV Firm, the same will also be a reimbursement, if given to the partners of the firm. Here in this case, there is a reason for reimbursing the expenditure There were directly to the partners of the firm instead of the firm. disputes among the partners and JV firm was agreed to be dissolved upon the registration of JDA with WC. The individual responsibilities have been fixed up among the members and accordingly, the reimbursement was given to the partners. Therefore, there is no merit in this argument of the assessing officer. The second observation of the assessing officer is that JV firm might have claimed this expenditure and might have been allowed as an expenditure in it hands under IT Act and hence as per the in this analogy any reimbursement of expenses which is debited in the relevant books needs to be considered for taxation as part of gross income in the year of accrual in the hands of Joint Venture, is also not correct. The appellant had produced the balance sheet of the JV Firm and the entire expenditure has been shown as Work in Progress and hence claiming the said expenditure as deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us. The Ld. DR placed reliance on the order of Ld. AO and prayed before the bench to upheld the order of Ld. AO. 10.3 On the other hand, the Ld. AR brought our attention to page no.14 of paper book containing "statement of profit and loss account" for the year ending 31.03.2016 and page no.15 related to schedule on "revenue from operation" and submitted that, the assessee has already offered Rs. 83 lakhs as its income by including the same in the amount of sale of Rs. 6,54,17,500/- and the addition made by the Ld. AO leads to double addition of the same income. Therefore, the Ld. AR prayed before the bench to delete the addition made by the Ld. AO. 10.4 We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. We have also gone through the statement of P&L account placed at page no.14 and schedule of revenue from other sources placed at page no.15 of paper book referred by the Ld. AR and found that the assessee has already offered Rs. 83 lakhs as income during A.Y. 2016-17. Therefore, we are of the considered opinion that, as Rs. 83 lakhs has already taken as income by the assessee, the addition made by the Ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT(Appeal) erred in allowing the claim on the ground that the payments were mostly made through banking channels without appreciating the fact that the mode of payment would not by itself decide the allowability of a claim. 5. The ld. CIT(Appeal) erred in granting relief on the ground that the assessee filed expenditure details and that the expenditure was mainly incurred through banking channels without giving a specific finding that the expenditure was examined and found to be allowable. 6. The appellant craves leave to amend or alter any ground or add any other grounds which may be necessary." 16. At the outset, it is seen that, there is a delay of 02 days in filing of this appeal for which the Revenue has filed a condonation petition explaining the reasons for such delay. After considering the contents of the condonation petition and after hearing the Ld. AR, the delay of 02 days in filing of this appeal is condoned and the appeal is admitted for adjudication. 17. The Ld. DR submitted that, the solitary issue involved in this appeal is on account of deletion made by the Ld. CIT(A) for Rs. 6,23,10,775/- on account of expenditure claimed by the assessee. The facts re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s / vouchers could not be produced before the Ld. AO. He further submitted that, all the relevant vouchers / bills / evidences produced before the Ld. CIT(A) in support of claim of expenditure of Rs. 6,23,10,775/- and after verifying the same, the Ld. CIT(A) has deleted the addition made by the Ld. AO. Therefore, the Ld. AR prayed before the bench to uphold the order of Ld. CIT(A). 21. We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. We found that, the assessee had filed all the ledger accounts of the relevant expenditure of Rs. 6,23,10,775/- containing the details of expenditure along with the corresponding bank statements from which the payments had been made. However, only the relevant bills / vouchers could not be produced before the Ld. Assessing Officer and consequently for want of bills and vouchers, the Ld. AO made the addition. To make up the said deficiency, all the relevant vouchers / bills / evidences produced by the assessee before the Ld. CIT(A) in support of claim of expenditure of Rs. 6,23,10,775/. Therefore, the claim of assessee has been substantiated by the extracts in the book of account a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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