IN THE INCOME TAX APPELLATE TRIBUNAL
`C' : NEW DELHI
DELHI BENCH `C
BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND
SIDHU, JUDICIAL MEMBER
SHRI H.S. SIDHU,
No.1747/Del/2013
ITA No.
2006-07
Assessment Year : 2006-
M/s Glitz Builders and Vs. Assistant Commissioner of
Promoters Pvt.Ltd., Income Tax,
Circle,
M-11, Middle Circle, Circle-23,
Central Circle-
Connaught Circus, New Delhi.
New Delhi 110 001.
PAN : AABCG9331N.
(Appellant) (Respondent)
No.1406/Del/2013
ITA No.1406/Del/2013
2006-07
Assessment Year : 2006-
Assistant Commissioner of Vs. M/s Glitz Builders and Promoters
Income Tax, Pvt.Ltd.,
Circle-23,
Central Circle- M-11, Middle Circle,
New Delhi. Connaught Circus,
New Delhi 110 001.
PAN : AABCG9331N.
(Appellant) (Respondent)
Assessee by : Shri V.S. Rastogi, AR.
Revenue by : Shri Vikram Sahai, Sr.DR.
ORDER
PER G.D. AGRAWAL, VP :
These appeals by the assessee and the Revenue are directed
against the order of learned CIT(A)-XXXIII, New Delhi dated 28th
December, 2012 for the AY 2006-07.
2 ITA-1747 & 1406/D/2013
2. Ground No.1 & 2 of the assessee's appeal are with regard to
validity of issue of notice under Section 153C of the Income-tax Act,
1961. These grounds were not pressed at the time of hearing before
us. Accordingly, the same are rejected as such.
3. Ground Nos.3 & 4 of the assessee's appeal read as under:-
"3. That on the facts and circumstances of the case
and in law the CIT(A) erred in not accepting the
appellant's contention that Additional Payments having
not been claimed as deduction by appellant, no
disallowance could have been made in the hands of the
appellant.
3.1 That without prejudice the CIT(A) erred in
upholding the disallowance of additional payments
made to the recipients who were not the owners of land
and to the payment made in cash.
3.2 That without prejudice the CIT(A) erred in not
himself quantifying the addition to be made.
4. That on the facts and circumstances of the case
and in law the CIT(A) erred in upholding the
disallowance u/s 40A(3) in respect of which no
deduction was claimed by the appellant.
4.1 That even on merits the disallowance was not
justified."
4. While, the only ground raised in the appeal of the Revenue reads
as under:-
"On the facts and in the circumstances of the case, the
CIT(A) has erred in deleting the addition of
Rs.13,06,377/-, made by the Assessing Officer in view of
the provisions of Section 37(1) of the Income Tax Act,
1961 on account of additional payment in violation of
Stamp Duty Act, 1899."
3 ITA-1747 & 1406/D/2013
5. At the time of hearing before us, it is submitted by the learned
counsel that during the year under consideration, the assessee
company acquired various lands from farmers/villagers for and on
behalf of M/s Countrywide Promoters (P) Ltd. (hereinafter referred to as
CWPPL). As per the collaboration agreement between the assessee
and CWPPL, CWPPL was to develop the land and sell it to the buyers.
The assessee was only entitled to consolidated fee of `35,000/- per
acre. In pursuance to above collaboration agreement, the assessee
acquired the land and the cost of the purchase of land was debited to
the account of CWPPL which made the payment there for. That in
respect of some land, the assessee was required to make additional
payment due to some dispute raised by the near relatives of the
person who executed the sale deed. The Assessing Officer disallowed
such additional payment on the ground that the genuineness of the
additional payment is not established. Accordingly, the total additional
payment of `13,06,377/- was disallowed. He also disallowed the sum
of `4,59,999/- under Section 40A(3). On appeal, learned CIT(A)
sustained the disallowance under Section 40A(3). However, in respect
of additional payment to the owner of the land, he partly allowed the
assessee's appeal with the following direction:-
"In view of the above additional payment made to the
owner of the land or to his brother, father, sons & their
spouses, who have got some legal claim over such land
by way of account payee cheque is hereby allowed as
an expense u/s 37 and additional payment made to
other payments are not supported by any legal right
over the land and similarly payment made in cash to
the owner of land is confirmed as, there are instances of
not conforming the receipt by few seller as stated
supra. Therefore, the ground is partly allowed."
6. The assessee, aggrieved with the disallowance sustained under
Section 40A(3) and part disallowance in respect of additional payment,
4 ITA-1747 & 1406/D/2013
is in appeal while the Revenue is in appeal in respect of relief allowed
on account of additional payment.
7. It is submitted by the learned counsel that any payment which
has not been claimed by the assessee as an expenditure cannot be
disallowed. He stated that the assessee purchased the land for and on
behalf of CWPPL and any payment for the purchase of land or for
additional payment has been debited to the account of CWPPL.
Therefore, when no deduction is claimed by the assessee for purchase
of land or for additional payment, the disallowance under Section
40A(3) or for additional payment cannot be made in the hands of the
assessee.
8. Learned DR, on the other hand, relied upon the order of the
Assessing Officer. He stated that the assessee has purchased the land
and handed over the same to CWPPL. Thus, it is a case of purchase
and sale of land by the assessee to CWPPL. Merely because the
assessee has not passed the entry of purchase and sale of the land in
its books of account and only accounted for the remuneration from the
sale of land, application of Section 40A(3) cannot be avoided. He,
therefore, submitted that the order of Assessing Officer should be
sustained.
9. We have carefully considered the submissions of both the sides
and perused relevant material placed before us. The assessee has
produced the collaboration agreement before the Assessing Officer and
has submitted as under:-
"Based on the aforesaid Agreement the assessee
purchased land for which the (M/s Countrywide
Promoters Pvt.Ltd.) has reimbursed all costs and
expenses with respect to the acquisition of the said land
5 ITA-1747 & 1406/D/2013
and also in conformity with the Collaboration
Agreement the assessee has received fees calculated @
Rs.35,000/- per acre, which is duly credited to the Profit
and Loss Account as the income."
10. The above facts stated by the learned counsel during
assessment proceedings have not been found to be incorrect or non-
genuine. As per the collaboration agreement, the assessee was to
purchase the land for and on behalf of CWPPL and whatever was the
purchase price including the additional payment was debited to CWPPL
and the assessee only received fixed remuneration i.e. `35,000/- per
acre. Thus, we agree with the contention of the learned counsel that
the assessee has not claimed any deduction in respect of cost of the
purchase of the land, whether original or additional payment. When
the cost of the land as well as additional payment is not claimed by the
assessee as deduction, the question of any disallowance under Section
40A(3) or otherwise in the case of the assessee does not arise. We,
therefore, delete the entire disallowance made by the Assessing Officer
under Section 40A(3) as well as additional payment.
11. In the result, the appeal of the assessee is allowed whereas the
appeal of the Revenue is dismissed.
Decision pronounced in the open Court on 2nd January, 2015.
Sd/- Sd/-
H.S. SIDHU)
(H.S. SIDHU) AGRAWAL)
(G.D. AGRAWAL)
JUDICIAL MEMBER VICE PRESIDENT
Dated : 02.01.2015
VK.
6 ITA-1747 & 1406/D/2013
Copy forwarded to: -
1. Appellant : M/s Glitz Builders and Promoters Pvt.Ltd.,
M-11, Middle Circle, Connaught Circus,
New Delhi 110 001.
2. Assistant Commissioner of Income Tax,
Respondent : Assistant
Circle-23, New Delhi.
Central Circle-
3. CIT
4. CIT(A)
5. DR, ITAT
Assistant Registrar
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