TaxTMI 
TaxTMI 
2012 (8) TMI 485
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....nd development of housing project. During the assessment proceedings emerged Assessing Officer observed that assessee has effected purchases of TDR (transfer of development rights hereinafter called in short 'TDR') and also shown the receipt to the expenditure of Rs. 1,81,50,100/- by way of sale of TDR during the period relevant to the assessment year under appeal. In response to query for furnishing the supporting details in respect of the said transaction assessee furnished before the Assessing Officer a bill raised by Kasturi Housing Pvt. Ltd. for an amount of Rs. 1,75,00,000/- for purchase of TDR for an area admeasuring 5110 sq.mtrs. (55000 sq.ft.) along with copy of development right certificate issued by Pimpri Chinchwad Municipal Cor....
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....000/- and the role of Kasturi Housing Pvt. Ltd. from whom assessee is claimed to have purchased TDR was limited to only making payment of purchase consideration of Rs. 96,25,000/- to Shatmurti Realty Pvt. Ltd. on behalf of assessee. 3. While concluding so the Assessing Officer emphasised the relevant process of said irrecoverable power of attorney issued by Shatmurti Realty Pvt. Ltd., which stated that M.s. Sharmuri Realty Pvt. Ltd., was in discussion with assessee M/s. Kasturi Builders for sale of TDR admeasuring 5100 Sq. mtr. And same was agreed to be sold by for a consideration of Rs. 96,25,000/- to M/s. Kasturi Builders on 19-04-2006. The payment thereof was made by Kasturi Builders through Kasturi Housing Pvt. Ltd. by way of cheque ....
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....0/- by showing the said purchases from M/s. Kasturi Housing Pvt. Ltd. Accordingly the cost of TDR was also held to be inflated to the extent of Rs. 78,75,000/- ( Rs. 1,75,00,000 - 96,25,000 ) and the same was added to the income of the assessee as suppressed profit on sale of TDR. 4. Matter was carried before first appellate authority wherein various contentions were raised and having considered the submission of the assessee CIT(A) held that Assessing Officer was justified in making the addition of Rs. 78,75,000/-. 5. The issue for determination is whether the transaction claimed to have been entered by the assessee that it is a sister concern namely Kasturi Housing Pvt. Ltd. HHPL for the purchase of TDR is only a colourable device a....
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....lated by assessee by putting its sister concern in between but there is no loss to revenue. It is implicitly invoking section of 40A(2) of the Income Tax Act while Hon'ble Bombay High Court in the case of CIT Vs. Indo Saudi Services (Travel) Pvt. Ltd. reported in 310 ITR 306 (Bom.) has held that " no disallowance is to be made in respect of the payment to sister concern where there is no attempt to evade tax" so the disallowance in question be set-aside. On the other hand, Departmental Representative supported the order of authorities below. 6. After going through rival submissions and material on record we find assessee is a firm engaged in the business of promoter as Builder. During the previous year relevant to Assessment Year assesse....