TaxTMI 
TaxTMI 
2015 (6) TMI 242
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....circumstances of the case, the Ld. Commissioner of Income Tax (Appeals)-XVI erred in law in holding that payment made by the appellant to consolidator is in the nature of commission / brokerage / fees for services on which TDS was required to be deducted. 3. That on the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals)-XVI erred in not considering the order dated 05.10.2011 in ITA No. 2361 (Del) 2011 of ITAT, New Delhi in the case of Finian Estates Developers Pvt. Ltd for the A.Y. 2007-08 filed during the appellate proceedings, wherein hon'ble ITAT has held that provision of section 40(a) (ia) of the I.T. Act, does not get invoked with respect to payment made to consolidator." I.T.A.No. 4059/Del/2012 (Assessment Year 2008-09): "1. Whether on the facts & in the circumstances of the case, the Ld. CIT(A) has erred in not quantifying the disallowance u/s 40(a)(ia) as the payment of Rs. 3,20,47,734/~ made by the assessee for consolidation of a land deal to M/s Vikram Electric Equipment Pvt. Ltd. comprises cost of land as well as consolidation fee paid to M/s Vikram Electric Equipment Pvt. Ltd. for its services of finalizing the deal. The asse....
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....h consolidation fee as purchase of land and this was as per the practice followed by various assessees engaged in the similar kind of activities. 6. We have had rival parties and have gone through the material placed on record. We find that the assessee company was incorporated and engaged in the business of real estate and other allied activities. The assessee had appointed M/s. Vikram Electric Equipments (P) Ltd. as consolidator for procuring land in and around Gurgaon for the assessee company and the role of consolidator was on principal to principal basis. The assessee had paid commission to M/s. Vikram Electric Equipments (P) Ltd. for procuring land in and around Gurgaon and the A.O. held that the payment represented the commission for purchase of land and, therefore, was liable for TDS which the assessee had not done and therefore he made disallowance u/s 40(a)(ia) of the Act. We find that in a series of cases as relied upon by Ld. A.R., the payment to Vikram Electric & Equipments Pvt. Ltd. under similar facts and circumstances has been held to have been made on principal to principal basis and, therefore, the Tribunal has held that there was no requirement for TDS. For th....
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....and after scrutiny of the concerned documents of the land, Vikram Electric Equipment P. Ltd. would suggest the appropriate land for purchase by the assessee. Vikram Electric Equipment P. Ltd. thus acted with the farmers on its own account rather than for and on behalf of the assessee, on principle to principle basis, with the farmers on the one hand and the assessee on the other. The assessee contends that this being so, the provisions of neither section 194C, nor section 194H get attracted to the payment made by the assessee to Vikram Electric Equipment P. Ltd. The payment along with payment made to the farmers directly represented the purchase of the cost of land and had been correctly treated as such in the assessee's books of account. It has been contended that alternatively, in any case, the payment made to Vikram Electric Equipment P. Ltd. has not affected the taxable profits of the assessee during the years. The total purchases were lying as closing stock, as observed by the Taxing authorities also and the effect of adjustment with regard to the amount paid to Vikram Electric Equipment P. Ltd. Would arise only on and in the instances of the sale of land by the assessee. It i....
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....lectric Equipment P. Ltd. 29. This clearly shows that Vikram Electric Equipment P. Ltd. was transacting on a principle to principle basis and it cannot be said that the payment was made by the assessee to Vikram Electric Equipment P. Ltd. for rendering of any service. The provisions of section 194H of the Act are, therefore, not at all applicable. 30. Moreover the amount paid to Vikram Electric Equipment P. Ltd. was duly reflected by the assessee in the purchases closing stock. No sales had been made during the year under consideration. It has not been shown to be otherwise. In such a scenario, in our considered opinion, no disallowance is called for. 31. Further still, the chart at page 16 of the assessee's paper book shows that almost 2% of the sale value was being paid by the assessee to Vikram Electric Equipment P. Ltd. as consideration for transferring Vikram Electric Equipment P. Ltd.'s right. This was in terms of the afore-mentioned clause. 32. Pertinently, no addition having been made for the year by the A.O., the alternate contention of the assessee to the effect that no addition can be made during the year, stands accepted by both the authorities below. 33.....