2015 (12) TMI 496

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.....M. : This is assessee's appeal for A.Y. 2010-11, against the action of the ld. CIT(A) in confirming the addition of Rs. 75 lacs representing settlement amount paid by a third party, on behalf of the assessee, considering the same as covered u/s 40a(ia) of the Income Tax Act, 1961. 2. The facts are that the assessee had given its land at Chandkheda, Dist. Gandhinagar, Gujarat, for developmen....

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.... Act. The A.O. disallowed the claim, holding that the amount was payable in respect of development charges or contract charges and, therefore, TDS had to be made u/s 194-C of the Act, which was not done, and so, by virtue of the provisions of section 40(a)(ia) of the Act, this expenditure, debited to the P&L account of the assessee, was disallowed. The ld. CIT(A) confirmed the disallowance. 3. ....

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....jected by the ld. CIT(A). 5. Having heard the parties and having perused the material on record, we find that it remains undisputed that the contractor filed a civil suit against the assessee. However, the dispute was settled out of court by an agreement dated 20-5-2009 whereby, the assessee agreed to pay Rs. 75 lacs to the contractor, as development charges. This amount was paid to the contrac....

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....rol of both the parties B.U. permission has not be received. Hence, it is agreed between First Party and Second Party that First Party will pay Rs. 75,00,000/- (Rupees Seventy Five Lacs only) including interest as a full and final settlement towards the development of the said property." 6. The amount of Rs. 70 lacs, as above, was thus agreed not payable by the assessee. Out of court settlement....