TaxTMI 
TaxTMI 
2014 (5) TMI 1069
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....see company. The assessee had filed its return of income declaring total loss of Rs. 10,327/- for the assessment year under consideration on 21.02.2008. The case was selected for scrutiny and as against returned loss of Rs. 10,327/- the assessment was completed u/s 143(3) of the I. T. Act, 1961 on total income of Rs. 42,99,803/- thereby making an addition of Rs. 43,10,130/- for the year under consideration on three alternative ground. Firstly, the A.O. treated the expenses as non genuine. Alternatively, he had held that it is to be disallowed u/s 40(a)(ia) with reference to Section 194H and Section 194C of the I. T. Act, 1961. The assessee company has entered into an agreement dated 07.04.2006 with M/s. Vikram Electric Equipment Pvt. Ltd. for acquiring lands. The MOU provides that M/s. Vikram Electric Equipments Pvt. Ltd. (consolidator) shall purchase/acquire 27 acres of land either itself or through its nominees/agents in Gurgaon for the assessee company. The assessee company agreed to make advance payment to the consolidator or at the request of the consolidator, to the nominee/agent towards sale consideration of the land to be procured by it for the assessee company. 3. During ....
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....at Rs. 18,03,26,579/- which is debited to its P & L a/c. As against this, the cost of the above land paid to the land owners as per sale deeds is Rs. 16,60,53,194/- and ht stamp duty is Rs. 99,63,255/-. The total of the above two amounts come to Rs. 17,60,16,449/-. On being questioned by the A.O. regarding the difference amount of Rs. 43,10,130/- (Rs.18,03,26,579/- minus Rs. 17,60,16,449/-), it was contended by the assessee that the said land has been purchased through the land consolidator M/s. Vikram Electric Equipment Pvt. Ltd. and the excess amount was paid to M/s. Vikram Electric being consolidator towards transfer of its rights in the land. It was argued that the same was done as per the Memorandum of Understanding between the assessee and M/s. Vikram Electric for purchase of 27 acres of land for which M/s. Vikram Electric was to act as consolidator for identifying the land, approaching the land owners and negotiating with them and carrying out due diligence etc. It was argued that the land measuring 8.42257 acres purchased during this year forms part of the total 27 acres of land which will be purchased by the assessee through M/s Vikram Electric as per the MoU. It was obser....
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....incipal to principal basis. 4.3 On careful examination of the matter I find that the payment was made by the appellant to M/s Vikram Electric under the MoU as the consolidator for purchase of land. The said payment is duly reflected in the books of account and bank statements of the appellant. Further, the cost of land paid to the land owners as per sale deeds also include payments made by the consolidator to the land owners through its bank account. The A.O. has also not made any independent inquiry and brought any adverse finding on record to disprove the claim of the appellant regarding the genuineness of the above expenditure. In view of the above, the genuineness of the above payment cannot be questioned. 4.3.1 However, I find that although the appellant has claimed the above amount of Rs. 43,10,130/- paid to M/s Vikram Electric as part of the purchase cost of land, it has failed to establish as to how the said amount can partake the character of purchase price of land of 8.42257 acres. The purchase price of land would include the cost of land as per the sale deeds and the stamp duty paid thereon which amounts to Rs. 16,60,53194/- and Rs. 99,63,255/- respectively. There is ....
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....ove amount as deduction and as such no disallowance u/s 40(a)(ia) can be made. It is also argued that the actual amount involved is Rs. 40,95,375/- and not s. 43,10,1301- which has been taken wrongly by the AO as the alleged excess amount. 4.4.1 On careful examination of the above matter, I find that M/s Vikram Electric has been engaged by the appellant company to render its services as a consolidator under the Mou. The land is purchased by the appellant not from M/s Vikram Electric, but directly from the land owners as per the sale deeds. The Id. AR has argued that the excess amount of Rs. 43,10,1301- paid by it to M/s Vikram Electric is not in the nature of remuneration as remuneration will be paid as may be mutually agreed after procuring the entire 27 acres as per MoU. However, this argument by the Id. AR is not valid. Since the land has been purchased by the appellant directly from the land owners as per sale deed at Rs. 16,61,57,333/-, and stamp duty has also been paid on the above amount of sale consideration, the above excess amount of Rs. 43,10, 1301- cannot be part of purchase rice of the land. The appellant has not been able to explain for what the above excess amount ....
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.....O. and confirmed by Ld. CIT(A). It was strongly pleaded that the issue relatable to disallowance made under section 40(a)(ia) is concerned, the same is covered in favour of the assessee by the decision of Delhi ITAT in the case of Finian Estates Developers Pvt. Ltd. Vs ITO, 142 TTJ 545 in which consolidator was the same i.e. M/s. Vikram Electric Equipments Pvt. Ltd., wherein the similar type of transaction was there. Similar view was taken in another case of Ethan Estates Development Pvt. Ltd. Vs ITO in I.T.A. No. 1952/Del/2011 assessment year 2007-2008 dated 21.03.2014. Therefore, in view of the decision taken in these cases, appeal of the assessee may be allowed. So far as the issue in relation to genuineness of the expenditure is concerned, Ld. CIT(A) has categorically made observation that the A.O. has not made any independent inquiry and brought out any adverse finding on record to disprove the claim of the assessee regarding the genuineness of the expenditure as per para 4.3 at page 12 of his order and such finding has not been challenged by the Department. Therefore, appeal of the assessee is fully allowable which may be allowed. 6. Ld. D.R. while relying upon the orders o....