TaxTMI 
TaxTMI 
2016 (3) TMI 647
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....ting to Rs. 95,44,264/- paid by the assessee to the consolidator for transfer of rights. 2.2 That on the facts and circumstances of the case, the ld. CIT(A) has erred in holding that the consolidator was working as an agent of the assessee and hence the assessee ought to have deducted TDS on amount paid to the consolidator u/s 194C or 194H of the I.T. Act, 1961 3. That on the facts and circumstances of the case, the ld. CIT(A) has erred in law in not appreciating that the disallowance of said sum of Rs. 95,44,264/- which is included in purchases during the year has no impact on appellant's profit liable to tax as the entire purchases form part of closing stock of the appellant at the year end. 3.1 That the order of ld. CIT(A) is erroneous and self contradictory. The ld. CIT(A) has erred in confirming the addition after holding that closing stock also needs to be reduced. The ld. CIT(A) ought to have held that the transaction of Rs. 95,44,264/- does not result into any taxable income as same is neither includible in purchases or closing stock. 4. That the appellant craves leave to add, alter, amend, substitute, withdraw and/or vary any grounds of ....
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....above land paid to the land owners as per sale deeds is Rs. 14,67,11,250/- and the stamp duty is Rs. 88,02,690/-. The total of the above two amounts comes to Rs. 15,55,13,940/-. On being questioned by the Assessing Officer regarding the difference amount of Rs. 95,44,264/- (Rs. 16,50,58,204/- minus Rs. 15,55,13,940/-), it was contended by the assessee that the said land has been purchased through the land consolidator M/s Vikram Electric Equipment P. Ltd. and the excess amount was paid to M/s Vikram Electric Co. Ltd. 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 Co. P. Ltd. for purchase of 27 acres of land for which M/s Vikram Electric Co. P. Ltd. 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 6.037 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 Co. P. Ltd. as per the MoU. It was observed by the Assessing Officer that the....
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....the case of Panthea Builders and Developers (supra) in ITA No. 270/2005 before the Hon'ble Jurisdictional High Court. The Hon'ble High Court at para 11 has observed the following facts: "11. In its order dt. 5th October, 2011, the ITAT examined the nature of the MoU between Finian and VEEPL with particular reference to the clauses therein and concluded that Finian was transacting with VEEPL "on a principal to principal basis" and that it could not be said that the payment to VEEPL was for rendering services. Consequently, it was held that section 194H of the Act was "not at all applicable". The ITAT noted that in terms of clause 3.2 of the MoU no sum was due to be paid to VEEPL for the services rendered by it till it procured 27 acres of land. The amount paid to VEEPL was duly reflected by Finian in its purchases and the closing stock and no sales had been made during the year in question. The payment of 2% of the sale amount of VEEPL as consideration for transferring VEEPL's rights in the land was in terms of Clause 3.2 of the MoU and it had not been shown that such payment was not a fair compensation. 12. As already noticed hereinbefore, no appeal was filed by t....
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....ectric Equipment P. Ltd., the final payment was to be made to the farmers. Towards the right of Vikram Electric Equipment P. Ltd. 2% of the cost of land (in some cases, even a higher amount) was to be paid to Vikram Electric Equipment P. Ltd. as mutually agreed. This was the mutually agreed price. 7.5. The ld.AR submitted that Vikram Electric Equipment P. Ltd. worked for land acquisition 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. He submitted that 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. 7.6. The ld.AR further submitted 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. It has been submitted by the ld.AR that 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 book....
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....of land for the Buyer company (unless the Buyer Company decides to procure less than 27 acres through the consolidator) and all the issues relating to possession and mutation of such land are settled to the satisfaction of the Buyer Company. 9.1. The above clause also makes it evident that unless the assessee decided to procure less than 27 acres of land through Vikram Electric Equipment P. Ltd. Vikram Electric Equipment P. Ltd. was to procure 27 acres of land for the assessee, failing which, no payment was to be made by the assessee to Vikram Electric Equipment P. Ltd. 9.2. 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 sec. 194H of the Act are, therefore, not at all applicable. 9.3. 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 disallow....