TaxTMI 
TaxTMI 
2017 (10) TMI 237
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....he case the learned Commissioner of Income Tax (Appeals) erred in confirming disallowance of Rs. 7,000/- on account of brokerage, Rs. 15,000/- on account of Commission and Rs. 17,985/- on account of Interest Paid on Loan under Section 40(a)(ia). 2) On the facts and the circumstance of the case the learned Commissioner of Income Tax (Appeals) erred in confirming addition of Rs. 20,00,000/- as Long Term Capital Gains without appreciating that Assessee did not owned any Apartment and the Flat sold during the year was sold by Mr. Prahladrai Bhartia and all the sales proceeds were also received by him. 3) On the facts and the circumstance of the case the learned Commissioner of Income Tax (Appeals) erred in not allowing the cost of purchase and indexation thereafter even after presuming that the above Flat was owned by the Assessee." 3. At the outset learned counsel for the assessee fairly submitted before the Bench that he donot want to press Ground no. 1 which is related to disallowance u/s 40(a)(ia) as to its applicability on the amount of covered expenditure which are outstanding for payment as at year end or will it apply on all expenditures which are covered by the provis....
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.... source. It is not suggested that the provisions of Chapter XVII-B do not apply to assessees following the cash system. There is nothing in Chapter XVII-B either that suggests otherwise. 20. Our view is fortified by the Explanatory Note to Finance Bill (No. 2) of 2004. Sub-clause (ia) of clause (a) of Section 40 was introduced by the Finance Bill (No. 2) of 2004 with effect from 01.04.2005. The Explanatory Note to Finance Bill-2004 stated:- " ** ** ** With a view to augment compliance of TDS provisions, it is proposed to extend the provisions of section 40(a)(i) to payments of interest, commission or brokerage, fees for professional services or fees for technical services to residents, and payments to a resident contractor or sub-contractor for carrying out any work (including supply of labour for carrying out any work), on which tax has not been deducted or after deduction, has not been paid before the expiry of the time prescribed under sub-section(1) of section 200 and in accordance with the other provisions of Chapter XVII-B. ......" 21. The adherence to the provisions ensures not merely the collection of tax but also enables the authorities to bring within their fo....
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....ure to deduct tax at source from the payments made, where tax was to be deducted at source or failure to pay the same to the credit of the Central Government, are stipulated in Section 201 of the Act. This Section provides that in that contingency, such a person would be deemed to be an assessee in default in respect of such tax. While stipulating this consequence, Section 201 categorically states that the aforesaid Sections would be without prejudice to any other consequences which that defaulter may incur. Other consequences are provided under Section 40(a)(ia) of the Act, namely, payments made by such a person to a contractor shall not be treated as deductible expenditure. When read in this context, it is clear that Section 40(a)(ia) deals with the nature of default and the consequences thereof. Default is relatable to Chapter XVIIB (in the instant case Sections 194C and 200, which provisions are in the aforesaid Chapter). When the entire scheme of obligation to deduct the tax at source and paying it over to the Central Government is read holistically, it cannot be held that the word 'payable' occurring in Section 40(a)(ia) refers to only those cases where the amount is ....
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....such as a contractor. The provisions of the Act including Section 40 and the provisions of Chapter XVII do not entitle the tax authorities to adjudicate the liability of an assessee to make payment to the payee/other contracting party. The appellant's submission, if accepted, would require an adjudication by the tax authorities as to the liability of the assessee to make payment. They would then be required to investigate all the records of an assessee to ascertain its liability to third parties. This could in many cases be an extremely complicated task especially in the absence of the third party. The third party may not press the claim. The parties may settle the dispute, if any. This is an exercise not even remotely required or even contemplated by the section." 16. As mentioned above, the Punjab & Haryana High Court found support from the judgments of the Madras and Calcutta High Courts taking identical view and by extensively quoting from the said judgments. 17. Insofar as judgment of the Allahabad High Court is concerned, reading thereof would reflect that the High Court, after noticing the fact that since the amounts had already been paid, it straightaway concluded....
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.... flat was made by Mr. Prahladrai Bharthiya only and hence the entire sale consideration of Rs. 60 lacs was credited to the bank O/D account of Mr. Prahladrai Bharthiya. The A.O. considered the submission of the assessee and observed as under:- i) Though the assessee claims that the entire purchase cost of the flat was met by Mr.Pralhadrai Bhartiya only, nothing has been kept in support thereof on record, such as, the photo copy of the relevant page of the bank statement, evidencing the outflow of funds towards agreement dated 29.11.1999 made and entered into with M/s. Runwal Chembers, Chembur, Mumbai-400072, copy of the annual accounts in general and the balance sheet in particular of Mr.Pralhadrai Bhartiya etc. ii. The assessee failed to file the photo copy of the agreement dated 29.11.1999. iii. The assessee failed to quote the purchase cost of the flat. iv) The quantum of the amount towards sale consideration received by each of the Transferor no way lead to an answer to million dollar question as to "In whose hands, the capital gains tax will be charged". The A.O. observed that the assessee has not brought on record such as photocopy of the purchase agreement dat....
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....e any payment towards the purchase of flat was not supported by any evidence. It was also observed that the flat had been sold for a consideration of Rs. 60 lacs but no capital gain had been paid by any of the parties. Mr. Prahladrai Bhartiya had not filed the return of income with the Revenue for the impugned assessment year and no taxes have been paid, hence, the ld. CIT(A) upheld the addition made by the A.O. , vide appellate order dated 23-03-2016 passed by the learned CIT(A). 7. Aggrieved by the appellate order dated 23-03-2016 passed by the ld. CIT(A), the assessee filed an appeal before the Tribunal. 8. The ld. Counsel for the assessee submitted that the flat was purchased in the year 1999 and the agreement for purchase of the flat was entered into by three persons namely Mr. Prahladrai Bhartiya, Mr. Roopam Prahladrai Bhartiya and Mrs. Usha P. Bhartiya. The ld counsel for the assessee submitted that the assessee did not contributed any amount nor his mother Mrs. Usha P. Bhartiya contributed any amount towards purchase of the said flat . It is submitted that the entire sale consideration was credited to the bank account of Mr. Prahladrai Bhartiya. The assessee brought o....
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.... available nor any bank statements of Prahaladrai Bharthiya are available. The ld. Counsel for the assessee, in the rejoinder, submitted that audited balance sheet of father of the assessee namely Mr. Prahladrai Bhartiya was filed for financial year 2002-03 . 9. The ld. D.R. submitted that the purchased deed was not submitted before the A.O. and also was not submitted before the ld. CIT(A). It was submitted that the assessee has not filed any evidence that the entire payment for purchase of the flat was made by the father of the assessee. The learned DR supported the orders of authorities below. He fairly agreed that if the share of sale of the said flat is to be brought to tax in the hands of the assessee, then the assessee will be entitled for share in purchase price of the said flat. It is submitted that it is an admitted position that none of the three co-owners of the flat paid capital gain tax on sale of the flat.It was submitted that name of the assessee is coming in sale and purchase agreement. It is submitted that it is a joint family who is living together and each owner has 1/3 share. 10. We have considered rival contention and also perused the material available o....
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.... taken from the bank by all the three parties which fact albeit disputed by the assessee is , however, emanating from the records. The said clauses of the sale agreement dated 23-07-2010 are reproduced hereunder (page 98/pb) : "(c) Initially Transferor no. 1, 2 & 3 have jointly purchased and acquired the said flat from the Promoter M/s Runwal Estate Private Limited, a company incorporated and registered in India and having its registered office situate at RUNWAL CHAMBERS, First Road, Chembur, Mumbai- 400072 by virtue of an Agreement dated 29th day of November , 1999. The said agreement is duly registered with the Jurisdictional sub registrar. (d) The Transferor 1, 2 & 3 have availed financial assistance from KARUR VYSYA BANK LTD against mortgage/charge on the said flat and said shares. (e) The Transferor have agreed to clear all loan liability of KARUR VYSYA BANK LTD on the said flat , and will give clear , marketable title free from encumbrances and vacant possession of the said flat" Perusal of the sale agreement dated 23-07-2010 leaves no doubt that all the three persons namely Mr. Prahladrai Bhartiya, Mr. Roopam Prahladrai Bhartiya and Mrs. Usha P. Bhartiya have own....
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....specially within knowledge When any fact is especially within the knowledge of any person, the burden of proving that fact is upon him. Illustrations (a)**** (b) A is charged with traveling on a railway without a ticket. The burden of proving that he had a ticket is on him." The assessee was not able to discharge burden of proof/onus of proof cast u/s 106 of 1872 Act as the assessee did not file documents for showing that the flat was exclusively owned by father of the assessee and payments for acquisition of the flat was exclusively paid by father of the assessee. The assessee could not rebut the presumption of ownership of the flat jointly with the mother and father of the assessee , with cogent evidences that the assessee name is merely included in the said flat for name sake . The assessee only filed one unsubstantiated accounts for assessment year 2003- 04 of father of the assessee which only showed general description 'Office Premises' without having any details of the said flat and verification from the Revenue that the total consideration was paid by the assessee's father which was reflected in his statement of affairs/balance sheet filed with revenue. The fathe....