TaxTMI 
TaxTMI 
2015 (8) TMI 1414
X X X X Extracts X X X X
X X X X Extracts X X X X
....holding that the transaction of Rs. 5,17,48,439/- is not a sham transaction as purchase and subsequent sale of land has occurred and the money as called for by the agreement has been paid by the appellant and that there was no violation of provisions contained in Chapter XVII-B of the Act. 2. That the impugned order of the CIT(A) is perverse and deserves to be set aside and the order of the AO to be restored. 3. The appellant craves leave to add, alter or abrogate any ground of appeal at the time of hearing." 3. Brief facts as emanating from the order of the AO, for the sake of convenience are reproduced herein below:- "During the course of assessment proceedings, it was found that the assessee-company paid sum....
X X X X Extracts X X X X
X X X X Extracts X X X X
....75% to Alishan Estates Pvt. Ltd and 25% to M/s. Entrepreneurs (Calcutta) Pvt. Ltd. The copy of agreement is enclosed at Annexure-1. 2.3 The nature of alleged services provided by Shri Ajay Agarwal of M/s. Alishan Estates Pvt. Ltd show that it is highly specialized in nature. Verifying and checking all the title deeds of land and ensuring the authenticity of the title of the seller of land need service of an expert person. Negotiation with seller of land in relation to the prices finalized also requires great negotiation skill. It is also a specialized service. Arrangement of document for the purpose of transfer of land in the name of assessee is also a service provided by M/s. Alishan Estates Pvt. Ltd. Further, identifying the buye....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on 40(a)(ia) of Income Tax Act, 1961 should not be made. However, no submission is made till now. It shows that the assessee had no explanation to furnish. So, sum of Rs. 5,17,48,439/- is added to the total income of the assessee. 4. The AO made further discussion in his order vide para 3.1 to 4 that the claim of Rs. 5,17,48,439/- is not allowable for two distinct reasons- firstly under section 40(a)(ia) of Act and secondly, the transaction being a 'sham transaction.' With the discussion in para 3.1 to 3.5 from the AO's order M/s. Alishan Estates Pvt. Ltd is a jamakharchi company This concern is used by the assessee to reduce its profit by Rs. 5,17,48,439/-. The claim of expenditure of Rs. 5,17,48,439/- is not allowable. Accordingly, the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rofit. The assessee received 25% of the profit in view of the contract. Such specified services were to procure pre-specified land, to make all necessary legal arrangements for such land, to find out suitable buyer for the said land and to undertake all the troubles for the sale of land. It was agreed between the assessee and M/s M/s. Alishan Estates Pvt. Ltd that the total profits arising out from the said joint venture project would be divided between M/s. Alishan Estates Pvt. Ltd and the assessee company in the ratio 75:25. There is no defect pointed out in the said agreement/contract by the AO. Therefore, he was not justified in treating the said amount as expenditure. There is no liability to deduct tax at source and no disallowance on....