TaxTMI 
TaxTMI 
TaxTMI 
2016 (3) TMI 1304
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....sment order passed u/s 143(3) dated 26-12-2011 were that the assessee firm is in the business of land development and construction. The AO had made an observation that during the year the assessee had purchased six land properties. On perusal of the purchase deeds it was found that the assessee had made cash payment of Rs. 64,35,000/-. The cash payment was over and above the payments made through banking transaction. The total cost of the lands purchased shown as stock in trade amounted to Rs. 3,61,12,567/-. The objection of the AO was that the payments have been made in excess of Rs. 20,000/- in cash, hence infringed the provisions of section 40A(3) of the I.T. Act. The details of the payment made in cash was listed by the AO as under : a. Banwadi Land dt. of purchase on 25/08/2008 Kh.No.88/1 for Rs. 29,00,000/- Rs.7,06,000/- at the time of agreement. Rs.4,94,000/- at the time of Registry on 25/08/2008. b. Banwadi Land dt. Of purchase on 25/08/2008 Kh. No. 88/2 for Rs. 57,60,000/- Rs.25,60,000/- at the time of agreement Rs.5,00,000/- at the time of Registry c. Banwadi Land dt. of purchase on 30/03/2009/- Kh. No. 93/2 Rs. 75,000/- at....
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....ITR 001 (SC) 6. On the other hand, from the side of the Revenue, learned D.R. Mr. Narendra Kane appeared and supported the orders of the Revenue authorities. He has pleaded that the payments in cash are exempt if covered under Rule 6DD. He has placed reliance on the order of MRS Roadways vs. CIT 52 taxmann.com 99 (Kerala). Learned D.R. has also pleaded that the payment in cash was squarely covered by the provisions of section 40A(3). Hence the action of the AO deserves to be affirmed. 7. We have heard both the sides and perused the material placed before us. At the outset it is worth to mention that on identical facts and circumstances where a Developer had made payments to farmers in cash at the time of purchase of land through a registered sale deed executed before Sub Registrar, the component of cash payment was held as admissible and the invocation of the provisions of section 40A(3) was found to be unjust. The ITAT, Raipur Bench in the case of ACIT vs. R.P. Real Estate Pvt. Ltd. (ITA No. 173/BLPR/2011) for assessment year 2008-09, order dated 17th July, 2015, has held as under : "7. Upon careful consideration, we find that it is undisputed that the assessee has purchased t....
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....nt as per recital of the sale deed has been received by him. At the same time, the government authority i.e. sub-registrar satisfied himself upon the identity of the seller to ensure that the payment has been made to the right person. For the sake of convenience in the receipt, the place is mentioned as the town where the document is registered. From the assessment order we observe that the Assessing Officer has not made any effort to examine the very fact whether the payments were made and received by the sellers at their villages or at the town where the sale deed was registered. 11. Considering the entire facts and proposition that the payments were made at villages where banking facilities did not exist is accepted. After careful consideration of practical situation, we also observe that even it is assumed that payments were made at a town where banking facilities were available, the case of the appellant company would still fall under the exception of Rule 6DD(h). We further observe that Rule 6DD(h) of the Rules has to be interpreted liberally so as not to frustrate the object of the legislature. The object of s. 40A(3) is not to disallow genuine payments and r. 6DD has to ....
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.... aside and disallowance and additions made thereunder are hereby deleted." 8. We find that the above case law is applicable on the facts of the case. Payees in this case also are illiterate villagers who wanted some of the payments to be done in cash. There is no dispute regarding identity of the payees and genuineness of the transaction. Moreover the above observations of the Tribunal are squarely applicable on the facts of the case. On the facts and circumstances of the case, we have no reason to differ from the view taken by the Tribunal as above which are directly applicable on the facts of the present case. The Hon'ble Apex Court in the case of Honda Ciel Power Products, Civil Appeal no. 5412 of 2007 has held that lack of consideration of a coordinate bench decision can render the order of the Tribunal liable for rectification of a mistake under section 254 of the I.T. Act. In this view of the matter, in the background of aforesaid discussion and precedent, we do not find any infirmity in the order of learned CIT(Appeals). Accordingly, we uphold the same." 8. Since this very bench has already taken a view after considering several case laws and the facts and circumstances o....
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....ve heard both the sides and perused the material placed before us. The method adopted by the assessee was average purchase price. However, the AO had considered certain expenses such as legal expenses etc. for the purpose of valuation of the closing stock. The assessee has furnished the calculation of the valuation stock and before the AO he has admitted that at best a difference in stock of Rs. 2,31,360/- could be assessed. This offer of the assessee has duly been recorded in the assessment order. We, therefore, hold that after considering the submissions as well as the method of valuation, at best, a sum of Rs. 2,31,360/- could be upheld by learned CIT(Appeals), instead of granting the total relief. To this extent we hereby modify the relief granted by the learned CIT(Appeals). The AO is directed to compute the addition accordingly. This ground of the Revenue is partly allowed. 13. Ground No. 2: "Whether on the facts and in the circumstances of the case and in law the learned CIT(Appeals) has erred in deleting the disallowance of Rs. 46,660/- made u/s 40A(3), without appreciating the fact that the photocopies of impugned bills/supporting vouchers were found self-made vouchers ....
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....es (visit to Domak village) being personal in nature." The expenditure of Rs. 1,64,871/- was claimed by the assessee as travelling expenses, out of which the AO had disallowed Rs. 89,700/- because of the reason that the expenditure were not related to the business of the assessee. It was found to be for personal purposes such as "Domak tour" and Shree Gajanan tour" etc. When the matter was carried before the first appellate authority, learned CIT(Appeals) has allowed the claim by assigning the reason that in real estate business travelling is required. However, the said reasoning is general in nature as against that the AO had made specific observation that some of the expenditure were connected with the business but personal in nature. 18. After considering the nature of expenditure and some of the details made available in the assessment order, we hereby uphold the addition to the extent of Rs. 25,000/- and for rest of the amount the relief granted by learned CIT(Appeals) is hereby approved. As a result, this ground of the Revenue is partly allowed. 19. Ground No. 5: "Whether on the facts and in the circumstances of the case and in law the learned CIT(Appeals) has erred in d....
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.... by the assessee: Total cost of plots booked By 9 agents. Amount paid by these plot Holders during the F.Y. 2008-09. Balance payment due from plot holders as on 31/03/2009. Rs.2,17,97,806/- Rs.1,34,32,961/- Rs. 83,68,591/- 100% 61.61% 38.39% The above figures show that only 61.61% of payment is received by the assessee during the year against total cost of plots. This fact is also confirmed by assessee as stated earlier (O/s. noting dated 22/12/2011). The 38.39% plot cost outstanding against the plot holders for which 100% commission is paid to thee agents being relatives of the partners of the firm. Thus 38.39% out of total commission paid amounting to Rs. 13,10,000/- is worked out to Rs. 5,02,900/- which is excess payment. The same is not allowable expenditure within the meaning of section 40A(2)(b) & hence the same is disallowed and added to the total income. Penalty proceedings u/s 274 r.w.s. 271(1)(c) is initiated separately." 21.1. When the matter was carried before the first appellate authority, learned CIT(Appeals) has opined that in the absence of any comparable instance, the AO was not justified to invoke the provisions of section 40A(2)(b) of the I.T. ....