TaxTMI 
TaxTMI 
TaxTMI 
2018 (5) TMI 1949
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....edings observed that in BPTP and some of its group companies first search & seizure operation was carried out on 15.11.2007. During the earlier assessment proceedings u/s 153A of the I.T. Act, it was very well proved that the assessee used to pay part payments of the sale consideration in respect of the land purchased at the time of execution of the sale deed and the payments of balance sale consideration were invariably made through Post Dated Cheques (PDCs) and for the intervening period i.e. period between the date of sale deed and the date of encashment of PDCs interest was paid in cash to the vendors of the land by the vendee company on monthly basis @ 1.25% per month on the amount of PDCs and this cash payment of interest by the vendee company was not accounted for by it in its books of account. He observed that the addition on this ground has been made in several group companies of the BPTP group during the course of earlier assessment proceedings u/s 143(3)/148/153A of the I.T. Act in consequence to search carried out on 15.11.2007. 3. He, therefore, asked the assessee to explain as to why the addition should not be made on PDCs in view of the orders of the Department in ....
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....vidence of receipt of interest is for extension of period of PDCs. Ld. AR's arguments that calculation of interest on PDCs has been considered while entering into agreements holds some logic. But when dates of PDCs are extended, the recipient will definitely ask and settle for some additional compensation in form of interest. There is no evidence which proves that interest is paid from the date of sale to date of encashment of post dated cheques. However, there is concrete evidence in form of seized material to show that interest is paid and received by seller on the extension of PDCs as discussed above while analyzing the seized document. Therefore, in my view where ever the dates of PDCs are extended interest is paid @ 15% per annum in cash out of Books of accounts. Which are evident from seized material. Therefore, interest on P DCs to the extent of extension period appears to quite reasonable and logical. Accordingly, interest on PDCs either as sale consideration or additional payment may be recomputed to the extent of extended period of PDCs by the A.O. and to that extent addition is confirmed. The above formulae will apply to all group companies under the management of....
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....computing the consideration. However, if such period for post dated cheques are extended, the seller of the land would definitely demand compensation for the delay. Therefore, logic while passing appellate order for earlier A.Y. still hold good. Accordingly, I direct the assessing officer to compute unaccounted interest on post dated cheques given to the farmer on similar lines as given my findings in ITA no. 412/09-10/265. Accordingly, this ground of appeal is partly allowed." 5. The Assessing Officer similarly made addition of Rs. 1,00,000/- u/s 40A(3) of the I.T. Act on the ground that the assessee company has made payment of Rs. 1,00,000/- in cash to various farmers from whom land has been purchased, which is in contravention of provisions of section 40A(3) of the I.T. Act. The explanation of the assessee that the sum paid towards purchase of the land was not expenditure in the hands of the assessee and was not claimed as deduction and that such land was not stock in trade in the hands of the assessee and that the entire expenditure incurred on purchase of land was reimbursed to the assessee by M/s Countrywide Promoters Pvt. Ltd. was rejected by the Assessing Officer. 6.....
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....ost of land is an expenditure in appellant's hand, section 40A(3) is applicable, as the expenditure has been incurred. This expenditure is not claimed explicitly in its Profit & Loss ale as the receipt and payment to the same extent gets squared up to the extent of cost of land. This accounting treatment cannot override the true nature of transaction. It is settled law that the provision of Income Tax Act would prevail over the system of accounting. Reliance is placed on Hon'ble Supreme Court decision in the case of Tuticorin Alkalies Chemicals and Fertilizers Ltd. Vs CIT, (1997) 227 ITR 0172. 5.3.1 In view of the above position judicial pronouncement relied upon by Ld. AR on all three counts are not applicable namely. 1. Expenditure is not incurred by appellant, therefore section 40A (3) does not apply. 2. Such payment is not claimed as expenditure in its Profit & Loss Ale. As there is no claim of expenditure, See 40A (3) does not apply. 3. Written agreement of collaboration agreement cannot be overtaken by oral evidence. It may be stated that terms of collaboration agreement has not be overridden by A. O.. He has only analyzed the terms of the agreement, an....
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....any grounds of appeal on or before the date of hearing of the appeal." ITA No.6818/Del/2014 (By Revenue) : "1. On the facts and in the circumstances of the case the CIT(A) has erred in directing the AO to compute the interest based on post dated cheques from the date after the six months of issue of such post dated cheques. 2. The order of the CIT(A) is erroneous and is not tenable on facts and in law. 3. The appellant craves leave to add, alter or amend any/all of the grounds of appeal during the course of the hearing of the appeal." 8. Ground no.1 and 4 by the assessee being general in nature are dismissed. 9. Similarly ground no.2 and 3 by the Revenue being general in nature are dismissed. 10. So far as ground no.2 to 2.4 by the assessee and ground no.1 by the Revenue are concerned, they relate to the part relief given by the ld. CIT(A) on account of interest and PDCs. 11. The ld. counsel for the assessee submitted that pursuant to the seized material etc. found during the course of search conducted on BPTP on 15.11.2007, the Assessing Officer found that the assessee was following similar business module and must have paid interest on PDCs. He submitted that ....
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....igh Court in the said decision has held that any and every document cannot be and is not an incriminating document. It was held that no addition can be made for a particular assessment year without there being an incriminating material qua that assessment year which would justify such an addition. 15. Ld. counsel for the assessee submitted that the ld. CIT(A) following the decision in the case of M/s Business Park Promoters Pvt. Ltd. for assessment year 2006-07 has directed the Assessing Officer to compute interest on PDCs after a period of six months from the date of conveyance deed. He submitted that the Co-ordinate Benches of the Tribunal in the group cases have consistently approved similar finding of the ld. CIT(A). He submitted that the decision in the case of M/s Business Park Promoters Pvt. Ltd. for assessment year 2006-07 passed by the ld. CIT(A) has been approved by the Tribunal vide ITA No.1404/Del/2013 and ITA No.1732/Del/2013 order dated 20.04.2015 for assessment year 2005-06. Following this decision, the Tribunal in various other group concerns has also taken similar view and the order of the ld. CIT(A) has been upheld. He accordingly submitted that the grounds rais....
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....ve heard the rival submissions and perused the material on record. The ground raised by the Revenue is misconceived because the CIT(A) has not deleted the addition of Rs. 40,22,546/-. The CIT(A) has only directed the A.O. to recomputed the interest on post dated cheques after six months from the date of issue of PDCs. In the group case an identical/similar order of the CIT(A) was confirmed by the Co-Ordinate Bench of the Tribunal in the case of M/s IAG Promoters and Developers Pvt. Ltd. (supra). The relevant finding of the Hon'ble Co-Ordinate Bench of the Tribunal reads as follows. "5. We have heard the arguments of both the sides and perused relevant material placed before us. At the outset, the ground raised by the Revenue is misconceived because Ld.CIT(A) has not deleted the addition of Rs. 5,06,625/- but has only directed to recalculate the interest. We have carefully gone through the order of the Ld.CIT(A) and also the submissions of both the parties and we do not find any infirmity in the order of the Ld.CIT(A). After examining the loose papers seized at the time of search at the assessee's premises, it was noticed that interest is paid on the PDCs only during the ....
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....n the assessee company was not in existence at the time of first search and when none of the documents found during the course of second search belonged to the assessee and considering the fact that the Assessing Officer in the assessment order has not referred to any seized material found during the course of second search pertaining to assessee company which gave any clue even in a remotest manner with respect to payment of interest on PDCs out of books beyond six months from the sale deed, no addition could have been sustained. The decisions relied on by the ld. counsel for the assessee also support its case that addition cannot be made for a particular year without there being any incriminating material qua that assessment year which would justify such addition. Accordingly, the ground raised by the assessee is allowed. 21. Ground no.3 by the assessee relates to addition of Rs. 4,50,000/- u/s 40A(3) by the Assessing Officer which has been sustained by the CIT(A). 22. The ld. counsel for the assessee at the outset filed a copy of the order of the Tribunal in the case of M/s Countrywide Promoters Pvt. Ltd. vs. ACIT vide ITA No.6303/Del/2013 and ITA No.6342/Del/2013 order date....