TaxTMI 
TaxTMI 
2021 (5) TMI 897
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....ssessee comprises the following grounds: 1. Disallowance u/s. 40A(3) of Rs. 1,70,875/- 2. Addition of Rs. 25,00,000/- and Rs. 12,25,000/- on account of seized material 5. Heard the arguments of both the parties and perused the material available on record. 6. The issue of PDC and additional payments have been dealt by a number of cases pertaining to the group, the various Coordinate Benches of the Tribunal on the similar facts of the cases. For the sake of ready reference, the relevant order in the case of Vasundra Promoters (P) Ltd. in ITA No. 1527 & 1758/Del/2013 for the assessment year 2006-07 is reproduced herewith: "2. We will first take up Revenue's appeal in which following grounds have been raised:- "1. On the facts and in the circumstances of the case, the CIT(A.) has erred in deleting the addition of Rs. 27,11,797/- made by the Assessing Officer on account of interest on PDCs paid out of books of account. 2. On the facts and in the circumstances of the case, the CIT(A) has erred, in deleting the addition of Rs. 1,05,86,958/- made by the Assessing Officer in view of the provisions of Section 37(1) of the Income Tax Act....
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....o the following conclusions which are being summarized as under:- (i) The analysis of the seized documents reveals that interest has been paid on PDCs and there are vouchers found which proves that recipient has signed on vouchers for receipt of the interest and the amounts are specific with calculation of 15% per annum. (ii) There is a clear evidence of receipt of interest for extension of period of PDCs and the arguments of the assessee that the calculation of interest of PDCs has been considered while entering into the agreement holds some logic but when the date of PDCs are extended, definitely the recipient will demand for some additional compensation in the form of interest. There is evidence which proves that interest is paid from the date of sale to date of encashment of PDCs. However there is concrete evidence in the form of seized material to show that interest is paid and received by seller on the extension of PDGs. Thus, interest on PDCs to the extent of extended period appears to be quite reasonable and logical and accordingly, he held that interest, of PDCs either a sale consideration or additional payment may be recomputed to the extent of extended ....
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....d any infirmity in the order of the learned 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 period of extension of PDCs and, therefore, he directed the Assessing Officer to re-compute the interest on PDCs at the time of extension of the PDCs. He has further observed that if it is not possible to work out the extension of PDCs in each case, then the Assessing Officer is directed to recomputed interest on PDCs after six months from the date of Issue of the PDCs. Therefore, the ground of appeal of the Revenue that the CIT(A) deleted the addition of Rs. 75,06,625/- made by the Assessing Officer on account of interest on PDCs is factually incorrect and contrary to the order of the CIT(A). The CIT(A) directed to recalculate the interest on PDCs and there was a sound logic for such direction. His direction is based on material found and seized at the time of search, in view of the above, we do not find any justification to interfere with the order of learned CIT(A) in this regard and accordingly, we reject ground No. 1 of the Revenue's appeal." Thus, he submi....
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.... and above sale consideration aggregated to Rs. 1,05,86,958/-. Before the Assessing Officer the assessee made various contentions, firstly, the agreement for the purchase of land is agreed with one person but other members of the family had also therefore, to settle the same, additional compensation is paid; secondly, the BPTP is developing township over thousand acres, therefore, various spurious and non serious agreements are entered with the farmers sand in order to settle such cases the payments are made; thirdly, often payments are made through PDCs and at the time of encashment there is considerable escalation in prices and therefore, there is always raise in the claim for the compensation of delayed payment; fourthly, the additional compensations are given for tube wells, trees and other super structure etc., as per demand made by the land owners; fifthly, the payments have been made for commercial expediency and all the payments are genuine; sixthly, the cyclostyled receipts does not results in roads in the genuineness and factum of payments; and lastly, the additional payments should not be considered for purchase of land but it is an extra expenditure for obtaining the ti....
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....d Developers Pvt. Ltd. in ITA No. 1752/Del/2013, wherein on same issue matter was decided in favour of the assessee. Not only that this decision has been followed by the Tribunal in three other group cases of assessee viz., i. M/s. Glitz Builders and Promoters Pvt. Ltd., 1747/Del/2013 & 1406/Del/2013 dated 02.01.2015 for the A.Y. 2006-07; ii. M/s. ISG Estate Pvt. Ltd. 1532/Del/2013 and 1756/Del/2013 dated 3.1.2015 for the A.Y. 2006-07; iii. M/s. Business Park Promoters Pvt. Ltd., in ITA No. 1404/Del/2013 & 1732/Del/2013 for the A.Y. 2006-07. He submitted that in all, these cases the Tribunal has held that since the assessee has neither claimed any income from purchase and sale of land nor has debited any expenditure on such purchases, therefore, there is no question of any disallowance. The assessee's income is only on account of commission which is fixed @ Rs. 35,000/- per acre. The income from operation itself was Rs. 8.08 lacs and cost on such operations was only Rs. 6.74. lacs. Thus, there is no question of disallowing any expenditure which has not been claimed. 11. We have heard the rival submissions and findings given in. the i....
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.... entire amount is added u/s. 37 as opposed to part of the expenditure disallowed u/s. 40A(3) is not so material as the finding is arrived at taking cognizance of the material fact that hereto also no such claim of expenditure has been made. The fact that the additional payments were warranted in order to avoid potential disputes amongst the claimants off the land holding which have been passed through to the land holders from generation to generation wherein there may be informal arrangements of ownership and or the payments were for commercial expediency to facilitate peaceful possession and registration of the land holding; where by the time Registry was made the landholders felt a higher payment was necessitated due to increase in value are issues which are not required to be addressed in the present proceedings. Ground No. -3 on the facts available on record, considering the judicial precedent referred to in detail while deciding Ground No. 4 has to be decided in favour of the assessee." 12. The aforesaid decision has been followed in other cases of the group companies also. Thus, on the aforesaid reasoning and binding judicial precedents, we also hold that, there is n....
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....ment of Shri Chottu Ram is referred to although the assessee has denied to have purchased any land from Shri Chottu Ram. The statement of Shri Chottu Ram was not even provided to the assessee. In our view, the statement of Shri Chottu Ram cannot be made as the basis for taking adverse inference without the assessee even having been confronted with it. Reliance is placed on the judgment of the Hon'ble Supreme Court in M/s. Andaman Timber Industries vs. Commissioner of Central Excise wherein it was held that order becomes null if based merely on statement of witness without allowing opportunity to cross examine them. None of the vendors of land and the alleged recipients of interest paid by the assessee were examined by AO who would have confirmed of having received any such interest. It is the basic principle of law that unless there is a corroborative evidence, no addition can be made in an assessment. Reliance is placed on the judgment of the Hon'ble Supreme Court in case of Dhakeshwari Cotton Mills Ltd. vs. CIT 26 ITR 775 (SC), Omar Salay Mohd. Salay vs. CIT 37 ITR 151 (SC) and Lalchand Bhagat Ambica Ram vs. CIT 37 ITR 288 (SC) wherein it is held by the Hon'ble Suprem....
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.... DR has placed reliance on the concurrent findings of the lower authorities. It is seen that the issue of disallowance u/s. 40A(3) is decided by several coordinate benches in various cases of group companies of BPTP in favour of the respective assessees by taking the view that issue of disallowance of expenses does not arise as the amount paid for purchase of land is neither debited to the Profit & loss a/c nor claimed as expenditure in the Computation of taxable income as the assesses have got reimbursements of the amounts paid for purchase of land from M/s. Countrywide Promoters Pvt. Ltd. on assignment of development rights in land purchased by assesses in favour of M/s. Countrywide Promoters Pvt. Ltd. This issue was first decided in the case of M/s. West Land Developers Pvt. Ltd. in ITA No. 1752/Del/2013 vide order dated 22.08.2014 and later on in more than 30 other cases of BPTP group on identical facts. Therefore, respectfully following the decision/s of the co-ordinate benches on the issue of disallowance u/s. 40A(3) and following the rules of precedence and consistency, the disallowance made by the AO of Rs. 12,31,160/- is hereby deleted." Disallowance u/s. 40A(3): 8. ....
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....) The A.O. has placed reliance on the applicability of See 40A(3) on the decision of Supreme Court in the case of Attar Singh Gurumukh Singh Vs. ITO 191 ITR 667. (v) He held that Rule 6DD is not applicable as that rule only gives non application of Section 40A(3) in fulfillment of Specific condition." 12. The Ld. CIT(A) supported the order of the Assessing Officer. 13. During the appellate proceedings, Ld. AR made written submission dated 9.11.2011. The Ld. AR emphasized that the assessee company has got reimbursed the land cost from the collaborator. He has submitted that the main contention before the AO for non applicability of Sec. 40A(3) as under: "Based on the aforesaid Agreement the assessee purchased land for which the (M/s. BPTP Ltd.) has reimbursed all costs and expenses with respect to the acquisition of the said land and also in conformity with the Collaboration Agreement the assessee has received fees calculated @ Rs. 40,000/- per acre, which is duly credited to the Profit and Loss Account as the income. Section 40A applies to expenses or payments not deductible in certain circumstances. It starts with the non-obstante clause providing ....
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....h the agreement between the assessee and the BPTP and find that the payments have been duly recorded and the amounts have been reimbursed by the BPTP and also the fact that these payments have not been debited to P&L account. The similar issue has been adjudicated in assessee's own case for the assessment year 2006-07 in ITA No. 6303 & 6342/Del/2013 dated 11.09.2017 in para 10.4 & 10.5 of the order wherein the plea of the assessee has been allowed. For the sake of ready reference, the relevant portion of the said order is reproduced as under: "10.4 We have considered submissions made by the parties and perused the material made available on record. In Westland Developers Pvt. Ltd. (supra) on identical facts it was held as under: "10.10. We have also taken ourselves through the judgment of the Jurisdictional High Court in the case of CIT vs. Industrial Engineering Projects Pvt. Ltd. (cited supra) which has been relied upon before us for the proposition that reimbursement of expenses cannot be treated to be a Revenue receipt. How the judgment of the Apex Court in Tuticorin Alkali Chemicals & Fertilizers is applicable to the facts of the present case has not been....