TaxTMI 
TaxTMI 
2021 (5) TMI 897
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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, 1961 on account of additional payment in violation of Stamp Duty Act, 1899. 3. The order of the CI....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nterest 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 period of PDCs by the Assessing Officer and to the extent that the extension made by the Assessing Officer. (iii) This formula and arra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aid 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 submitted that this issue stands squarely covered by Tribunal order, therefore, the ground raised by the Revenue should be dismissed. 6. After considering the rival submissions and on perus....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rson 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 title of the land. 8. However the Assessing Officer did not accept the aforesaid contention and after detailed reasoning and rebutting each and every contention of the assessee, held that such a payme....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 impugned orders as referred to before us. The first and foremost apparent from the perusal of the profit and loss account is that, assessee has not claimed any such expenses for Rs. 1,05,86,958/-, nor it has been claimed in the computation of income. The assessee ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 no disallowance of expenditure in the hands of the assessee. Accordingly, the ground No. 2 of the revenue is dismissed." 7. Further, it was also adjudicated in the appeal of the assessee for the assessment year 2007-08 in the case of Green Valley Tower Pvt. Ltd. in ITA No. 175....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 Supreme Court that there must be something more than mere suspicion in support of an assessment and mere suspicion cannot take the place for the purpose of passing an order of assessment. 9.0.1 The issue of the alleged payment of interest by the assessee is covered by the judgment of the H....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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. The assessee company has acquired various lands through farmers/villagers and after acquiring the same from farmers/villagers, it has, in pursuance of a Collaboration Agreement handed over the same to M/s. BPTP Ltd. for development/construction of an integrated township project at the said land. As per ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 that the provisions of the section shall have effect notwithstanding anything to the contrary contained in any other provisions of the Act relating to the computation of income under the head 'Profit and gains of business or profession.' Sub-section (3) of Section 40A is an exception to the deductibility of expenditure under the computation provisions o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f 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 set out in the order of the authorities nor has the Ld. DR been able to address the applicability of the said judgment to the issue at hand. We have taken ourselves through the said judgment and seen that it proceeds on entirety different facts and circumstances and has no applicability to the facts of the present case. Consequently, it is seen that from the ratio of the judgments relied upon before the ....