TaxTMI 
TaxTMI 
2022 (2) TMI 1142
X X X X Extracts X X X X
X X X X Extracts X X X X
....ve ground of appeal, Ld. CIT(A) erred in law and on facts of the case in deleting the addition of Rs. 8,10,29,645/- made by the AO on protective basis u/s 40a(ia) of the Act for non-deduction of tax at source u/s 194H of the Act out of commission or brokerage paid by the assessee company to M/s. SBPL." 3. The facts in brief are that the assessee company is a subsidiary of M/s. Experion Developers Private Ltd. (EDPL) and is engaged in the business of construction-development of projects including townships, group housing, commercial premises, hotels, resorts, recreational facilities and regional infrastructure. During the FY 2007-08, the assessee company was required to purchase contiguous land measuring 15.31251 acres in section 112 of Gurgaon district in Haryana. For this purpose, the assessee entered into an agreement with M/s. Soni Buildcon Private Ltd. (SBPL) who in turn had arrangements/understanding with the land owners with regard to purchase of said land parcels, i.e., it had obtained preferential rights to purchase the land and would further acquire such rights. As per the MOU/ Agreement, the price at which the land would be purchased was fixed at Rs. 3.71 crore per acr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ier and as on or before to the date of agreement i.e. 17.04.2007 between the assessee and SBPL, therefore, this is an after-thought on part of the assessee as the assessee itself started negotiating with the land owners so as to inflate the cost of land. Assessing Officer has also noted the date of payment as mentioned in the sale deed in respect of various parties and the payments made to the respective sellers on or before 17.04.2007, the date on which so-called agreement was entered into by the assessee with SBPL. Apart from that, he also observed that SBPL could not have entered into any kind of understanding/ agreement with the land owners without making any advance payment to them in lieu of the proposed transfer of their land. Thus, he doubted the entire arrangement between the assessee and SBPL and held that claim of the assessee to have paid Rs. 8,10,29,645/- to SBPL for renunciation of its rights in the land is a mere make believe story and assessee's claim cannot be accepted that the said payment made by the assessee for relinquishment of rights of SBPL in the land being purchased by the assessee. After detailed discussion, he held that such a payment claimed towards pay....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent between land owners and SBPL which was admitted by the ld. CIT (A) and forwarded to the AO for examination and to submit his report. AO filed his remand report which has been incorporated in the impugned appellate order as well as the assessee's rejoinder on the said report. Another important fact which was brought on record by the assessee before the ld. CIT (A) that in the agreement to sell between the land owners and SBPL it was specifically provided that upon payment of full consideration as determined between the land owners and SBPL, land owners would get the land registered either in the name of SBPL or its nominees or other person as may be specified by the SBPL. Initially payments were made by the SBPL to reserve its rights in the land and pursuant to such arrangement only, the land owners agreed and executed the sale deeds directly into the name of the assessee. The summary of total payments made by the SBPL and the assessee to the land owners are as under :- Sale Deed No. Name of the land seller SBPL Appellant Total Payment 4099 Mangatram 9,333,333 38,400,001 47,733,334 Daryab Singh 9,333,333 38,400,001 47,733,334 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ale deeds (i.e. between land owners and the assessee), which ld. CIT (A) appreciated that the initial payments made by the SBPL (which was duly reimbursed to the SBPL) for acquiring the interest in the land were also specifically mentioned in the sale deed and such payments also forms the part of cost of the land in the sale agreement between land owners and the assessee. This fact also conveys that SBPL had dealt on principal to principal basis and the payment of Rs. 8.10 crores has been made to SBPL on account of renunciation of preferential rights in land only. 9. Ld. CIT (A) after considering the entire gamut of facts as well as various additional evidences filed during the course of appellate proceedings as well as the report of the AO held that payment was towards interest in land and the assessee had treated the same as a part of the cost of land and made following observations in respect of the agreement to sell and sale deed :- "a. The agreement to sell clearly shows that SBPL had an arrangement /understanding with the land owners, that too prior to entering the agreement with the appellant. Thus, it implies that SBPL was rightly having interest in the land i.e....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 2.8 Further, the assessing officer also asked the appellant to produce the authorised representative of the SBPL for further verification. Mere non attendance of the representative of SBPL before the assessing officer, did not render the payment as unexplained. I hold that the appellant has discharged its onus by furnishing the requisite information/ documents in respect of SBPL. Accordingly, I hold that the payment of Rs. 81,029,645/- (i.e. over and above the payment of land cost) have been made to buy all the vested interests in the said land including existing rights under agreement to sell executed by land owners. Accordingly, the disallowance of payment of Rs. 81,029,645/- made by the assessing officer is deleted and these grounds of appeal are allowed." 11. We have heard the rival submissions and also perused the relevant findings given by the impugned orders and the material placed before us during the course of hearing. It is an undisputed fact that during the FY 2007-08, the assessee had requirement to purchase contiguous piece of land for its housing project and has entered into memorandum of understanding/ agreement with SBPL to provide contiguous piece of ....