Karnataka High Court
Asgar Jan vs Commissioner Of Income-Tax on 26 November, 2007
Equivalent citations: [2008]298ITR60(KAR), [2008]298ITR60(KARN)
Author: K.L. Manjunath
Bench: K.L. Manjunath, N. Ananda
JUDGMENT K.L. Manjunath, J.
1. This reference is sent by the Income-tax Appellate Tribunal to give our opinion on questions of law framed in paragraph 7 of its order.
2. At the time of arguments, learned Counsel appearing for the parties submits that on the facts of this case, this Court is required to answer only the following questions of law:
(i) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that M/s. Embassy Builders had not rendered any service at all as consultants and the payment to them is not genuine and does not qualify for deduction under Section 148 of the Income-tax Act, 1961, in the light of the documentary evidence?
(ii) Whether, on the facts and in the circumstances of the case, the Tribunal is correct in finding that the payment to the Prestige group, who are in real estate building, is not genuine in terms of the supplementary agreement?
3. For the assessment year 1991-92 the assessee filed a return of income on December 31, 1991, declaring the income of Rs. 4,13,490. The same was processed under Section 143(1)(a) of the Act. Accordingly, notice was issued to the assessee. It was revealed that the assessee had disclosed a short-term capital gains of Rs. 4,02,450 in respect of sale of property bearing No. 192, Jalahobli, Devanahalli Taluk. The assessee has shown sale proceeds of Rs. 18,70,000 and claimed deduction of Rs. 10,17,750 towards purchase of property and Rs. 4,50,000 towards commission paid to M/s. Embassy Builders. He has also shown, out of total sale consideration received by him he had incurred expenditure towards stamp duty and registration fees. The Assessing Officer has disallowed the claim of brokerage paid to M/s. Embassy Builders amounting to Rs. 4,50,000 and so also the stamp duty on the ground that no services were rendered by M/s. Embassy Builders and that the stamp duty was paid by purchaser. This order was called into question by filing an appeal. The appeal filed by the petitioner was dismissed by the Commissioner of Income-tax (Appeals), Bangalore, against which an appeal was filed before the Appellate Tribunal which also has been dismissed. On a reference the assessee is before us.
4. We find, concurrently the authorities have held that the stamp duty has been paid by M/s. Prestige group and in their return of income-tax the same is reflected. If it is so, on facts we cannot interfere with the findings of authorities below with regard to stamp duty. Therefore, question No. 2 has to be answered against the assessee.
4.1 In regard to question No. 1, pursuant to the order passed by the Assessing Officer penalty proceedings were initiated which is also now pending before this Court in I.T.A. No. 520 of 2002. In penalty proceedings, the Tribunal has accepted the contention of the assessee and so also by the Commissioner of Income-tax (Appeals) in regard to the brokerage paid by the assessee to M/s. Embassy Builders. According to the assessee, the amount of Rs. 4,50,000 paid by him has been reflected by M/s. Embassy Builders in their income-tax returns and the same is accepted by the Department. If it is so, we are of the opinion that the authorities did not consider the case of the petitioner properly. When he has paid the amount through cheque and the same is accepted by M/s. Embassy Builders treating it as commission for having rendered their services, it was not open to the Assessing Officer and other authorities to hold against the assessee. Our views are also supported by the orders of the Tribunal in penalty proceedings wherein the case of the assessee has been accepted. There cannot be two views on the same issue when the matter is considered by the same authority.
4.2 In the circumstances, we have to allow this appeal in part in answering question No. 1 in favour of the assessee holding that the assessee has paid Rs. 4,50,000 as brokerage to M/s. Embassy Builders. To that extent the reference is allowed answering question No. 1 in favour of the assessee.