Income Tax Appellate Tribunal - Delhi
Green Valley Housing And Land ... vs Assessee on 24 April, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'C', NEW DELHI
Before Sh. G. C. Gupta, VP And Sh. N. K. Saini, AM
ITA No. 1771/Del/2013 : Asstt. Year : 2007-08
ITA No. 2309/Del/2013 : Asstt. Year : 2008-09
Green Valley Housing and Land Vs Asstt. Commissioner of Income
Development Pvt. Ltd., M-11, Tax, Central Circel-23,
Middle Circle, Connaught Circus New Delhi-110055
New Delhi-110001
(APPELLANT) (RESPONDENT)
ITA No. 1533/Del/2013 : Asstt. Year : 2007-08
ITA No. 2690/Del/2013 : Asstt. Year : 2008-09
Asstt. Commissioner of Income Vs Green Valley Housing and Land
Tax, Central Circel-23, Development Pvt. Ltd., M-11,
New Delhi-110055 Middle Circle, Connaught Circus
New Delhi-110001
(APPELLANT) (RESPONDENT)
PAN No. AAACG4113H
ITA No. 1770/Del/2013 : Asstt. Year : 2007-08
Green Park Estate Pvt. Ltd., Vs Asstt. Commissioner of Income
M-11, Middle Circle, Connaught Tax, Central Circel-23,
Circus, New Delhi-110001 New Delhi-110055
(APPELLANT) (RESPONDENT)
ITA No. 1672/Del/2013 : Asstt. Year : 2007-08
Asstt. Commissioner of Income Vs Green Park Estate Pvt. Ltd.,
Tax, Central Circel-23, M-11, Middle Circle, Connaught
New Delhi-110055 Circus, New Delhi-110001
(APPELLANT) (RESPONDENT)
PAN No. AAACG4040P
Assessee by : Sh. V. S. Rastogi, Adv.
Revenue by : Smt. Parwinder Kaur, Sr. DR
Date of Hearing : 15.04.2015 Date of Pronouncement : 24.04.2015
2 ITA Nos. 1770, 1771, 2309,
1533, 1673 & 2690/Del/2013
Green Valley Housing & Land Development
ORDER
PER N. K. SAINI, AM:
These are the cross appeals by the assessees and the Department against the separate orders dated 18.12.2012 & 22.01.2013 for the assessment years 2007-08 & 2008-09 respectfully in the case of Green Valley Housing and Land Development Pvt. Ltd and the order dated 18.12.2012 for the assessment year 2007-08 in the case of M/s Green Park Estate Pvt. Ltd. passed by the Ld. CIT(A) XXXIII, New Delhi. Since the issue involved are common. In these cross appeals which were heard together so these are being disposed of by this consolidated order for the sake of convenience.
2. First we will deal with the cross-appeals for the assessment year 2007-08 in the case of M/s Green Valley Housing and Land Development Pvt. Ltd. In the assessee's appeal in ITA No. 1771/Del/2013. Following grounds have been raised:
"1. That on the facts and circumstances of the case and in law the CIT(A) erred in rejecting appellant's contention that assessment order made by Assessing Officer was bad in law and void ab-initio on the ground that it ought to have been made u/s153C of the Income Tax Act, and not, as was done u/s 143(3) of the Income Tax Act.
2. That without prejudice, on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the action of the Assessing Officer in relying upon the 3 ITA Nos. 1770, 1771, 2309, 1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development material seized in the case of search on M/s BPTP group of cases despite:-
i) that such material had no nexus/relevance with the case of the appellant and,
ii) that, the CIT(A) himself holding that such material did not belong to the appellant.
3. That on the facts and circumstances of the case and in law the CIT(A) erred in holding to quote, ' that seized documents definitely prove that interest is paid on PDC' despite-
i. that the seized record on the basis of which above finding was given, even according to his own finding by the CIT(A), did not belong to the appellant and, ii. that no enquiries were made from any of the alleged recipients of the interest and none was confronted with relevant document(s).
3.1 That the finding of the CIT(A) is based on mere surmises and conjectures without proof and corroboration by independent evidence.
4. That on the facts and circumstances of the case and in law the CIT(A) erred in not accepting the appellant's contention that Additional Payments having not been claimed as deduction by appellant, no disallowance could have been made in the hands of the appellant.
4.1. That without prejudice the CIT(A) erred in upholding the disallowance of Additional Payments made to the recipients who were not the owners of land and not the payment made in cash.
4 ITA Nos. 1770, 1771, 2309,1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development 4.2 That without prejudice the CIT(A) erred in not himself quantifying the addition to be made.
5. That on the facts and circumstances of the case and in law the CIT(A) erred in upholding the disallowance u/s40A(3) in respect of which no deduction was claimed by the appellant.
5.1 That even on merits the disallowance was not justified.
6. That the orders passed by the Assessing Officer and Commissioner of Income Tax (Appeals)-XXXIII, New Delhi are bad in law and void ab-initio.
7. The appellant craves permission to add, amend, alter or vary all or any grounds of appeal on or before the date of hearing of the appeal."
3. Ground Nos. 1 to 3, 6 & 7 were not pressed as such these required no adjudication on our part. Vide Ground No. 4, the grievance of the assessee relates to the substance of disallowance made by the AO on account of additional payments for the purchase of land made to the recipients who were not the owners of the land.
4. As regards to this issue, the ld. Counsel for the assessee at the very outset stated that it is covered in favour of the assessee vide order dated 02.01.2015 in ITA No. 1747/Del/2013 for the assessment year 2006-07 in the case of M/s Glitz Builders and Promoters Pvt. Ltd. Vs ACIT Delhi (copy of the said order was furnished). In her rival submissions, the ld. DR although supported the orders of the authorities below but could not controvert the aforesaid contention of the Ld. Counsel for the assessee.
5 ITA Nos. 1770, 1771, 2309,1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development
5. After considering the submissions of both the parties and carefully going through the material available on the record, it is noticed that a similar issue has already been adjudicated by this Bench of the Tribunal vide Para 10 of the aforesaid referred to order wherein relevant matters has been given as under:-
"10. The above facts stated by the Ld. Counsel during assessment proceedings have not been found to be incorrect or non-genuine. As per the collaboration agreement, the assessee was to purchase the land for and on behalf of CWPPL and whatever was the purchase price including the additional payment was debited to CWPPL and the assessee only received fixed remuneration i.e. Rs.35,000/- per acre. Thus, we agree with the contention of the Ld. Counsel that the assessee has not claimed any deduction in respect of cost of the purchase of the land, whether original or additional payment. When the cost of the land, as well as additional payment is not claimed by the assessee as deduction, the question of any disallowance u/s40A(3) or otherwise in the case of the assessee does not arise. We, therefore, delete the entire disallowance made by the Assessing Officer u/s 40A (3) as well as additional payment."
6. Since, the facts in the case of the assessee are similar to the facts involved in the case of M/s Glitz Builders and Promoters Pvt. Ltd. (supra), we, therefore, by respectfully following the said order dated 02.01.2015 in ITA No. 1747/Del/2013 for the assessment year 2006-07, delete the impugned addition made by the AO and sustained by the ld. CIT(A).
6 ITA Nos. 1770, 1771, 2309,1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development
7. The next issue vide Ground No. 5, relates to the confirmation of disallowance made by the AO u/s 40A (3) of the Act.
8. As regards to this issue, the ld. Counsel for the assessee at the very outset stated that this issue is covered vide order dated 02.01.2015 in ITA No. 1747/Del/2013 in the case of M/s Glitz Builders and Promoters Pvt. Ltd Vs ACIT (Supra). In her rival submissions, the Ld. DR although supported the orders of the authorities below but could not controvert the aforesaid contention of the Ld. Counsel for the assessee.
9. After considering the submissions of both the parties and the material available on the record, it is noticed that an identical issue having similar facts was involved in the case of M/s Glitz Builders and Promoters Pvt. Ltd Vs. ACIT (Supra) wherein vide order dated 2/1/2015 in Para 6 to 10, it has been observed as under:-
" 6. The assessee, aggrieved with the disallowance sustained u/s 40A(3) and part disallowance in respect of additional payment, is in appeal while the Revenue is in appeal in respect of relief allowed on account of additional payment.
7. It is submitted by the Ld. Counsel that any payment which has not been claimed by the assessee as an expenditure cannot be disallowed. He stated that the assessee purchased the land for an on behalf of CWPPL and any payment for the purchase of land or for additional payment has been debited to the account of CWPPL. Therefore, when no deduction is claimed by the assessee for purchase of land or for additional payment, the disallowance u/s 40A(3) or for additional payment cannot be made in the hands of the assessee.7 ITA Nos. 1770, 1771, 2309,
1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development
8. Ld. DR on the other hand, relied upon the order of the Assessing Officer. He stated that the assessee has purchased the land and handed over the same to CWPPL. Thus, it is a case of purchase and sale of land by the assessee to CWPPL. Merely because the assessee has not passed the entry of purchase and sale of the land in its books of account and only accounted for the remuneration from the sale of land, application of Section 40A(3) cannot be avoided. He, therefore, submitted that the order of Assessing Officer should be sustained.
9. We have carefully considered the submissions of both the sides and perused relevant material placed before us. The assessee has produced the collaboration agreement before the Assessing Officer and has submitted as under:-
"Based on the aforesaid Agreement the assessee purchased land for which the (M/s Countrywide Promoters Pvt. 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.35,000/- per acre, which is duly credited to the Profit and Loss Account as the income."
10. The above facts stated by the Ld. Counsel during assessment proceedings have not been found to be incorrect or non- genuine. As per the collaboration agreement, the assessee was to purchase the land for and on behalf of CWPPL and whatever was the purchase price including the additional payment was debited to CWPPL and the assessee only received fixed remuneration i.e. Rs.35,000/- per acre. Thus, we agree with the contention of the Ld. Counsel that the assessee has not claimed any deduction in respect of cost of the purchase of the land, whether original or additional payment. When the cost of the land, as well as additional payment is not claimed by the assessee as deduction, the 8 ITA Nos. 1770, 1771, 2309, 1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development question of any disallowance u/s40A(3) or otherwise in the case of the assessee does not arise. We, therefore, delete the entire disallowance made by the Assessing Officer u/s 40A (3) as well as additional payment."
10. Since the facts of the present case are identical to the facts involved in the aforesaid referred case so respectfully following the earlier order dated 02.01.2015 of this Bench of the Tribunal in ITA No. 1747/Del/2013 (supra), the disallowance sustained by the ld. CIT(A) is deleted.
11. For the assessment year 2008-09 is assessee's appeal in ITA No. 2309/Del/2013 the issues involved are identical having similar facts, therefore our findings given in former part of this order for the assessment year 2007-08 in ITA No. 1771/Del/2013 shall apply mutatis mutandis.
12. Now we will deal with the appeal of the Department in ITA No. 1533/Del/2013 for the assessment year 2007-08. Following grounds have been raised in this appeal.
" 1. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of Rs.93,47,930/- 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. 1,68,55,000/- made by the Assessing Officer in view of the provisions of Section 9 ITA Nos. 1770, 1771, 2309, 1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development 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 CIT(A) is erroneous and is not tenable on facts and in law.
4. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal."
13. Ground Nos. 3 & 4 are general in nature, so, do not require any comments on our part. Vide Ground No. 1, the grievance of the Department relates to the deletion of addition made by the AO on account of interest on post dated cheques (PDC) paid out of books of accounts. As regards to this issue, the ld. Counsel for the assessee at the very outset stated that this issue is covered vide order dated 9/1/2015 of the ITAT 'F' Bench, New Delhi in the case of ACIT Vs M/s Pricison Infrastructure Pvt. Ltd. in ITA NO. 4542/Del/2013 for the Assessment Year 2008-09.
14. In his rival submissions, the ld. DR although supported the order of the AO and could not controvert the aforesaid contention of the Ld. Counsel for the assessee. After considering the submissions of both the parties it is noticed that an identical issue having similar facts was involved in the case of ACIT Vs Pricison Infrastructure Pvt. Ltd (Supra) wherein by following the earlier orders of the ITAT Bench 'C' New Delhi, the similar findings given by the Ld. CIT(A) as have been given 10 ITA Nos. 1770, 1771, 2309, 1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development in the impugned order, had been confirmed by observing in Para 7 of the aforesaid order dated 09.01.2015 which read as under:-
"7. We have considered the submissions of both the parties and carefully gone through the material available on the record. It is noticed that the facts of the present case are identical to the facts involved in the case of M/s IAG Promoters and Developers Pvt. Ltd. (supra). The said company is a sister concerns of the assessee and belonged to the same group companies of BPTP Group to which the assessee belongs. In the said case vide order dated 31/10/2014 the ITAT Bench 'C', New Delhi in ITA Nos. 1674/Del/2013 & 1765/Del/2013 for the assessment year 2008-09 observed in para 5 as under:-
"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 period of extension of PDCs and, therefore, he directed the Assessing Officer to recompute 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 recompute 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.5,06,625/- 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 11 ITA Nos. 1770, 1771, 2309, 1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development 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 Ld. CIT(A) in this regard and accordingly, we reject Ground No. 1 of the Revenue's appeal."
15. Since the facts in the present case are similar to the facts involved in the case of ACIT Vs M/s Pricison Infrastructure Pvt. Ltd. (Supra), so respectfully following the order dated 09.01.2015 in ITA No. 2542/Del/2013 for the assessment year 2008-09, we do not see any merit in the appeal of the Department on this issue.
16. The next issue vide ground no. 2 relates to the deletion of addition made by the AO by invoking the provisions of Section 37(1) of the Act on account of Additional payment in violation of Stamp Duty Act 1899.
17. As regards to this issue, the Ld. Counsel for the assessee submitted that this issue is covered in favour of the assessee vide order dated 22/8/2014 in the case of M/s West Land Developers Pvt. Ltd Vs ACIT in ITA No. 1752/Del/2013 for the assessment year 2006-07. The ld. DR although supported the order of the AO but could not controvert the aforesaid contention of the Ld. Counsel for the assessee.
18. After considering the submissions of both the parties and perusing the material available on the record, it is noticed that a similar issue was involved in the aforesaid referred case of M/s West Land Developers 12 ITA Nos. 1770, 1771, 2309, 1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development Pvt. Ltd. Vs ACIT, wherein the relevant findings has been given in paras 12, 12.1 12.2 & 13 which read as under:-
"12. Referring to the order it was submitted that the AO makes a passing reference to search on BPTP Ltd. and its group companies taking note of the fact that no search was conducted on the assessee and proceeded to make a disallowance u/s 37 ignoring the fact that no such claim was made by the assessee as these were not routed through the P&L A/c of the assessee and were also like the earlier payment were made to the claimants of the land holdings and for the assessee these were re-imbursements. The issue has been considered by the CIT(A) in paras 5.3.1 to paras 5.3.8 however he has restored the matter with certain directions referring to facts which were not relatable to the assessee. Addressing these facts Ld. AR submitted the arguments herein also remain the same as these were payments for the purchase of land and have not been claimed as an expenditure by the assessee as these were reimbursed to the assessee. The argument herein also remains the same that since no claim of expenditure has been incurred by the assessee as the payment was made as they were paid on behalf of CWPPL to settle the claims of the various claimants for the lands sold where potential disputes, claims and counter claims of the land holders had to be paid for peaceful litigation free possession of the land holding. It was re-iterated by the Ld. AR that the AO has recorded certain findings in paras 4 to 4.6 of the assessment order to search on BPTP It was contended and he gave no indication in the course of the hearing that he would be referring to the facts pertaining to the search on BPTP. It was his submission that it is a matter of record that no search operation took place on the assessee and this fact has been noted by the AO himself. In this background it was contended that the CIT(A) wrongly in paras 5 to 5.3.8 has incorporated certain factually incorrect findings in the 13 ITA Nos. 1770, 1771, 2309, 1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development order by resorting to cutting and pasting from various other cases as a result of which enormous errors have occurred. Inviting attention to paras 5 to 5.3, it was contended would show that the CIT(A) makes a reference to some statement of patwari referred to by the AO which does not find any mention in the assessment order and may be a fact in the case of some other group company's case. Similarly in para 5.3.4 statement of some Chotu Ram recorded on 24.03.2008 is stated to be extracted in the assessment order is refereed to whereas in the assessment order under consideration it was pointed out there is no such reference or for that matter to any such statement having been recorded. It was his submission that all arguments advanced in Ground No-4 contending that section 40A(3) is wrongly invoked would fully apply here. Herein also it was submitted additional payments were never claimed by the assessee as expenses. Since the said issue has also been covered in the assessee's synopsis filed, the relevant submissions qua the said ground found mentioned in para 6.1 & 6.2 of Synopsis filed, is reproduced hereunder:-
6.1. "The CIT(A) for identical reasons as in the case of disallowance u/s 40A(3) has held that the payment for purchase of land was assessee's expenditure (kindly see para 5.3.1). He has given directions to the AO to deal with the admissibility of additional payment in para 5.3.8 of his order.
6.2. The finding of the CIT(A), that cost of land is assessee's expenditure is challenged for identical reason as in Ground No-4 (supra). It is contended that cost of land cannot be considered in the hands of the assessee and resultantly the directions contained in para 5.3.8 are non-issue in the hands of the assessee. IT is prayed that the assessee's contention be allowed, viz that no 14 ITA Nos. 1770, 1771, 2309, 1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development disallowance u/s 37(1) can be made in the hands of the assessee."
12.1. In the said background it was submitted that these additional payments made to the parties which admittedly have not been routed as an expense in assessee's P&L A/c has been wrongly added as an addition in assessee's hands. In this background it was contended that since cost of the land as assessee's expenditure has been assailed in Ground No-4 for similar reasons additional payments for the purchase of the land reimbursed by CWPPL cannot be disallowed u/s 37(1) in the hands of the assessee as no expenditure has been claimed by the assessee. Apart from this similarity of facts qua the arguments for Ground No-3 with Ground No.-4, it was submitted that the assessee has specifically challenged vide Ground No-2 the action of the CIT(A) who no doubt was dealing with multiple cases of search and has virtually cut and pasted in his order facts which are not even emerging from the assessment order as such keeping in mind the fact that AO never gave any hint during the hearing that he would refer to BPTP Ltd. group cases which were searched where assessee admittedly was not searched and the CIT(A) has made observation on the facts which are not on facts of the case. Since herein also the issue is addressed in the synopsis filed by the assessee, we extract para 7 from the same:-
7. Ground No.2 While the disallowance of additional payment is challenged for the reasons stated in para 6.1 & 6.2 above, we support the same by the objections taken in ground No.2 for following reasons:-
(i) Search u/s 132 was carried out on 15.11.2007 on M/s BPTP Ltd and its group companies. Although assessee is a group company no search was carried on it. It is also a 15 ITA Nos. 1770, 1771, 2309, 1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development matter of record that no document was seized in the course of such search which belonged to the assessee and which was treated as incriminating. This follows from the fact that no action was taken u/s 153C in the hands of the assessee.
(ii) In the present assessment made u/s 143(3), the AO in paras 4.3 & 4.4 has referred to certain seized record belonging to M/s BPTP Ltd and its group companies (and not of the assessee company) and used the same to the detriment of the assessee in justifying disallowance u/s 37(1) by way of additional payment. This action was legally wrong and incorrect because any alien seized material i.e. material belonging of any other company, which did not belong to the assessee, could not be used in an assessment of the assessee u/s 143(3). Only such seized material which belongs to the assessee could be used and that too u/s 153A/153C as held in the case of Abhay Kumar Shroff vs. CIT 290 ITR 14 (Jhar.) (Copies being filed; reference para 20). From the fact that the assessment was made u/s 143(3) it is to be taken that AO admits that no seized material belonged to the assessee.
Hence, the entire observations in para 4.3 & 4.4 of the order of the AO are to be expunged.
(iii) The order of the CIT(A) suffers from factual errors and legal infirmity. Firstly, in clauses (ii) and (iii) of para 5.2 he has referred to some submissions allegedly made by the assessee. No such submissions were made. Secondly, yet again what he has stated in paras 5.3.3, 5.3.4, 5.3.5, & 5.3.6, nothing emerges from order of the Assessing Officer nor from any reply by the assessee. Unfortunately, the CIT(A) has mixed up the facts from some of his order(s) in other appeals.
16 ITA Nos. 1770, 1771, 2309,1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development
(iv) The CIT(A) in para 6.3 says, to quote, "Undoubtedly AO has utilized the documents seized from the premise of M/s BPTP Ltd and group companies. However, assessment order nowhere mentions that any part of the seized material belong to appellant company". The CIT(A) therefore himself gives a finding that no material seized belonged to the assessee and was utilized in making the assessment.
(v) However, notwithstanding having stated as above, the CIT(A) justifies in para 6.4, the utilization of alien material seized from a different assessee in the hands of an assessee in making assessment u/s 143(3) by relying on the judgment in Pooran Mal vs. CIT 93 ITR 505 (SC).
The CIT(A) has misread this judgment. There is no quarrel on the proposition as laid down in that case, that where search and seizure were in contravention of the provisions of section 132, material seized would be liable to be used. But what has been held in this judgment is that such material would be liable to be used, subject to law, against the person from whose custody it was seized. This is what was stated by the court in this regard:-
"In that view, even assuming, as was done by the High Court, that the search and seizure were in contravention of the provisions of section 132 of the Income Tax Act, still the material seized was liable to be used subject to law before the income tax authorities against the person from whose custody it was seized." (Copy of order being furnished.) The CIT(A) is plainly wrong and incorrect in extending the scope of the judgment by saying that such material can be used in an assessment u/s 143(3) in the hands of a 17 ITA Nos. 1770, 1771, 2309, 1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development totally different person i.e. a person from whose custody it was not seized or to whom it did not belong to.
7.2 In view of above, the orders passed by the AO and the CIT(A), in so far as they are based on the utilization of alien seized material, which does not belong to the assessee, cannot be sustained.
7.3 In fine, it is concluded that on facts and in law the disallowance of additional payment is not justified."
12.2. The Ld. Sr. DR placed reliance upon the orders of the authorities below. It was his submission that there was no obligation on the assessee to make the payments accordingly the same could not be allowed as business expenditure.
13. We have heard the rival submissions and perused the material available on record. The case law relied upon by the parties has been taken into consideration. On a consideration of the same we are of the view that since in the facts of the present case the material issue is that the said expenditure was never claimed as assessee's business expenditure the occasion to make a disallowance of the same does not arise. On this fact there is no dispute as admittedly the expenditure was not claimed as an expense by the assessee and consequently has not been routed through its P&L A/c. In the circumstances, the occasion to make an addition of the same by way of a disallowance in these peculiar facts and circumstances of the case does not arise. The reasoning and finding given while considering the arguments qua Ground No-4 would fully apply here also. The difference that here the 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 herein also no such claim 18 ITA Nos. 1770, 1771, 2309, 1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development of expenditure has been made. The fact that the additional payments were warranted in order to avoid potential disputes amongst the claimants of 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. GroundNo-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. Ground No.3.1 and 3.2 as such need not be adjudicated in the present case. Qua Ground No-2 the observation and findings to the extent that general observations based on material found during BPTP group of companies which were searched does not have any bearing. The material not having been confronted to the assessee in the face of the argument that even otherwise has no nexus has not been rebutted by the Revenue by any evidence or argument as the thrust of the parties attention remained focused on addressing the additions made. In the afore-mentioned peculiar facts and circumstances taking cognizance of the fact that in the facts of the present case the CIT(A) makes a reference to facts not borne out from the record namely recording of statement of some patwari and Chotu Ram the support drawn by the CIT(A) in sustaining the addition is found to be misplaced. However since the specific additions under challenge have been addressed on facts and the legal position thereon Ground No-2 in terms of the above observation is left open for want of necessary evidences and arguments based on evidences.
19. Since the facts of the present case are similar to the facts involved in the aforesaid referred to case of M/s West Land Developers Pvt. Ltd.
19 ITA Nos. 1770, 1771, 2309,1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development Vs ACIT, so respectfully following the said order dated 22.08.2014. We do not see any merit in this ground of the departmental appeal.
20. In the departmental appeal for the assessment year 2008-09 in ITA No.2690/Del/2013. Vide Ground Nos. 1 & 2 same issues are involved as were in ITA No. 1533/Del/2013 for the assessment year 2007-08. Therefore, our findings given therein for the identical issues shall apply mutatis mutandis. In this appeal another issue vide ground no. 3 has been agitated by the Department which relates to the deletion of addition made by the AO, in view of the provisions of Section 2(22)(e) of the Act on account of deemed dividend.
21. As regards to this issue, Ld. Counsel for the assessee submitted that this issue is covered in favour of the assessee by the judgment of the Hon'ble Jurisdictional High Court in the case of CIT Vs. Ankitek Pvt. Ltd. reported at 11 Taxman.com 100 (copy of the said order was furnished which is placed at page nos. 123 to 142 of the assessee's paper book). The ld. DR in her rival submissions supported the order of the AO. After considering the submissions of both the parties and the material available on the record, it is noticed that the AO made the addition of Rs. 51,65,726/- u/s 2(22)(e) of the Act on account of advance received by other company of BPTP group. The assessee also belonged to the said group and Shri Kabul Chawala is having substantial interest in all the companies. The AO found that the assessee received advance 20 ITA Nos. 1770, 1771, 2309, 1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development from M/s Countrywide Promoters Pvt. Ltd. (a company of BPTP group) and treated the advance to the extent of accumulated profit of Rs. 51,65,726/- as deemed dividend u/s 2(22)(e) of the Act. The contention of the assessee before the AO was that the amount was an advance for the purpose of suitable land and that the said amount was shown in the balance sheet as current liability. However, the AO did not find merit in the submissions of the assessee and made the impugned addition. However, the ld. CIT(A) deleted the addition by following the judgment of the Hon'ble Jurisdictional High Court in the case of CIT Vs. Ankitek Pvt. Ltd. (2011) 11 Taxman.com 100 wherein at paras 25 to 27 it has been held as under:
"25. Further, it is an admitted case that under normal circumstances, such a loan or advance given to the shareholders or to a concern, would not qualify as dividend. It has been made so by legal fiction created under Section 2(22)(e) of the Act. We have to keep in mind that this legal provision relates to 'dividend'. Thus, by a deeming provision, it is the definition of dividend which is enlarged. Legal fiction does not extend to 'shareholder'. When we keep in mind this aspect, the conclusion would be obvious, viz., loan or advance given under the conditions specified under Section 2(22)(e) of the Act would also be treated as dividend. The fiction has to stop here and is not to be extended further for broadening the concept of shareholders by way of legal fiction. It is a common case that any company is supposed to distribute the profits in the form of dividend to its shareholders/members and such dividend cannot be given to non-members. The second category specified under Section 2(22)(e) of the Act, viz., a concern (like 21 ITA Nos. 1770, 1771, 2309, 1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development the assessee herein), which is given the loan or advance is admittedly not a shareholder/member of the payer company. Therefore, under no circumstance, it could be treated as shareholder/member receiving dividend. If the intention of the Legislature was to tax such loan or advance as deemed dividend at the hands of 'deeming shareholder', then the Legislature would have inserted deeming provision in respect of shareholder as well, that has not happened. Most of the arguments of the learned counsels for the Revenue would stand answered, once we look into the matter from this perspective.
26. In a case like this, the recipient would be a shareholder by way of deeming provision. It is not correct on the part of the Revenue to argue that if this position is taken, then the income 'is not taxed at the hands of the recipient'. Such an argument based on the scheme of the Act as projected by the learned counsels for the Revenue on the basis of Sections 4, 5, 8, 14 and 56 of the Act would be of no avail. Simple answer to this argument is that such loan or advance, in the first place, is not an income. Such a loan or advance has to be returned by the recipient to the company, which has given the loan or advance.
27. Precisely, for this very reason, the Courts have held that if the amounts advanced are for business transactions between the parties, such payment would not fall within the deeming dividend under Section 2(22)(e) of the Act."
22. Now the department is in appeal. After considering the submissions of both the parties and the material available on the record, it appears that the assessee had shown the impugned amount in its balance sheet as current liability which was received as an advance against the purchase of suitable land. The AO although invoked the provisions of Section 2(22)(e) of the Act but could not bring any 22 ITA Nos. 1770, 1771, 2309, 1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development material on record to substantiate that the amount in question was a loan or deposit and not the advance received from associates concern M/s Countrywide Promoters Pvt. Ltd.. We, therefore, by keeping in view the ratio laid down by the Hon'ble Jurisdictional High Court in the aforesaid referred to case of CIT Vs. Ankitek Pvt. Ltd. (supra), do not see any valid ground to interfere with the findings of the ld. CIT(A). In that view of the matter, we do not see any merit in this ground of the departmental appeal.
23. Now, we will deal with the cross appeals relating to the M/s Green Park Estate Pvt. Ltd. First we will deal with the departmental appeal in ITA No. 1672/Del/13 for the A.Y 2007-08. Following grounds have been raised in this appeal:
"1. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of Rs. 17,89,219 out of total addition of Rs. 35,78,438/-, 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. 7,00,000/- out of total addition of Rs. 27,40,625/-, made by the Assessing Officer in the 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 CIT(A) is erroneous and is not tenable on facts and in law."23 ITA Nos. 1770, 1771, 2309,
1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development
24. From the above grounds, it would be clear that the issues involved are identical to the issues involved in ITA No. 1533/Del/13 in the case of M/s Green Valley Housing and Land Development Pvt. Ltd for the assessment year 2007-08. Therefore, our findings given in the former part of this order in the aforesaid case, shall apply mutatis mutandis. In that view of the matter, we do not see merit in this appeal of the Department.
25. Now, we will deal with appeal of the assessee in ITA No. 1770/Del/2013. Following grounds have been raised in this appeal:
"1. That on the facts and circumstances of the case and in law the CIT(A) erred in rejecting appellant's contention that assessment order made by Assessing Officer was bad in law and void ab-initio on the ground that it ought to have been made u/s 153C of the Income Tax Act, and not, as was done u/s 143(3) of the Income Tax Act.
2. That without prejudice, on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the action of the Assessing Officer in relying upon the material seized in the case of search on M/s BPTP group of cases despite:-
i. That such material had no nexus/relevance with the case of the appellant and, ii. That, the CIT(A) himself holding that such material did not belong to the appellant.
3. That on the facts and circumstances of the case and in law the CIT(A) erred in holding to quote, 'that seized documents definitely prove that interest is paid on PDC' despite:-24 ITA Nos. 1770, 1771, 2309,
1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development i. That the seized record on the basis of which above finding was given, even according to his own finding by the CIT(A), did not belong to the appellant and, ii. That no enquiries were made from any of the alleged recipients of the interest and none was confronted with relevant document(s).
3.1 That the finding of the CIT(A) is based on mere surmises and conjectures without proof and corroboration by independent evidence.
3.2 That without prejudice the CIT(A) erred in upholding the addition of interest for the period for which PDC's were extended.
3.3 That without prejudice the CIT(A) erred in not quantifying the addition and instead giving ambiguous directions to compute the interest after six months from the date of sale.
4. That on the facts and circumstances of the case and in law the CIT(A) erred in not accepting the appellant's contention that Additional Payments having not been claimed as deduction by appellant, no disallowance could have been made in the hands of the appellant.
4.1 That without prejudice the CIT(A) erred in upholding the disallowance of Additional Payments made to the recipients who were not the owners of land and to the payment made in cash.
4.2 That without prejudice the CIT(A) erred in not himself quantifying the addition to be made.
5. That the orders passed by the Assessing Officer and Commissioner of Income Tax (Appeals)-XXXIII, New Delhi are bad in law and void ab-initio.25 ITA Nos. 1770, 1771, 2309,
1533, 1673 & 2690/Del/2013 Green Valley Housing & Land Development
6. The appellant craves permission to add, amend, alter or vary all or any grounds of appeal on or before the date of hearing of the appeal."
26. From the above grounds it would be clear that the issues involved are identical to the issues raised in ITA No. 1771/Del/2013 for the assessment year 2007-08 in the case of M/s Green valley Housing and Land Development Pvt. Ltd. (supra). The only difference is that in the appeal of this M/s Green Park Estate Pvt. Ltd. i.e. the present assessee, there is no issue relating to the disallowance u/s 40A(3) of the Act. Therefore, our findings given in the former part of this order in respect of ITA No. 1771/Del/2013 shall apply mutatis mutandis for this appeal.
27. In the result, the appeals of the assessees are partly allowed and that of the Department are dismissed.
(Order pronounced in the open Court on 24/04/2015).
Sd/- Sd/-
(G. C. Gupta) (N. K. Saini)
VICE PRESIDENT ACCOUNTANT MEMBER
Dated: 24/04/2015
*Subodh*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5.DR: ITAT
ASSISTANT REGISTRAR