Income Tax Appellate Tribunal - Delhi
M/S. Impower Infrastructure Pvt. Ltd., ... vs Acit, New Delhi on 18 May, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "C", NEW DELHI
BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER
AND
SMT. BEENA A. PILLAI, JUDICIAL MEMBER
ITA No.6637/Del/2014
Assessment Year : 2011-12
Impower Infrastructure Pvt. Ltd., ACIT, Central Circle- 23,
M-11, Middle Circle, New Delhi.
Vs.
Connaught Circus, New Delhi.
PAN : AACCI2039N
(Appellant) (Respondent)
ITA No.6818/Del/2014
Assessment Year : 2011-12
DCIT, Central Circle- 32, Impower Infrastructure Pvt. Ltd.,
New Delhi. M-11, Middle Circle,
Vs.
Connaught Circus, New Delhi.
PAN : AACCI2039N
(Appellant) (Respondent)
Assessee by : Shri Piyush Kaushik, Adv.
Department by : Smt. Meeta Singh, CIT-DR
Date of hearing : 05-04-2018
Date of pronouncement : 18-05-2018
ORDER
PER R. K. PANDA, AM :
These are cross-appeals. The first one is filed by the assessee and the second one filed by the Revenue and are directed against the order 2 ITA No.6637/Del/2014 ITA No.6818/Del/2014 dated 05.08.2014 of CIT(A)- XXXIII, New Delhi relating to assessment year 2011-12. For the sake of convenience, these were heard together and are being disposed of by this common order.
2. Facts of the case, in brief, are that a search and seizure operation was carried out at various premises of M/s BPTP Ltd. and its group concerns and associated persons on 07.12.2010 which was finally concluded on 05.02.2011. The assessee is associated with BPTP group of cases. It filed its return of income on 12.08.2011 declaring total income at Rs.42,800/-. The Assessing Officer during the course of assessment proceedings observed that in BPTP and some of its group companies first search & seizure operation was carried out on 15.11.2007. During the earlier assessment proceedings u/s 153A of the I.T. Act, it was very well proved that the assessee used to pay part payments of the sale consideration in respect of the land purchased at the time of execution of the sale deed and the payments of balance sale consideration were invariably made through Post Dated Cheques (PDCs) and for the intervening period i.e. period between the date of sale deed and the date of encashment of PDCs interest was paid in cash to the vendors of the land by the vendee company on 3 ITA No.6637/Del/2014 ITA No.6818/Del/2014 monthly basis @ 1.25% per month on the amount of PDCs and this cash payment of interest by the vendee company was not accounted for by it in its books of account. He observed that the addition on this ground has been made in several group companies of the BPTP group during the course of earlier assessment proceedings u/s 143(3)/148/153A of the I.T. Act in consequence to search carried out on 15.11.2007.
3. He, therefore, asked the assessee to explain as to why the addition should not be made on PDCs in view of the orders of the Department in the group concerns, which were framed u/s 153A/153C/143(3)/148 of the I.T. Act. Rejecting the various explanations given by the assessee, the Assessing Officer made addition of Rs.38,06,534/- to the total income of the assessee.
4. In appeal, the ld. CIT(A) gave part relief to the assessee by observing as under :-
"Decision:-
I have considered the assessment order, written submission and arguments of Ld.AR.
The addition has been made by the Ld. assessing officer on account of unaccounted payment of interest payment on post dated cheques on the basis of findings of search in BPTP group of cases conducted on 15.11.2007 that BPTP group is engaged in payment of unaccounted interest on post dated cheques given for acquisition of land.4 ITA No.6637/Del/2014 ITA No.6818/Del/2014
I have heard many appeals in BPTP group of cases. On this issue my findings after considering the evidential value of seized documents as a result of search was that the BPTP group of companies are paying unaccounted interest payment on post dated cheques wherever the same get extended for the period of extension & if such period of extension cannot be ascertained then unaccounted interest payment on PDCs should be computed after six month from date of conveyance deed. Such findings in the case M/s Business Park Promoters (P) Ltd. being one of BPTP group of companies A.Y. 2006-07 in ITA no 521/09-10/309 dt.24.12.2012 is reproduced as under:-
Learned AR has been maintaining all along that interest is not paid as all the receipts are only memorandum only. Analysis of these above seized document reveals that these seized documents definitely proves that interest is paid on PDCs. Various vouchers in seized documents conclusively proves that the recipient has signed on voucher for receipt of the interest. Ld AR 's contention that these are only working of interest claimed by seller for putting up before senior management does not appear to be convincing. In case of claim, the receiver will not sign the voucher as recipient. Amounts are specific and calculation is 15% per annum. Therefore, Ld. AR without conceding that the interest is paid on PDCs has taken the stand that in none of the seized material, i.e. even in receipt seized, the interest is from date of issue of PDCs. Now issue arises whether interest on PDCs are paid from date of issue or for extension of PDCs. Documents discussed above where there is clear evidence of receipt of interest is for extension of period of PDCs. Ld. AR's arguments that calculation of interest on PDCs has been considered while entering into agreements holds some logic. But when dates of PDCs are extended, the recipient will definitely ask and settle for some additional compensation in form of interest. There is no evidence which proves that interest is paid from the date of sale to date of encashment of post dated cheques. However, there is concrete evidence in form of seized material to show that interest is paid and received by seller on the extension of PDCs as discussed above while analyzing the seized document. Therefore, in my view where ever the dates of PDCs are extended interest 5 ITA No.6637/Del/2014 ITA No.6818/Del/2014 is paid @ 15% per annum in cash out of Books of accounts. Which are evident from seized material. Therefore, interest on P DCs to the extent of extension period appears to quite reasonable and logical. Accordingly, interest on PDCs either as sale consideration or additional payment may be recomputed to the extent of extended period of PDCs by the A.O. and to that extent addition is confirmed. The above formulae will apply to all group companies under the management of BPTP i.e.( M/s BPTP and Associate companies) including the appellant company as evidence is found in respect of various companies of BPTP and some seized paper could not be related to specific company. Therefore, it is proper to apply this formula for all companies under the common management of BPTP Group, head by Shri Kabul Chawla. All these companies are closely linked. Some companies purchase land and transfer the same to M/s BPTP Ltd, or Countrywide Promoters (P) Ltd. for Housing or commercial projects are ultimately developed and sold by M/s BPTP Ltd and Countrywide Promoters Ltd. or in stray case by some other companies. Assessing Officer has applied the case of Eusuf Ali for applying interest on PDCs for all companies of BPTP Group for all Assessment Year under consideration. Ld AR has tried to differentiate the above cited case on facts. In my view, as interest payment on extension of period of PDCs are established on numerous seized documents. A trend is established for the group as the overall management is controlled by one person Sh. Kabul Chawla and activities of all companies are interrelated. If it is not possible to work out the extension of PDCs in each case then A.O. is directed to recomputed interest on PDCs after six months from date of issue of PDCs i.e. date of sale, as six months is taken as reasonable period for giving PDC as per sale deed. This view is formed on the basis the statement of Sh. Chhotu Ram which says that normally PDCs are given for 8 to 10 months. Further Ld AR has also submitted few Sale Deed in respect of some of Seized record in the case of Ramvati Beero etc where the interest working is made after 9/ 15 months. Taking these facts into consideration. It would be proper to compute interest after 6 months from date of Sale on conservative side. Accordingly this ground is partly allowed.6 ITA No.6637/Del/2014 ITA No.6818/Del/2014
The Ld. AR has made submission on similar lines in earlier BPTP group of cases. He has only another ground that addition cannot be made in subsequent assessment year on the basis of findings of earlier assessment.
I have considered this argument. The same is not acceptable as I have given the findings not on the basis of seized document alone but also considering the fact that at the time of entering the conveyance deed, there may be agreed consideration in form of post dated cheques & calculation of interest is inherent while computing the consideration. However, if such period for post dated cheques are extended, the seller of the land would definitely demand compensation for the delay. Therefore, logic while passing appellate order for earlier A.Y. still hold good.
Accordingly, I direct the assessing officer to compute unaccounted interest on post dated cheques given to the farmer on similar lines as given my findings in ITA no. 412/09-10/265. Accordingly, this ground of appeal is partly allowed."
5. The Assessing Officer similarly made addition of Rs.1,00,000/- u/s 40A(3) of the I.T. Act on the ground that the assessee company has made payment of Rs.1,00,000/- in cash to various farmers from whom land has been purchased, which is in contravention of provisions of section 40A(3) of the I.T. Act. The explanation of the assessee that the sum paid towards purchase of the land was not expenditure in the hands of the assessee and was not claimed as deduction and that such land was not stock in trade in the hands of the assessee and that the entire expenditure incurred on 7 ITA No.6637/Del/2014 ITA No.6818/Del/2014 purchase of land was reimbursed to the assessee by M/s Countrywide Promoters Pvt. Ltd. was rejected by the Assessing Officer.
6. In appeal, the ld. CIT(A) sustained the addition of Rs.1,00,000/- made by the Assessing Officer u/s 40A(3) by observing as under :-
"5.3 Decision:-
I have considered the assessment order written submission and arguments of Ld. AR on this issue. The facts & circumstances are similar to various cases of BPTP Group for disallowance of additional payment. I have decided various appeals in BPTP group of cases. The findings of in one of appeal namely in the case of M/s Business Park Promoter Pvt. Ltd (Appeal No.521/2009-10/309 dated 24.12.2012) for the AY 2006-07 is as under:-
I have considered the assessment order, argument of Ld. AR. To decide the issue of disallowability u/s 40A (3) pointed out by learned AR, It is proper to examine the terms of collaboration agreement and facts of the case. The appellant purchases the land from various farmers/ land owners in its own name by entering into sale deed. Registration is done in the name of appellant. The payment is made by appellant. As per the collaboration Agreement, the appellant company would acquire the land and transfer 100% of its development right to M/s CWPPL. The appellant company is shown as owner of the land. In lieu of transferring the development right, the appellant company gets cost of land plus Rs. 35,000 per acre for CWPPL. This being the case, what is transferred is the development right, the ownership remains with appellant. Therefore, it is difficult to accept the Ld AR's contention that the cost of land is reimbursed by CWPPL. If the land would have been sold to CWPPL, view might have been that the appellant is only working as an agent of CWPPL and expenditure pertains to CWPPL and the appellant is only receiving the cost of land as reimbursement of expenditure. I agree with the finding of A.O. that ownership continues with the appellant and only 8 ITA No.6637/Del/2014 ITA No.6818/Del/2014 developmental right is transferred to CWPPL. In that scenario, the appellant company can be safely termed as engaged in the business of development of real estate. What he receives i.e. cost of land and Rs. 35,000 per acre in receipt in its hand for the transfer of development right and the payment for purchase of land is its expenditure. On these facts, in my opinion the payment made to land owner is expense in appellants hand and entire receipts including cost of land plus Rs. 35,000 per acre is revenue receipt in its hand. As cost of land is an expenditure in appellant's hand, section 40A(3) is applicable, as the expenditure has been incurred. This expenditure is not claimed explicitly in its Profit & Loss ale as the receipt and payment to the same extent gets squared up to the extent of cost of land. This accounting treatment cannot override the true nature of transaction. It is settled law that the provision of Income Tax Act would prevail over the system of accounting. Reliance is placed on Hon'ble Supreme Court decision in the case of Tuticorin Alkalies Chemicals and Fertilizers Ltd. Vs CIT, (1997) 227 ITR 0172.
5.3.1 In view of the above position judicial pronouncement relied upon by Ld. AR on all three counts are not applicable namely.
1. Expenditure is not incurred by appellant, therefore section 40A (3) does not apply.
2. Such payment is not claimed as expenditure in its Profit & Loss Ale. As there is no claim of expenditure, See 40A (3) does not apply.
3. Written agreement of collaboration agreement cannot be overtaken by oral evidence.
It may be stated that terms of collaboration agreement has not be overridden by A. O.. He has only analyzed the terms of the agreement, and by analyzing the term of agreement, he has given the finding that appellant is in the business of acquiring land and its development through CWPPL and therefore, payment made to farmer/seller of land is an expenditure in applicant's hand. Accordingly Section 40A (3) is applicable.
9ITA No.6637/Del/2014 ITA No.6818/Del/2014
After considering entire facts and circumstances of the case, I uphold the addition made by Assessing Officer; therefore, this ground of appeal is hereby dismissed.
As the facts & circumstances are similar and the argument of Ld. AR is also on same line, following my own above decision, I hereby confirm the addition made. This ground of appeal is dismissed."
7. Aggrieved with such order of the ld. CIT(A), the assessee as well as the Revenue are in appeal before the Tribunal by raising the following grounds.
ITA No.6637/Del/2014 (By Assessee) :
"1. That the order passed by the Assessing Officer and Commissioner of Income Tax (Appeals)-XXXIII, New Delhi are bad in law and void ab- initio.
2. That on the facts and circumstances of the case and in law the CIT(A) has erred in holding that wherever the date of PDCs are extended, interest is to be taken to have been paid @ 15% p.a in cash outside the books of account and is to be treated as undisclosed income. 2.1 That the CIT(A) erred in utilizing the material seized in the course of search on BPTP group of cases (excluding appellant) on 15.11.2007 which neither belong to the appellant nor relate to period under consideration.
2.2 That the CIT(A) erred in utilizing the aforesaid seized material in the course of present assessment, when such material could not have been even utilized because of limitation having been set in. 2.3 That neither enquiries were made from any of the alleged recipients of the interest nor anyone was confronted with the relevant document(s).10 ITA No.6637/Del/2014 ITA No.6818/Del/2014
2.4 That the addition was unwarranted being based on merely surmises and conjectures without proof and corroboration by independent evidence.
3. That on the facts and circumstance of the case and in law the CIT(A) erred in sustaining the disallowance of Rs.1,00,000/- u/s 40A(3) of the IT Act despite the fact that neither the said amount was debited to Profit and Loss account nor deduction in respect of said sum was claimed in the computation of income from business.
4. 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."ITA No.6818/Del/2014 (By Revenue) :
"1. On the facts and in the circumstances of the case the CIT(A) has erred in directing the AO to compute the interest based on post dated cheques from the date after the six months of issue of such post dated cheques.
2. The order of the CIT(A) is erroneous and is not tenable on facts and in law.
3. The appellant craves leave to add, alter or amend any/all of the grounds of appeal during the course of the hearing of the appeal."
8. Ground no.1 and 4 by the assessee being general in nature are dismissed.
9. Similarly ground no.2 and 3 by the Revenue being general in nature are dismissed.
11ITA No.6637/Del/2014 ITA No.6818/Del/2014
10. So far as ground no.2 to 2.4 by the assessee and ground no.1 by the Revenue are concerned, they relate to the part relief given by the ld. CIT(A) on account of interest and PDCs.
11. The ld. counsel for the assessee submitted that pursuant to the seized material etc. found during the course of search conducted on BPTP on 15.11.2007, the Assessing Officer found that the assessee was following similar business module and must have paid interest on PDCs. He submitted that the ld. CIT(A) following the decision in the case of M/s Business Park Promoters Pvt. Ltd. for assessment year 2006-07 directed the Assessing Officer to compute the interest on PDCs after a period of six months from the sale deed. He accordingly sustained the amount of Rs.2,98,851/- and deleted the balance addition.
12. He further submitted that the Assessing Officer in the assessment order has referred only to the material seized during the search on 15.11.2007 whereas the assessee company was incorporated on 30.12.2009, a fact submitted before the Assessing Officer and the ld. CIT(A) and not controverted by the Revenue. Therefore, when the assessee company was not even in existence, the seized material found in 12 ITA No.6637/Del/2014 ITA No.6818/Del/2014 the course of first search has absolutely no co-relation with the assessee company. Referring to the seized material found during the course of search, he submitted that these documents do not belong to or relate to the assessee and none of the documents relate to the impugned assessment year. Therefore, when these seized documents have no relation whatsoever with the assessee company and even during the second search, no adverse material of any sort pertaining to the assessee company was recovered giving any indication i.e. assessee company is paying interest on the PDCs beyond six months from the date of sale deed out of the books of account, no addition could have been made. Therefore, the order of the ld. CIT(A) sustaining an amount of Rs.2,92,851/- is not justified. He submitted that the addition sustained by the ld. CIT(A) is totally based on surmises and conjectures and hence should be deleted.
13. Referring to the decision of the Hon'ble Supreme Court in the case of Dhirajlal Girdharilal vs. CIT reported in 26 ITR 736, he submitted that the Hon'ble Supreme Court in the said decision has held that mere existence of reason for suspicion would not tantamount to evidence. Referring to the decision of the Hon'ble Supreme Court in the case of 13 ITA No.6637/Del/2014 ITA No.6818/Del/2014 Lalchand Bhagat Ambica Ram vs. CIT reported in 37 ITR 288, he submitted that the Hon'ble Supreme Court in the said decision has held that findings based on suspicions, conjectures and surmises without any basis cannot be upheld.
14. Referring to the decision of the Hon'ble Delhi High Court in the case of Pr.CIT vs. Meeta Gutgutia reported in 395 ITR 526, he submitted that the Hon'ble High Court in the said decision has held that any and every document cannot be and is not an incriminating document. It was held that no addition can be made for a particular assessment year without there being an incriminating material qua that assessment year which would justify such an addition.
15. Ld. counsel for the assessee submitted that the ld. CIT(A) following the decision in the case of M/s Business Park Promoters Pvt. Ltd. for assessment year 2006-07 has directed the Assessing Officer to compute interest on PDCs after a period of six months from the date of conveyance deed. He submitted that the Co-ordinate Benches of the Tribunal in the group cases have consistently approved similar finding of the ld. CIT(A). He submitted that the decision in the case of M/s Business Park Promoters 14 ITA No.6637/Del/2014 ITA No.6818/Del/2014 Pvt. Ltd. for assessment year 2006-07 passed by the ld. CIT(A) has been approved by the Tribunal vide ITA No.1404/Del/2013 and ITA No.1732/Del/2013 order dated 20.04.2015 for assessment year 2005-06. Following this decision, the Tribunal in various other group concerns has also taken similar view and the order of the ld. CIT(A) has been upheld. He accordingly submitted that the grounds raised by the Revenue should be dismissed and the grounds raised by the assessee should be allowed.
16. The ld. DR on the other hand heavily relied on the order of the Assessing Officer. He submitted that the Assessing Officer has clearly brought out the business module followed by the assessee wherein the assessee used to pay interest on PDCs in cash to the vendors of the land on monthly basis at the rate of 1.25% per month. He accordingly submitted that the order of the ld. CIT(A) giving partial relief to the assessee by reversed and that of the Assessing Officer be restored.
17. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the ld. CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer on the 15 ITA No.6637/Del/2014 ITA No.6818/Del/2014 basis of material found during the course of search conducted on BPTP group of cases on 15.11.2007 formed the opinion that the assessee is making payment of interest on PDCs for which he made addition @ 1.25% per month on PDCs from the date of sale deed till the encashment of PDCs on the premises that the interest must have been paid out of the books. He accordingly made addition of Rs.38,05,534/-. While doing so, the Assessing Officer followed the decision in the case of M/s Business Park Promoters Pvt. Ltd. for assessment year 2006-07. While following the above decision, he noted that although the ld. CIT(A) has given part relief to the said assessee, however, the said decision has not been accepted by the Department and appeal is pending before the Tribunal. We find the ld. CIT(A) following his decision in the case of M/s Business Park Promoters Pvt. Ltd. for assessment year 2006-07 directed the Assessing Officer to compute the interest on the PDCs after a period of six months from the sale deed, as a result of which only an amount of Rs.2,92,851/- was sustained and the balance amount was deleted.
18. So far as relief granted by the ld. CIT(A) is concerned, we find the Tribunal in the case of M/s Business Park Promoters Pvt. Ltd. vide ITA 16 ITA No.6637/Del/2014 ITA No.6818/Del/2014 No.1404/Del/2013 and 1732/Del/2013 order dated 20.04.2015 for assessment year 2006-07 has decided the issue and the grounds raised by the Revenue have been dismissed. The relevant observation of the Tribunal at para 7 and 8 of the order reads as under :-
"7. We have heard the rival submissions and perused the material on record. The ground raised by the Revenue is misconceived because the CIT(A) has not deleted the addition of Rs.40,22,546/-. The CIT(A) has only directed the A.O. to recomputed the interest on post dated cheques after six months from the date of issue of PDCs. In the group case an identical/similar order of the CIT(A) was confirmed by the Co-Ordinate Bench of the Tribunal in the case of M/s IAG Promoters and Developers Pvt. Ltd. (supra). The relevant finding of the Hon'ble Co-Ordinate Bench of the Tribunal reads as follows.
"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 A.O. to recomputed 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 A.O. 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 17 ITA No.6637/Del/2014 ITA No.6818/Del/2014 Rs.5,06,625/- made by the A.O. 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 ld.CIT(A) in this regard and accordingly, we reject ground no.1 of the revenue's appeal."
8. In view of the Co-Ordinate Bench order of the Tribunal in the group concern of the assessee in the case of M/s IAG Promoters and Developers Pvt. Ltd. (supra), we hold that the CIT(A)'s order is correct and no interference is called for. It is ordered accordingly."
19. We further find the Tribunal in the case of M/s IAG Promoters and Developers Pvt. Ltd. vide ITA No.1674/Del/2013 and ITA No.1765/Del/2013 order dated 31.10.2014 for assessment year 2008-09 and in the case of M/s Countrywide Promoters Pvt. Ltd. (supra) has taken similar view and the appeal filed by the Revenue on this issue has been dismissed. Therefore, respectfully following the decisions of the Co- ordinate Benches of the Tribunal in the case of sister concern, we do not find any infirmity in the order of the ld. CIT(A). Accordingly, the ground raised by the Revenue is dismissed.
18ITA No.6637/Del/2014 ITA No.6818/Del/2014
20. Now, coming to the amount sustained by the ld. CIT(A) is concerned, it is a matter of fact that the assessee company was incorporated on 30.12.2009 which is much after the past date of search i.e. 15.11.2007. Similarly, during the course of second search that has taken place on 07.12.2010 and concluded on 05.02.2011, we find none of the documents belong to the assessee or relate to the assessee. Similarly, none of the seized documents also belong to assessment year 2011-12 and no notice u/s 153C has been issued. We, therefore, find merit in the submission of the ld. counsel for the assessee that when the assessee company was not in existence at the time of first search and when none of the documents found during the course of second search belonged to the assessee and considering the fact that the Assessing Officer in the assessment order has not referred to any seized material found during the course of second search pertaining to assessee company which gave any clue even in a remotest manner with respect to payment of interest on PDCs out of books beyond six months from the sale deed, no addition could have been sustained. The decisions relied on by the ld. counsel for the assessee also support its case that addition cannot be made for a 19 ITA No.6637/Del/2014 ITA No.6818/Del/2014 particular year without there being any incriminating material qua that assessment year which would justify such addition. Accordingly, the ground raised by the assessee is allowed.
21. Ground no.3 by the assessee relates to addition of Rs.4,50,000/- u/s 40A(3) by the Assessing Officer which has been sustained by the CIT(A).
22. The ld. counsel for the assessee at the outset filed a copy of the order of the Tribunal in the case of M/s Countrywide Promoters Pvt. Ltd. vs. ACIT vide ITA No.6303/Del/2013 and ITA No.6342/Del/2013 order dated 11.09.2017 for assessment year 2006-07 and submitted that under identical circumstances, the addition made u/s 40A(3) by the Assessing Officer and sustained by the ld. CIT(A) has been deleted. Since in the instant case also when the assessee has not claimed any such expenditure in the Profit & Loss Account nor debited such amount to the Profit & Loss Account, therefore, no addition is called for.
23. The ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the ld. CIT(A) and submitted that since the assessee has violated the provisions of section 40A(3), therefore, ld. CIT(A) was rightly justified in sustaining the addition made by the Assessing Officer. 20 ITA No.6637/Del/2014 ITA No.6818/Del/2014
24. After hearing both the sides, we find identical issue had come up before the Tribunal in the case of M/s Countrywide Promoters Pvt. Ltd. (supra), a sister concern of the assessee. The Tribunal following the decision of the Co-ordinate Bench of the Tribunal in the case of M/s Westland Developers Pvt. Ltd. vide ITA No.1752/Del/2013 order dated 22.08.2014 for the assessment year 2006-07 deleted the addition made by the Assessing Officer and sustained by the ld. CIT(A) u/s 40A(3) of the I.T. Act. The relevant observation of the Tribunal from para 10.4 onwards reads 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 judgement 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 judgement 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 judgement to the issue at hand. We have taken ourselves through the said judgement 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 judgements relied upon before the 21 ITA No.6637/Del/2014 ITA No.6818/Del/2014 CIT(A) and also before us which have been discussed in the earlier part of this order no arguments have been advanced by the Revenue so as to contend how they are not applicable to the case at hand, no distinguishing fact, circumstance or position of law has been relied upon so as to come to a contrary finding than the one arrived at. Accordingly on a consideration of the peculiar facts and circumstances of the case and the judgements relied upon considering the relevant provision of the Act namely Section 40A(3), we hold for the detailed reasons given hereinabove that Section 40A(3) of the Act has been wrongly invoked as admittedly no expenses relatable to the addition has been claimed and the assessee has successfully demonstrated that the payment were reimbursement made by CWPPL. Accordingly Ground No.4 is allowed. "
10.5 As facts of case of assessee are similar and identical to the various cases decided by coordinate benches of Tribunal, New Delhi details of which are given above where similar disallowance by following the order in case of M/s Westland Developers Pvt. Ltd. (supra) as aforesaid is deleted by various coordinate benches of the Tribunal, New Delhi, the ground No. 5 is allowed and disallowance of cash payment made under section 40A(3) is deleted as assessee has not claimed any deduction in respect of cash payment made."
25. The facts in the instant case are identical to the facts of the case decided by the Tribunal. Therefore, respectfully following the decision of the Co-ordinate Bench of the Tribunal, we delete the disallowance of Rs.4,50,000/- made by the Assessing Officer u/s 40A(3) which has been 22 ITA No.6637/Del/2014 ITA No.6818/Del/2014 sustained by the ld. CIT(A). The ground no.3 raised by the assessee is accordingly allowed.
26. In the result, the appeal filed by the assessee is allowed and the appeal filed by the Revenue is dismissed.
Order pronounced in the open Court on this 18th May, 2018.
Sd/- Sd/-
(BEENA A. PILLAI) (R. K. PANDA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 18-05-2018.
Sujeet
Copy of order to: -
1) The Appellant
2) The Respondent
3) The CIT
4) The CIT(A)
5) The DR, I.T.A.T., New Delhi
By Order
//True Copy//
Assistant Registrar
ITAT, New Delhi