Case Law Details
Brief of the Case
ITAT Delhi held In the case of Sunaina Tower Pvt. Ltd. vs. ACIT that the material issue is that the said expenditure was never claimed as 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.
Facts of the Case
ITA No. 1748 & 1252/Del/2013
Addition made on account of interest on Post Dated Cheques
The AO made the addition of Rs. 28,42,472/- on account of interest on Post Dated Cheques for the part payment of purchase of land. He calculated interest @ 15% per annum from the date of issue (sale deed) to the date of encashment of the cheque and made the addition in the hands of the assessee.
Disallowance on account of additional payments for purchase of land
The AO made a disallowance of Rs. 15,66,979/- on account of additional payments made for the purchase of land by observing that said payment was in violation of Stamp Duty Act and such expenditure was hit by explanation to Sec. 37(1) of the Act.
Contention of the Assessee
Addition made on account of interest on Post Dated Cheques
The ld Counsel for the assessee reiterated the contents of the grounds of appeal and at the very outset
stated that this issue is squarely covered vide order dated 31.10.2014 in ITA Nos. 1674 & 1765/Del/2013 for the assessment year 2008-09 in the case of M/s IAG Promoters and Developers Pvt. Ltd.
Disallowance on account of additional payments for purchase of land
The ld. Counsel for the assessee submitted that an identical issue having similar facts was involved in ITA No. 1752/Del/2013 in the case of M/s Westland Developers Pvt. Ltd. Vs ACIT wherein the issue has been decided vide para 13 of the order dated 22.08.2014. The said contention of the ld. Counsel for the assessee was not controverted by the ld counsel of the revenue.
Contention of the Revenue
Addition made on account of interest on Post Dated Cheques
The ld. DR although supported the order of the AO but could not controvert the aforesaid contention of the ld. Counsel for the assessee.
Held by CIT (A)
Addition made on account of interest on Post Dated Cheques
CIT (A) held that if it is not possible to work out the extension of PDCs in individual cases then the AO is directed to recompute interest of PDCs after six months from date of issue of PDCs i.e. date of sale.
Disallowance on account of additional payments for purchase of land
CIT (A) held that additional payment was made by the assessee to the seller of the land mainly on account of enhanced rate of land at the time of realization of PDCs and the said payment made to the owner of the land by way of account payee cheque was allowable as an expense u/s 37 and the additional payment made to others were not supported by any legal right over the land. Accordingly, the disallowance on those payments was confirmed as there was no business expediency.
Held by ITAT
Addition made on account of interest on Post Dated Cheques
It is noticed that an identical issue having similar facts has already been adjudicated by the ITAT Delhi Bench in the case of ACIT Vs M/s IAG Promoters and Developers Pvt. Ltd. ITA Nos. 1674 & 1765/Del/2013 vide order dated 31.10.2014. It was held that we do not find any infirmity in the order of the learned 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 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 Assessing Officer is directed to recomputed interest on PDCs after six months from the date of issue of the PDCs.
Since the facts of the present case are identical to the facts involved in the aforesaid referred to case of M/s IAG Promoters and Developers Pvt. Ltd. So, respectfully following the aforesaid referred to order dated 31.10.2014 we do not see any valid ground to interfere with the findings given by the CIT (A). Accordingly, we do not see any merit in the grounds of the assessee as well as the department, on this issue.
Disallowance on account of additional payments for purchase of land
It is noticed that an identical issue having similar facts has already been adjudicated in the aforesaid referred to case of M/s Westland Developers Pvt. Ltd. vide order dated 22.08.2014 in ITA No. 1752/Del/2013. In this case, it was held that 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.
So, respectfully following the aforesaid referred to order dated 22.08.2014 in the case of Westland Developers Pvt. Ltd. in ITA No. 1752/Del/2013. This issue is decided in favour of the assessee and against the Revenue.
Accordingly appeals disposed of.
