COMMISSIONER OF INCOMET TAX (C) - III vs. M/S VANSHIDAR PROJECTS PVT. LTD.

IN THE HIGH COURT OF DELHI AT NEW DELHI . ITA 450/2013 . . . COMMISSIONER OF INCOMET TAX (C) ? III ..... Appellant . Through: Mr.N.P.Sahni, Advocate . . . versus . . . M/S VANSHIDAR PROJECTS PVT. LTD. ..... Respondent . Through: None. . . . CORAM: . HON'BLE MR. JUSTICE SANJIV KHANNA . HON'BLE MR. JUSTICE SANJEEV SACHDEVA . O R D E R . 07.10.2013 . . . The finding of the first appellate authority and the Tribunal is . that Rs.1,92,00,000/- (wrongly taken by the assessing officer as Rs.2,28,00,000/-) was not claimed as an expenditure in the profit and loss account and, therefore, Section 40A(1) is not applicable. The said factual position, has not been disputed. Copy of the profit and loss account to contest the said finding has not been filed. The issue is not whether payment in cash was made to purchase, stock in trade but whether any expenditure was claimed. Section 40A(1) cannot be applied if no expenditure is claimed to reduce profits in profit and loss account. . In fact, interest of the revenue is fully protected in view of the observations/directions stated in the last few lines of the first appellate authority. The same reads as under: . . . ? However, as and when the investment made by way of advance to farmers for purchase of land is treated as part of ?work, in progress stock in trade? it would be a logical corollary that the said value of ?work in progress stock in trade? would have to be reduced by 1/5th of the total cash payment made during the year (FY 2006-07) for Rs.1,92,00,000/- which works out to Rs.38,40,000/-. Subject to the above direction the addition made to income during this year for Rs.45,60,000/- is directed to be deleted.? . . . The assessee has accepted the said directions and did not prefer any appeal to the Tribunal. . There is no merit in the present appeal which is misconceived. . Appeal is dismissed in limine. . . . . . SANJIV KHANNA, J . . . . . . . SANJEEV SACHDEVA, J . OCTOBER 07, 2013/sv . . . $ 3 .