M/S. GITANJALI PROMOTERS PVT. LTD.,NEW DELHI vs. ACIT, NEW DELHI
In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that a consistent view has been taken by the Tribunal in similar matters in favor of the assessee. Therefore, the addition made on account of Section 40A(3) was directed to be deleted.
What were the facts?
The assessee made a cash payment of Rs. 2 Lacs for land acquisition, which was disallowed by the Assessing Officer and confirmed by the CIT(A) under Section 40A(3) of the Income Tax Act. The assessee argued that the payment was a reimbursement and not debited to the P&L account.
What were the issues?
Whether the disallowance under Section 40A(3) for cash payments made for land acquisition is justified when the assessee claims it was a reimbursement and not debited to the P&L account.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH: ‘ C’ NEW DELHI
ORDER PER K. NARASIMHA CHARY, JM:
Aggrieved by the order dated 27/6/2014 in appeal No. 161/2013-14/1312 passed by the learned Commissioner of Income Tax (Appeals)-XXXIII, New Delhi (“Ld. CIT(A)”), for the assessment year 2010-11, M/s GeethanjaliPromoters Private Limited (“the assessee”) filed this appeal in respect of the additions made on account of the interest on the post dated cheques in cash outside the books of accounts and also Rs. 2 Lacs under section 40 A (3) of the Income Tax Act, 1961 (for short “the Act”). During the course of arguments, Ld. AR, however, not pressed the ground relating to the interest on PDCs and proceeded to argue only the ground relating to the addition of Rs. 2 Lacs under section 40A(3) of the Act.
Brief facts of the case in this respect are that there was a search and seizure operation at the various premises is of BPTP Ltd and its group concerns and associated persons, with which the assessee is also associated, on 7/12/2010 and concluded on 5/02/2011. Pursuant to the notice issued under section 153A of the Act on 11/01/2012, assessee filed return of income on 30/01/2012 declaring a total loss of Rs. 7, 651/-. During the course of assessment, among other things, learned Assessing Officer noticed that the assessee company had acquired various lands from farmers; and that on perusal of the details of payments made by the assessee company for acquiring the land from farmers/villagers, the assessee made payments of total sale consideration of Rs. 2 Lacs in cash in contravention of section 40A(3) of the Act. Assessee submitted that the land was not purchased as stock in trade; that the transaction was the reimbursement to the assessee by M/s Countrywide Promoters Private Limited (CWPPL); that there is no income element involved in this transaction; that no expenditure incurred on purchase in cash was debited to the P&L Account of the assessee and, therefore, the assessee never claimed the same; and that the reimbursement of cost for the purchase of land and payment of Rs. 35,000/-per acre farm separate the constituents of the collaboration agreement.
Learned Assessing Officer, while following the decision of the Ld. CIT(A) in the case of Business Park Promoters Private Limited in appeal No. 521/2009-10/309 by order dated 24/12/2012 held that such payment in contravention of section 40A(3) of the Act has to be disallowed, and accordingly he disallowed it and added it back to the income of the assessee.
When the assessee preferred appeal before the Ld. CIT(A), the Ld. CIT(A) also placed reliance on his decision in the case of Business Park Promoters Private Limited for the assessment year 2006-07 and confirmed the addition. Assessee is therefore before us in this appeal.
Ld. AR submitted that both the authorities below based their findings on the decision of the Ld. CIT(A) in the case of Business ParkPromoters Private Limited for the assessment year 2006-07 and a coordinate Bench of this Tribunal while following the decision of another coordinate Bench in the case of Westland developers Pvt. Ltd vs. ACIT in /Del/ 2013 order dated 22/08/2014 held the issue in favour of the assessee in Business Park Promoters Private Limited for the assessment year 2006-07 and therefore the very basis for the addition is not available for the Revenue to rely upon. He further submitted that the decision of Business Park Promoters Private Limited (supra) and Westland developers Pvt. Ltd (supra) of the coordinate Benches of this Tribunal are followed subsequently in a number of similarly placed matters.
Ld. DR placed reliance on the orders of the authorities below on this aspect, but does not dispute the submissions made by the Ld. AR as to the Tribunal holding the issue against the Revenue in Westland developers Pvt. Ltd (supra) and Business Park Promoters Private Limited (supra).
It is therefore, clear that a consistent view has been taken by the Tribunal in a number of matters under similar facts in favour of the assessee and the Revenue is not disputing the same. In the absence of any change in the facts or law, it is not possible for us to take a different view or to disturb the consistent view taken by the Tribunal. With this view of the matter we hold the issue in favour of the assessee and direct the learned Assessing Officer to delete the addition on account of section 40A(3) of the Act.
In the result, appeal of the assessee is allowed.
Order pronounced in the Open Court on 08.09.2020.
More judgments on Section 40A(3)
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- Saiyed Zaharul Alam, Murshidabad vs I.T.O., Ward - 42(1), MurshidabadITA 2233/KOL/2026[2013-2014]Status: Disposed16 Oct 2026AY 2013-2014
- M/S Sadana Electric Store, Lucknow vs DCIT Range-6, LucknowITA 283/LKW/2024[2014-15]Status: Disposed30 Sept 2026AY 2014-15
- Nagendra Prasad, Patna vs ITO Ward -5(3) Patna, Dak BanglowITA 362/PAT/2026[2016-17]Status: Disposed29 Sept 2026AY 2016-17
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