ACIT, Circle-9(2), New Delhi Vs. Four Star Constructions Pvt. Ltd.

Case snapshot

Sections / provisions: 68/69C; 68; 69C

Questions before the Court / Tribunal

• Section 68/69C type additions in construction company: deletion based on evidentiary record and nature of transactions.
• What factual, statutory and procedural conditions control the relief?
• How does the operative order apply to the parties and the challenged proceeding?

Material facts and procedural background

THE INCOME TAX APPELLATE TRIBUNAL DELHIBENCH ‘B’, NEW DELHI Before Smt Diva Singh, Judicial Member Dr. B. R. R. Kumar, Accountant Member ITA No. 9367/Del/2019 : Asstt. Year: 2012-13 ACIT, Vs. Four Star Constructions Pvt. Ltd., Circle-9(2), 21, Furniture Block, Kirti Nagar, New Delhi-110002 New Delhi-110015 (APPELLANT) (RESPONDENT) PAN No. AAACF8278L

Assessee by : Sh. Sanjay Agarwal, CA & Sh. Rajat Vaishnaw, Adv. Revenue by : Sh. Ram Krishna Meena, Sr. DR Date of Hearing: 05.04.2023 Date of Pronouncement: 11.04.2023

4. The undisputed fact before us is that the assessee has indeed paid to M/s. Sewa International Fashions Ltd. a related entity. Thus, the assessee is not a recipient but payer of the loan.

5. Hence, as per the provisions of Section 2(22)(e) of Income Tax Act, the assessee was not liable to tax.

8. During the year, the assessee has entered into an agreement with M/s A B Multiples Pvt. Ltd. to jointly maintain the building. Both the parties have agreed to open joint account for meeting the maintenance expenses. The auditor has pointed out in the audit report that in the absence of records and books of account we are unable to comment of the deduction and deposit of TDS on account of maintenance expenses amounting

Appellant / assessee submissions

In this regard, it is submitted that the appellant had jointly developed a property alongwith M/s. AB Multiplex Pvt. Ltd. And the above expenses, so claimed represents 50% share of the appellant in the total common area maintenance expenses incurred by the corresponding partner being M/s. AB Multiplex Pvt. Ltd. As desired copy of agreement for Joint Development, Ownership & Maintenance between the appellant and M/s AB Multiplex Private Limited (Refer Point 16(a) & 16(b) at Page 10 of the agreement i.e. back side of Pb 5) may kindly be referred at pages 01 to 08 of the paper book.

We have been informed that the expenses for the maintenance of the common area are firstly incurred directly by M/s AB Multiplex Pvt. Ltd. and thereafter a claim is being made on the appellant by way of a debit note. It is also submitted that the expenses incurred towards the maintenance of the common area includes expenses towards security charges, mall maintenance charges, electricity charges, diesel expenses, as well as towards general repair and maintenance and are being paid directly by M/s AB Multiplex Pvt. Ltd. after making the relevant statutory compliances such as towards TDS etc. It is further submitted that the payments so made towards

In this regard, it is submitted that as explained earlier the TDS (wherever applicable) was directly deducted by M/S AB Multiplex Pvt. Ltd. Owing to the privity of third party information we have been denied the copies of their quarterly e-TDS returns by them since that would be containing the details of their transactions with other parties also.

However, since per pages 68-158 the copies of the corresponding bills as also the TDS certificates issued by M/s AB Multiplex Pvt. Ltd. to these parties (wherever applicable) have already been attached, it is requested to kindly dispense off the above requirement more so when the purported TDS certificates are the ones which have not been issued manually but have downloaded from the portal of the Income Tax Department and thus there could not be any iota of doubt qua their genuineness. Not prejudice, in case your goodself still intends to examine the quarterly e- TDS returns filed by M/s. AB Multiplex Pvt. Ltd. pertaining to F.Y. 2011-12, it is submitted that the same may be called directly from them or alternatively from the AO-TDS having jurisdiction over their TAN - DELA18408F and their PAN - AAACE1424H.

Revenue / respondent submissions

However, since per pages 68-158 the copies of the corresponding bills as also the TDS certificates issued by M/s AB Multiplex Pvt. Ltd. to these parties (wherever applicable) have already been attached, it is requested to kindly dispense off the above requirement more so when the purported TDS certificates are the ones which have not been issued manually but have downloaded from the portal of the Income Tax Department and thus there could not be any iota of doubt qua their genuineness. Not prejudice, in case your goodself still intends to examine the quarterly e- TDS returns filed by M/s. AB Multiplex Pvt. Ltd. pertaining to F.Y. 2011-12, it is submitted that the same may be called directly from them or alternatively from the AO-TDS having jurisdiction over their TAN - DELA18408F and their PAN - AAACE1424H.

Court / Tribunal analysis and reasoning

14. Thus, we find that the entire amount of Rs. 79,49,392/- do not pertain to payments eligible to TDS and in fact a substantial part of this amount pertained to expenses on which TDS is not required to be deducted. On the remaining payments, TDS has been deducted by M/s AB Multiplex Pvt. Ltd. and the appellant is merely reimbursing the expenses incurred on its behalf to M/s AB Multiples Ltd which payment are not income in the hands of M/s AB Multiplex Put Ltd. Hence, we hold that no disallowance is called for on account of non-eligibility of the expenses u/s 37 or

Operative decision and relief

15. In the result, the appeal of the Revenue is dismissed.

Ratio and legal principle

• The packaged judgment addresses Section 68/69C type additions in construction company: deletion based on evidentiary record and nature of transactions. The precise proposition must be read with the Court/Tribunal's reasoning and operative directions.
• Reliance depends on matching the statutory version, jurisdiction, procedural stage and material evidence recorded in the judgment.

Why this judgment matters

This decision is relevant to practitioners and affected parties dealing with section 68/69c type additions in construction company: deletion based on evidentiary record and nature of transactions. Its value lies in showing how the adjudicating forum connected the applicable rule to the proved facts and procedural posture.

Practitioner action points

• Match the statutory version, jurisdiction, procedural stage and decisive evidence before relying on the result.
• Verify current appellate, review and SLP history and any later amendment or controlling authority.
• Attach the complete judgment to the working paper or filing and cite the paragraph/page supporting the proposition.

Does this case match your facts?

Section / provision impact

• 68/69C - apply the exact version considered in the judgment.
• 68 - apply the exact version considered in the judgment.
• 69C - apply the exact version considered in the judgment.

Case network

Similar issue / useful comparison

• SANJAY VRAJLAL KOTHARI V ITO 25(2)(3), MUMBAI - ITAT Mumbai - G Bench
• Ramachandra Kanu Mendadkar v. CIT(A) - ITAT Mumbai - D Bench
• ACIT v Ramlal Jewellers Pvt. Ltd. - ITAT Mumbai - D Bench

Different outcome / possible distinction

• No source-reviewed contrasting case is linked yet.

Full judgment and source control

Read / download packaged judgment record

Source class: SANITIZED_LOCAL_FULL_JUDGMENT_COPY_PRIMARY_PENDING · Repository status: HOLD_SOURCE_OR_LATER_HISTORY