M/s. Manas Infratech Pvt. Ltd., New Delhi V. DCIT, New Delhi

CO 232/DEL/2015

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1184 (ITAT-DELHI)
• Duration Of Justice: 1 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC 1
• Next Hearing Date: 23-09-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 12-08-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMRIT LAL
• Assessee Lawyers: GAURAV GOEL
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC : NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER ITA NO.1732/DEL/2015 ASSESSMENT YEAR : 2011-12 DCIT, CENTRAL CIRCLE-26, NEW DELHI. VS. MANAS INFRATECH PVT. LTD., C-4, 1 ST FLOOR, MALVIYA NAGAR, NEW DELHI. PAN: AAFCM1419B CO NO.232/DEL/2015 (ITA NO.1732/DEL/2015) ASSESSMENT YEAR : 2011-12 MANAS INFRATECH PVT. LTD., C-4, 1 ST FLOOR, MALVIYA NAGAR, NEW DELHI. PAN: AAFCM1419B VS. DCIT, CENTRAL CIRCLE-26, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI GAURAV GOEL, CA DEPARTMENT BY : SHRI AMRIT LAL, DR DATE OF HEARING : 23.09.2015 DATE OF PRONOUNCEMENT: 24.09.2015 ORDER THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARISE OUT OF THE ORDER PASSED BY THE CIT(A) ON 21.1 .2015 IN RELATION TO THE ASSESSMENT YEAR 2011-12. ITA NO.1732/DEL/2015 CO NO.232/DEL/2015 2 2. THE ONLY ISSUE RAISED BY THE REVENUE IN ITS APPE AL IS AGAINST THE DELETION OF REDUCTION OF RS.49,66,000/- FROM THE CO ST OF LAND. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF REAL ESTATE. ON PERUSAL OF THE BALANCE SHEET FILED BY THE ASSESSEE, IT WAS NOTICED BY THE AO THAT THE VALUE OF INVENTORIES STOOD INCREASED FROM RS.25.79 CRORE IN THE PRECEDING YEAR TO RS.30.32 CRORE. ON BEING CALLED UPON TO JUSTIFY SUCH INCREASE, THE ASS ESSEE FURNISHED DETAILS OF ADDITIONS. ON GOING THROUGH SUCH DETAILS, IT WAS OB SERVED THAT THE ASSESSEE COMPANY PURCHASED LAND AT TALUKA VENGRULA, DISTRICT SINDHUDURG, MAHARASHTRA. THE COST OF LAND WAS RS.2.97 CRORE AN D COMPENSATION TOWARDS RELINQUISHMENT OF RIGHTS WAS PAID AT RS.1.0 2 CRORE ALONG WITH COMMISSION AND BROKERAGE. ON HAVING A LOOK AT THE DETAILS OF COMPENSATION PAID FOR RELINQUISHMENT OF RIGHTS, IT WAS NOTICED THAT A SUM OF RS.53 LAC WAS PAID TO M/S MILESTONE VINIMAY PVT. LT D. BESIDES THAT A SUM OF RS.49,66,000/- WAS SHOWN TO HAVE BEEN PAID AS CO MPENSATION TO ONE MRS. RALKAR SMITA DATTATRAYA. ON BEING CALLED UPON TO SUBSTANTIATE THE PAYMENT OF SUCH COMPENSATION, THE ASSESSEE FURNISHE D A COPY OF MEMORANDUM OF UNDERSTANDING, AS PER WHICH THE ASSES SEE PAID THIS SUM TO MRS. RALKER SMITA DATTATRAYA. AS PER THIS MOU, MRS . RALKAR SMITA ITA NO.1732/DEL/2015 CO NO.232/DEL/2015 3 DATTATRAYA HAD PURCHASED THE LAND UNDER CONSIDERATI ON FROM MR. VISHNU RALKAR AND ADVANCED A SUM OF RS.10 LAC. IT WAS WIT H A VIEW TO RELINQUISH HER RIGHTS THAT SHE WAS PAID A COMPENSATION OF RS.4 9.66 LAC BY THE ASSESSEE. THE AO NOTICED THAT MRS. RALKAR SMITA DATTATRAYA IS WIFE OF MR. VISHNU RALKAR DATTATRAYA. NOTICE U/S 133(6) WAS ISSUED TO MR. VISHNU. IN HIS REPLY, MR. VISHNU DID NOT REFER TO MRS. RALKAR SMIT A DATTATRAYA. THE AO OBSERVED THAT THE SO-CALLED AGREEMENT BETWEEN MRS. RALKAR SMITA DATTATRAYA AND MRS. VISHNU RALKAR WAS DATED 24.8.20 10, WHEREAS MR. VISHNU RALKAR ALONG WITH OTHER CO-OWNER, I.E., MRS. PRIYA SURENDER HAD ALREADY MADE AN AGREEMENT WITH MR. LINDON ALVES ON 1.10.2008 FOR SALE OF LAND WHICH, IN TURN, WAS PURCHASED BY THE ASSESSEE FROM M/S MILESTONEVINIMAY PVT. LTD./MR. LINDON. THE AO, THE REFORE, CAME TO HOLD THAT THERE WAS NO GENUINE AGREEMENT BETWEEN MRS. RA LKAR SMITA DATTATRAYA AND MR. VISHNU. HE, THEREFORE, REDUCED THE SUM OF R S.49.66 LAC FROM THE COST OF LAND APPEARING AS INVENTORY IN THE ASSESSEE S BOOKS OF ACCOUNT WITHOUT MAKING ANY CORRESPONDING ADDITION TO THE TO TAL INCOME. IN OTHER WORDS, THE RETURNED INCOME AS WELL AS THE ASSESSED INCOME STOOD AT A LOSS OF RS.1,13,090/-. THE LD. CIT(A) GOT CONVINCED WITH T HE SUBMISSIONS ADVANCED ON BEHALF OF THE ASSESSEE AND HELD THAT TH E AMOUNT OF ITA NO.1732/DEL/2015 CO NO.232/DEL/2015 4 COMPENSATION PAID TO MRS. RALKAR SMITA DATTATRAYA S HOULD BE INCLUDED IN THE VALUE OF INVENTORY. THE REVENUE IS AGGRIEVED A GAINST THIS FINDING. 4. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE ON THE FACT THAT TH E ASSESSEE PURCHASED THIS LAND FROM MR. LINDON WHO WAS CONSOLIDATING LANDS ON BEHALF OF M/S MILESTONE VINIMAY PVT. LTD. THERE IS FURTHER NO DIS PUTE THAT THE ASSESSEE DID PAY CONSIDERATION AND ALSO COMPENSATION FOR REL INQUISHMENT OF RIGHTS. ALL OTHER PAYMENTS MADE BY THE ASSESSEE HAVE BEEN A CCEPTED AS GENUINE EXCEPT FOR A SUM OF RS.49.66 LAC, WHICH THE ASSESSE E PAID TO MRS. SMITA RALKAR, AS A COMPENSATION FOR RELINQUISHMENT OF HER RIGHT THAT WAS CREATED ON ACCOUNT OF TRANSACTION BETWEEN HUSBAND AND WIFE AND LATER ON A DISPUTE AROSE BETWEEN THE TWO AND THE ASSESSEE COULD GET CL EAR TITLE ONLY AFTER MAKING THE SAID PAYMENT. IN ORDER TO SUPPORT THE P AYMENT TO MRS. SMITA RALKAR, THE ASSESSEE FURNISHED A COPY OF MOU ENTERE D INTO WITH HER, WHOSE VERACITY HAS NOT BEEN CHALLENGED BY THE AO. THE DI SPUTE ROTATES AROUND THE POINT THAT THE RIGHT OF MRS. SMITA RALKAR WAS CREAT ED IN THE LAND IN THE YEAR 2010, WHEREAS AGREEMENT TO SELL SUCH LAND TO MR. LI NDON WAS EXECUTED IN THE YEAR 2008. I AGREE THAT THERE IS DIFFERENCE IN THE DATES, BUT, THE FACT OF THE MATTER IS THAT THE ASSESSEE PURCHASED THIS LAND ON 10.8.2010 FROM M/S ITA NO.1732/DEL/2015 CO NO.232/DEL/2015 5 MILESTONE VINIMAY PVT. LTD. AND THE DISPUTE BETWEEN MR. VISHNU AND MRS. SMITA RALKAR WAS PRIOR TO THAT. BE THAT AS IT MAY, THE FACT REMAINS THAT THE ASSESSEE DID MAKE A PAYMENT OF RS.49.66 LAC TO MRS. SMITA RALKAR AS A COMPENSATION FOR RELINQUISHMENT OF HER RIGHT IN THE PROPERTY, WHICH WAS CREATED BECAUSE OF SOME AGREEMENT BETWEEN HER AND S HRI VISHNU, WHO HAPPENS TO BE ONE OF THE CO-OWNERS SELLING THE PROP ERTY IN QUESTION. SINCE THE GENUINENESS OF THE PAYMENT HAS NOT BEEN DENIED AND THE ASSESSEE HAS ALSO SUPPORTED THE CLAIM OF PAYMENT BY MEANS OF A M OU WITH THE LADY, I THE VIEW TAKEN BY THE LD. CIT(A). 5. THE CROSS OBJECTION FILED BY THE ASSESSEE IS SIM PLY IN SUPPORT OF THE IMPUGNED ORDER. 6. IN THE RESULT, THE APPEAL OF THE REVENUE I S DISMISSED AND THE CO IS ALSO DISMISSED AS HAVING BECOME INFRUCTUOUS. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 2 4 TH SEPTEMBER, 2015. SD/- (R.S. SYAL) ACCOUNTANT M EMBER DATED: 24 TH SEPTEMBER, 2015. DK ITA NO.1732/DEL/2015 CO NO.232/DEL/2015 6 COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI