Sri. Tobby Simson, Bangalore V. Deputy Commissioner Of Income Tax,Circle- 6(1)(2), Bangalore

ITA 106/BANG/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2411 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 28-09-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 21-01-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: V SRINIVASAN SHRI S SUNDA
• Keywords: Capital asset; Depreciation; Fair market value; TDS; Rule 8D; Capital Gains
• Section: 142(1); 40(a)(ia); 143(1); 143(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI. B.R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.106/BANG/2020 ASSESSMENT YEAR : 2012 13 SRI TOBBY SIMON, #34, EMBASSY, DIAMANTE, VITTAL MALLYA ROAD, BENGALURU-560 001. PAN AAOPS 8164P. VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-6(1)(2), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI V SRINIVASAN, ADVOCATE RESPONDENT BY : SHRI S SUNDAR RAJAN, ADDL. CIT (DR) DATE OF HEARING : 28-09-2020 DATE OF PRONOUNCEMENT : 27-11-2020 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST O RDER DATED 31/10/2019 PASSED BY LD. CIT (A)-6, BANGALORE FOR ASSESSMENT YEAR 2012-13 ON FOLLOWING GROUNDS OF APP EAL: GROUNDS OF APPEAL 1. THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR A S THEY ARE AGAINST THE APPELLANT, ARE OPPOSED TO LAW, EQUITY, WEIGHT OF EV IDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT[A] IS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS. 3,73,78,654!- AS CAPITAL GAINS ON THE ALLEGED TRANS FER OF THE APPELLANT'S PROPERTY TO M/S. SYNERGIA CONSULTANTS PVT. LTD., IN TERMS OF THE PAGE 2 OF 13 ITA NO.106/BANG/2020 MEMORANDUM OF UNDERSTANDING [MOU] DATED 15/06/2009 TAKING RECOURSE TO THE PROVISIONS OF SECTION 2{47[V] OF TH E ACT UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 2.1 THE LEARNED CIT[A] OUGHT TO HAVE APPRECIATED TH AT THE ALTHOUGH THE APPELLANT HAD ENTERED INTO THE AFORESAID MOU DATED 15/06/2009 WITH M/S. SYNERGIA CONSULTANTS PVT. LTD., NONE OF THE CO NDITIONS MENTIONED U/S. 2[47][V] OF THE ACT WERE ATTRACTED ESPECIALLY SINCE THE MOU WAS AN UNREGISTERED DOCUMENT AND NO POSSESSION OF THE SAID PROPERTY WAS DELIVERED BY THE APPELLANT TO M/S. SYNERGIA CONSULT ANTS PVT. LTD., DURING THE YEAR PURSUANT TO THE SAID UNREGISTERED M OU AND HENCE, THE PROVISIONS OF SECTION 2[47][V] OF THE ACT WERE NOT APPLICABLE TO THE FACTS OF THE APPELLANT'S CASE. 2.2 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED C!T [A] OUGHT TO HAVE FURTHER APPRECIATED THAT THE MOU DATED 15/06/2009 W AS NOT ENTERED INTO BY THE APPELLANT DURING THE YEAR UNDER APPEAL AND CONSEQUENTLY, ASSESSMENT OF CAPITAL GAINS ON THE BASIS OF THE SAI D AGREEMENT PRESUMING THAT THERE WAS TRANSFER DURING THE YEAR U NDER APPEAL WAS ERRONEOUS AND THE SAME OUGHT TO HAVE BEEN DELETED. 3. THE LEARNED CIT[A] IS NOT JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF RS. 25,000/- INVOKING THE PROVISIONS OF SEC. 40[A][ IA] OF THE ACT UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT 'S CASE. 4. THE LEARNED CIT[A] IS NOT JUSTIFIED IN OMITTING TO CONSIDER THE ADDITIONAL GROUNDS OF APPEAL RAISED BY THE APPELLAN T IN RESPECT OF THE DISALLOWANCE OF TRAVELLING EXPENSES OF RS.52,07,186 /- UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 5. THE LEARNED CIT[A] IS NOT JUSTIFIED IN OMITTING TO CONSIDER THE ADDITIONAL GROUNDS OF APPEAL RAISED BY THE APPELLAN T IN RESPECT OF THE DISALLOWANCE OF DEPRECIATION OF RS. 7,62,135/- UNDE R THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 6. WITHOUT PREJUDICE TO THE RIGHT TO SEEK WAIVER WI TH THE HON'BLE CC IT/DC, THE APPELLANT DENIES HIMSELF LIABLE TO BE CH ARGED TO INTEREST U/S. 234-B OF THE ACT, WHICH UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE AND THE LEVY DESERVES TO BE CANCEL LED. 7. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URGE D AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT HUMBLY PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED AND THE APPELLA NT MAY BE AWARDED COSTS IN PROSECUTING THE APPEAL AND ALSO OR DER FOR THE REFUND OF THE INSTITUTION FEES AS PART OF THE COSTS. BRIEF FACTS OF THE CASE ARE AS UNDER: 2. ASSESSEE FILED HIS RETURN OF INCOME FOR YEAR UND ER CONSIDERATION ON 27/09/2012. THE RETURN WAS PROCESS ED UNDER PAGE 3 OF 13 ITA NO.106/BANG/2020 SECTION 143(1) OF THE ACT AND WAS SELECTED FOR SCRU TINY. SUBSEQUENTLY NOTICE UNDER SECTION 143(2) AND NOTICE UNDER 142(1) WAS ISSUED TO ASSESSEE, IN RESPONSE TO WHICH , REPRESENTATIVES OF ASSESSEE APPEARED BEFORE LD.AO A ND FILED REQUISITE DETAILS AS CALLED FOR. 3. LD.AO NOTED THAT ASSESSEE HAD DISCLOSED LOSS OF RS.1,22,29,028/-IN HIS RETURN OF INCOME. IT WAS ALS O NOTED THAT LOSS COMPUTED FOR THE YEAR UNDER CONSIDERATION AMOU NTED TO RS.1,16,21,032/-. LD.AO ACCORDINGLY CALLED FOR THE DETAILS IN RESPECT OF THE SAME. AS ASSESSEE DID NOT FURNISH CO MPLETE DETAILS OF THE RETURNS FILED, LD.AO TREATED THE LOSS FOR YE AR UNDER CONSIDERATION TO BE RS.1,16,21,032/-. 4. LD.AO NOTED FROM THE BALANCE SHEET THAT ASSESSEE HAD SHOWN CURRENT LIABILITIES OF RS.3,05,70,826/- AS AD VANCE FOR PURCHASE OF LAND. LD.AO CALLED UPON ASSESSEE TO FUR NISH DETAILS OF SUCH ADVANCE, NAMES AND ADDRESSES OF PARTIES FRO M WHOM ADVANCE WERE TAKEN AND COPY OF AGREEMENT. ASSESSEE IN RESPONSE FILED MEMORANDUM OF ASSOCIATION MOU AND LEDGER ACCO UNT OF SYNERGY CONSULTANTS PVT. LTD., DEPICTING THE ADVANC E RECEIVED FOR LAND AMOUNTING TO RS.3,05,70,826/-. 5. FROM THE DETAILS FILED IN RESPECT OF THE ADVANCE , LD.AO NOTED THAT ASSESSEE HAD ENTERED INTO MOU ON 15/6/2009 WIT H ITS SISTER CONCERN BEING M/S SYNERGY CONSULTANTS PVT.LTD., IN WHICH ASSESSEE IS A DIRECTOR HOLDING 50% SHARE TO SELL F OR 4156 SQ.FT. BUILT-UP AREA ON 1 ST FLOOR NO. 34 EMBASSY DIAMANTE, VITTHAL PAGE 4 OF 13 ITA NO.106/BANG/2020 MALLYA ROAD, BANGALORE, FOR CONSIDERATION OF RS.4,5 0,00,000/-. IT WAS ALSO NOTED BY LD. AO THAT ASSESSEE IS THE SOLE AND ABSOLUTE OWNER OF THE SAID PROPERTY. LD.AO NOTED THAT M/S SY NERGY CONSULTANTS PVT.LTD. WAS OPERATING ITS BUSINESS FRO M THIS PREMISES AND WAS NOT PAYING ANY RENT TO ASSESSEE. L D.AO ACCORDINGLY CALLED UPON ASSESSEE TO SUBSTANTIATE AS TO WHY CAPITAL GAINS SHOULD NOT BE CHARGED AS PER PROVISIO NS OF SECTION 2(47) READ WITH SECTION 45 OF THE ACT. 6. IN RESPONSE, ASSESSEE SUBMITTED THAT, M/S.SYNERG Y CONSULTANTS PVT.LTD. IS OCCUPYING THE OFFICE ALONG WITH ASSESSEES OWN BUSINESS, SYNERGIA BIO SCIENCES. HE ALSO SUBMIT TED THAT, THE OFFICE SPACE IS IN ASSESSEES POSSESSION AND IS NOT TRANSFERRED TO THE COMPANY IN ANY MANNER AND THAT THERE HAS BEEN N O SALE OR EXCHANGE OF ANY RIGHT IN THE OFFICE SPACE BY ASSESS EE, THAT FALLS UNDER THE PURVIEW OF SECTION 2(47). IT WAS INFORMED BY ASSESSEE THAT THE ADVANCES RECEIVED WERE AGAINST A PROPOSED SALE, IF ASSESSEE WAS TO ABLE TO FINALISE THE TERMS WITH AN INVESTOR IN THE COMPANY. AND THAT THE SUM WOULD BE REPAYABLE, IN TH E EVENT THE SALE DOES NOT MATERIALISE BEFORE 31/12/2015. 7. LD.AO ALSO CALLED UPON ASSESSEE TO EXPLAIN WHY R ENT AS PER FAIR MARKET VALUE SHOULD NOT BE CHARGED IN THE HAND S OF ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IN RESPO NSE TO VARY, ASSESSEE SUBMITTED THAT ASSESSEE IS USING THE OFFIC E SPACE FOR PURPOSE OF HIS OWN BUSINESS BEING SYNERGIA BIO SCIE NCES AND PAGE 5 OF 13 ITA NO.106/BANG/2020 HENCE THERE CANNOT BE ANY NOTIONAL RENT PAYABLE OR RECEIVABLE BY ASSESSEE. 8. LD. AO THUS CAME TO THE CONCLUSION THAT, M/S SYN ERGY CONSULTANTS PVT.LTD. IS A COMPANY WAS ENJOYING THE OCCUPATION OF OFFICE SPACE FREE OF RENT AND THAT IT HAS PAID SUBS TANTIAL ADVANCE AMOUNTING TO RS.3,05,70,826/- TILL 31/03/2012 FOR P URCHASE OF SAID OFFICE PREMISES IN ACCORDANCE WITH MOU DATED 1 5/06/2009. HE ALSO NOTED THAT THE COMPANY PAID SUBSTANTIAL AM OUNT OUT OF TOTAL SALE CONSIDERATION AMOUNTING TO RS.4,50,00,00 0/- AND THEREFORE M/S.SYNERGY CONSULTANTS PVT.LTD., WAS HEL D TO BE POSSESSION OF PROPERTY WITHIN THE MISCHIEF OF PROV ISION TO SECTION 2 (47) OF THE ACT READ WITH SECTION 53A OF TRANSFER OF PROPERTY ACT, 1882. HE THUS REJECTED THE ARGUMENT SUBMITTED BY AS SESSEE THAT IN THE EVENT THE SALE DOES NOT MATERIALISE BEFORE 3 1/12/2015 THE ADVANCE WOULD HAVE TO BE RETURNED BACK FOR THE REAS ON THAT POSSESSION OF THE PROPERTY IS WITH ASSESSEE AND ASS ESSEE IS ALSO 50% DIRECTOR IN THE ALLEGED PURCHASER COMPANY BEING M/S SYNERGY CONSULTANTS PVT.LTD. LD.AO THUS IN ACCORDAN CE WITH THE RATIO LAID DOWN BY HONBLE KARNATAKA HIGH COURT IN CASE OF CIT VS T.K DYALU REPORTED IN 202 TAXMANN 531 ASSESSED THE CAPITAL GAINS IN THE HANDS OF ASSESSEE DURING THE YEAR UNDE R CONSIDERATION. HE THUS CALCULATED SHORT TERM CAPITA L GAIN AS UNDER: SALES CONSIDERATION : RS.4,50,00,000 /- LESS: WDV AS PER B/S : RS. 76,21,346/ - PAGE 6 OF 13 ITA NO.106/BANG/2020 SHORT TERM CAPITAL GAIN : RS.3,70,78,654/ - OTHER DISALLOWANCES MADE BY LD.AO WAS IN RESPECT OF DISALLOWANCE UNDER SECTION 40 (A) (IA) OF THE ACT, FOR NOT DEDUCTING TDS IN RESPECT OF CERTAIN PAYMENTS THAT WAS NOT REL ATED TO THE BUSINESS ACTIVITIES OF ASSESSEE AMOUNTING TO RS.6,3 8,090/-. LD.AO ALSO DISALLOWED A SUM OF RS.5,65,218/- THAT W AS DEBITED AS ENTERTAINMENT AND BUSINESS PROMOTION MADE THROUG H CREDIT CARDS AGAINST WHICH NO PROOF/EVIDENCES/VOUCHERS ETC WERE FILED. LD.AO ALSO DISALLOWED TRAVELLING EXPENSES FOR WHICH PROOF WAS NOT AVAILABLE FOR VERIFYING AMOUNTING TO RS.52,07,186/- . ASSESSEE HAD FAILED TO ESTABLISH NEXES WITH BUSINESS OF ASSE SSEE IN REGARDS TO PERSONS WHO TRAVELLED ALONG WITH HIM AGAINST WHI CH AN EXPENDITURE OF RS.62,258/- WAS INCURRED. 9. LD. AO ALSO MADE ADDITION OF RS. 2, 10, 443/-UND ER SECTION 14 A OF THE ACT AS PER RULE 8D (2) (III) OF INCOME TAX RULES. 10. AGGRIEVED BY THE ADDITIONS MADE BY LD. AO, ASSE SSEE PREFERRED APPEAL BEFORE LD.CIT(A). IN THE APPEAL FI LED BEFORE LD. CIT (A) ASSESSEE DID NOT ALLEGE THE DISALLOWANCE OF TRAVELLING EXPENSES AMOUNTING TO RS.52,07,186/-. 11. LD.CIT (A) IN RESPECT OF ADDITION OF SHORT TERM CAPITAL GAIN HELD THAT MERELY BECAUSE A REGISTERED SALE DEED HAD NOT BEEN EXECUTED DOES NOT CHANGE THE NATURE OF TRANSACTION BEING ONE OF TRANSFER OF CAPITAL ASSET AS HELD IN THE CASE OF CHATURBHUJ DWARKA DAS KAPOOR DR VS CIT REPORTED IN 180 CTR 107 (BOM) BY HONBLE BOMBAY HIGH COURT . LD.CIT(A) OBSERVED THAT, ASSESSEE HAVE BEEN PAGE 7 OF 13 ITA NO.106/BANG/2020 REPEATEDLY EXTENDING THE TENURE OF MOU TILL 2015 AN D AGAIN IT WAS BEEN EXTENDED TILL 2018, ON THE GROUND THAT THE DESIRED INVESTMENT IN COMPANY BEING M/S SYNERGY CONSULTANTS PVT.LTD. WAS NOT MATERIALISED. IT IS ALSO AN ADMITTED FACT T HAT, DURING THESE PERIOD M/S SYNERGY CONSULTANTS PVT.LTD. OCCUP IED PREMISES WITHOUT PAYING ANY RENT TO ASSESSEE AND AL L THESE WHILE CONSIDERATION ADVANCE FROM M/S SYNERGY CONSULTANTS PVT. LTD., RECEIVED WAS NOT OFFERED TO TAXES BY ASSESSEE. 12. HE THUS UPHELD OBSERVATIONS OF LD.AO. 13. IN RESPECT OF THE DISALLOWANCE UNDER SECTION 40 (A) (IA) OF THE ACT, LD.CIT (A) OBSERVED AS UNDER: 7.2 GROUND OF APPEAL NO. 3 IS RELATED TO THE ISSUE OF DISALLOWANCE U/S 40(A)(IA). FROM THE DETAILS SUBMITTED BOTH BEFO RE THE AO AND DURING THE APPELLATE PROCEEDINGS, IT IS SEEN THAT T HE PAYMENTS OF RS.6,38,090/- WERE MADE TOWARDS PROFESSIONAL CHARGE S FOR DEVELOPMENT OF SOFTWARE AND SAP CERTIFICATION AND T DS HAS BEEN DEDUCTED THEREON. THE APPELLANT HAS SUBMITTED THAT HE IS THE PROPRIETOR OF SYNERGIA BIOSCIENCES, OF WHICH SYNERG IA TECHNOSOFT IS A DIVISION. HENCE THE ABOVE EXPENSES WHICH HAVE BEE N CLAIMED ON PROFESSIONAL CHARGES AND ON WHICH TDS HAS BEEN DEDU CTED ARE ADMISSIBLE. THE AMOUNT OF RS.85,541/ COMPRISES TWO PAYMENTS VIZ. RS.25,000/- PAID TO AL AMIN COLLEGE F PHARMACY FOR COMPLETION OF A STUDY RELATED TO PROJECT AND RS.60,54 1/- TOWA RDS PURCHASE OF A DRUG OLANZAPINE USP. THE LATTER PAYMENT WOULD NOT BE LIABLE TO TDS BEING FOR THE PURCHASE OF MATERIALS. HOWEVER, T HE AMOUNT OF RS.25,000/- CONSTITUTES CONSULTANCY/PROFESSIONAL CH ARGES AND IS LIABLE FOR DEDUCTION OF TDS. HENCE THE DISALLOWANCE OF THIS AMOUNT U/S 40(A)(IA) IS UPHELD. THIS GROUND OF APPEAL IS T HEREFORE PARTLY ALLOWED. 14. THE OTHER DISALLOWANCES MADE BY LD.AO WAS DELET ED BY THE LD.CIT(A). 15. AGGRIEVED BY THE ORDER PASSED BY LD.CIT(A) ASSE SSEE IS IN APPEAL BEFORE US NOW. PAGE 8 OF 13 ITA NO.106/BANG/2020 16. AT THE OUTSET, GROUND 4-5 RAISED BY ASSESSEE, WAS NOT RAISED BEFORE LD.CIT(A). WE NOTE THAT GROUND NO.4 RAISED BEFORE THIS TRIBUNAL ALSO DOES NOT ARISE OUT OF ORDER PASSED BY LD.CIT( A). ACCORDINGLY, WE ARE NOT INCLINED TO ADJUDICATE THES E ISSUES. THESE GROUNDS ARE DISMISSED AS IT DOES NOT ARISE OU T OF IMPUGNED ORDER. 17. GROUND NO. 1-2 IS IN RESPECT OF THE SHORT TERM CAPITAL GAIN ADDED IN THE HANDS OF ASSESSEE AMOUNTING TO RS.3,05 ,70,826/-. LD.AR SUBMITTED THAT ASSESSEE ON 15/06/2000 AND ENT ERED INTO SALE AGREEMENT WITH M/S.SYNERGY CONSULTANTS PVT.LTD ., ACCORDING TO WHICH, THE COMPANY ADVANCED INTEREST- FREE AMOUNT OF RS.3,05,70,826/- TILL END OF 31/03/2012. IT WAS SUBMITTED THAT AS PER UNDERSTANDING ENTERED INTO BETWEEN ASS ESSEE AND THE COMPANY. THE ADVANCES RECEIVED, WAS AGAINST A PROPOSED SALE, AND THEREFORE PROVISIONS OF SECTION 2(47)(V) WAS NOT ATTRACTED TO THE PRESENT FACTS OF THE CASE. LD.AR S UBMITTED THAT, IT DOES NOT AMOUNT TO ANY TRANSFER AS OBSERVED BY LD. AO U/S 53A OF TRANSFER OF PROPERTY ACT, AS THE AGREEMENT IS NO T REGISTERED AND ONLY A TOKEN AMOUNT WAS RECEIVED BY ASSESSEE I N VIEW OF THE PROPOSED SALE. IT HAS BEEN SUBMITTED THAT ASSESSEE DID NOT PAY TAX ON THE SAID ADVANCES RECEIVED FROM M/S SYNERGY CONSULTANTS PVT. LTD., AS ORIGINALLY IT WAS IN THE NATURE OF LO AN AND SINCE ASSESSEE WAS NOT PAYING ANY INTEREST IT CULMINATED INTO A PROPOSED SALE TO M/S SYNERGY CONSULTANTS PVT. LTD. PAGE 9 OF 13 ITA NO.106/BANG/2020 18. IN REGARDS TO THE RENT CHARGEABLE IN THE HANDS OF ASSESSEE, IT WAS SUBMITTED THAT ASSESSEE IS USING THE SAME OFFIC E SPACE FOR PURPOSE OF HIS OWN BUSINESS, AND HENCE NO NOTIONAL RENT IS RECEIVABLE BY ASSESSEE. HE PLACED RELIANCE ON DECIS ION OF HONBLE SUPREME COURT IN CASE OF CIT VS BALBIR SINGH MAINI REPORTED IN (2017) 398 ITR 531. 19. ON THE CONTRARY LD.SR.DR SUBMITTED THAT, THE FA CTS OF PRESENT CASE IS SQUARELY COVERED BY PROVISIONS OF SECTION 2(47)(V) OF THE ACT, READ WITH SECTION 53A OF TRANSFER OF PR OPERTY ACT 1882. HE SUBMITTED THAT ASSESSEE IS A DIRECTOR AND 50% OF M/S SYNERGY CONSULTANTS PVT.LTD. HE ALSO SUBMITTED THAT, ASSESS EE IS THE OWNER OF PROPOSED BUILDING FOR SALE WITH SYNERGY CO NSULTANTS PVT. LTD. AND THAT, THE AMOUNT THAT IS SHOWN AS LO AN IN THE ACCOUNTS OF ASSESSEE WAS LATER ON CONVERTED INTO AN ADVANCE FOR ALLEGED SALE. OUR ATTENTION WAS DRAWN TO THE AGREED SALE CONSIDERATION BEING RS.4,50,000,000/- OUT OF WHICH ASSESSEE ALREADY RECEIVED SUM OF RS.3,05,70,826/- AS ADVANCE . LD.SR.DR SUBMITTED THAT, SUBSTANTIAL AMOUNT OF SALE CONSIDER ATION HAVE BEEN RECEIVED BY ASSESSEE AS ADVANCE DURING THE YEA R UNDER CONSIDERATION. 20. LD.DR IN CASE OF CIT VS. BALBIR SINGH MAINI (SUPRA), RELIED ON FOLLOWING OBSERVATIONS BY HONBLE SUPREME COURT IN SUPPORT:- 22.1 THE OBJECT OF SEC.2(42)(VI) OF THE ACT IS TO BRING WITHIN TAX NET A DEFACTO TRANSFER OF ANY IMMOVABLE PROPERTY. THE EX PRESSION, ENABLING THE ENJOYMENT OF, TAKES COLOUR FROM THE EARLIER EXPRES SION, TRANSFERRING. THUS IT IS CLEAR THAT ANY TRANSACTION WHICH ENABLES THE ENJOYMENT OF IMMOVABLE PROPERTY MUST BE CONSTRUED TO BE ENJOYME NT AS A PURPORTED PAGE 10 OF 13 ITA NO.106/BANG/2020 OWNER THEREOF. THE IDEA IS TO BRING WITHIN TAX NE T, TRANSACTION, WHERE, THOUGH TITLE MAY NOT BE TRANSFERRED IN LAW, IN SUBS TANCE, A TRANSFER OF TITLE IN FACT. HONBLE COURT REFERRED IT AS NOSCITUR A SOCIIS H ONBLE COURT IN CATENA OF CASES OBSERVED THAT, FOR CHARGEABILITY OF INCOME -TAX, THE INCOME OUGHT TO HAVE EITHER ARRIVED OR ACCRUED. 21. LD.SR.DR SUBMITTED THAT, THERE HAS BEEN TRANSFE R OF SAID PROPERTY TO M/S SYNERGY CONSULTANTS PVT. LTD., BASE D ON A MOU WHICH IS ENFORCEABLE IN LAW. AS A CONSEQUENCE, M/S SYNERGY CONSULTANTS PVT. LTD., WERE CARRYING OUT ITS BUSINE SS FROM THE SAID PREMISES SINCE 2009. LD.SR.DR SUBMITTED THAT M /S SYNERGY CONSULTANTS PVT. LTD., HAS ALSO NOT BEEN PAYING ANY RENT TO THE ASSESSEE FOR OCCUPYING THE OFFICE SPACE IN WHICH AS SESSEE ALSO RUNS HIS BUSINESS IN THE NAME OF SYNERGY BIOCON SER VICES. IT WAS SUBMITTED BY LD.SR.DR THAT, THERE IS A CATEGORICAL OBSERVATION BY LD.CIT(A) THAT, PROPOSED SALE HAS NOT BEEN MATERI ALISED EVEN TILL DECEMBER 2018, AND THEREFORE THE INTENTION OF ASSES SEE IS VERY CLEAR THAT, ENTIRE EXERCISE OF ENTERING INTO A PRO POSED SALE WAS TO CIRCUMVENT TAXABILITY OF SUCH INCOME IN THE HANDS O F ASSESSEE, EITHER AS CAPITAL GAINS, NOR AS RENT, THAT WOULD H AVE BEEN PAYABLE, HAD IT TO BE A THIRD-PARTY WITH WHOM ASSES SEE HAS AN AGREEMENT. HE THUS SUPPORTED THE ORDERS PASSED BY AUTHORITIES BELOW. 22. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SI DES IN LIGHT OF RECORDS PLACED BEFORE US. AND DECISION OF HONBLE SUPREME COURT IN CASE OF BALBIR SINGH MAINI(SUPRA) RELIED BY LD.AR. IN PRESENT FACTS, ASSESSEE HAS BEEN SUBMITTING THAT THERE WAS A LOAN TRANSACTION AMOUNTING TO RS.3,50,00,000/- BETW EEN PAGE 11 OF 13 ITA NO.106/BANG/2020 ASSESSEE AND M/S SYNERGY CONSULTANTS PVT. LTD. SUBS EQUENTLY, RS.3,50,00,000/- WAS SHOWN AS ADVANCE TOWARDS PURCH ASE OF LAND BY AN AGREEMENT DATED 15/06/2009 ENTERED INT O BETWEEN ASSESSEE AND M/S SYNERGY CONSULTANTS PVT. LTD. TOWA RDS PROPOSED SALE OF 4156 SFT. BUILT UP AREA ON THE 1 ST FLOOR OF NO.34, EMBASSY DIAMANATE, VITHAL MALYA ROAD (HEREINAFTER R EFERRED TO AS SAID PROPERTY). ADMITEDLY, ASESSEE, IS ALSO THE OWNER OF SAID PROPERTY AND IS 50% DIRECTOR IN M/S SYNERGY CONSULT ANTS PVT. LTD. IN OUR VIEW, A TRANSACTION OF LOAN OR PROPOSED SALE DOES NOT DEPEND MERELY ON THE TERMS OF THE DOCUMENT, BUT HAS GOT TO BE JUDGED FROM THE INTENTION OF THE PARTIES AND ALL TH E CIRCUMSTANCES OF THE CASE. 23. AS PER THE MOU DATED 15/06/2009, THE SALE WAS T O TAKE PLACE BY DECEMBER, 2012, HOWEVER, ADMITTEDLY, THE S AME HAS NOT MATERIALISED TILL DATE. DURING THE PERIOD RS.3,50,0 0,000/- WAS RECEIVED, OUT OF TOTAL CONSIDERATION OF RS.4,50,00, 000/- FROM M/S SYNERGY CONSULTANTS PVT. LTD. 24. IT IS UNBELIEVABLE THAT, THE ADVANCE RECEIVED W AS ADJUSTED TOWARDS COST OF SAID PROPERTY IN A PROPOSED SALE, W HICH HAS NOT BEEN MATERIALISED TILL DATE. THIS ARGUMENT DOES NOT HOLD WATERS IN THE EYES OF LAW. IN OUR VIEW, THIS IS AN ARRANGED T RANSACTION WHICH CANNOT BE IGNORED. IN A MATTER OF SUCH DESCRI PTION, THE AUTHORITIES ARE ENTITLED TO PIERCE THE VEIL OF CORP ORATE ENTITY AND LOOK AT THE REALITY OF THE TRANSACTION. PAGE 12 OF 13 ITA NO.106/BANG/2020 WE THEREFORE REMAND THIS ISSUE TO LD.AO TO CONSIDER IT AFRESH IN ACCORDANCE WITH LAW. ACCORDINGLY THESE GROUNDS RAISED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS PARTY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOV, 2020 SD/- SD/- (B.R BASKARAN) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL ME MBER BANGALORE, DATED, THE 27 TH NOV, 2020. /VMS/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE