The DCIT, Circle-1, Ahmedabad V. M/s. Amba Township Pvt. Ltd., Ahmedabad

ITA 1340/AHD/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8582 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-08-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 06-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S. S. GODARA, JUDICIAL MEMBER) ITA. NO: 1340/AHD/2014 (ASSESSMENT YEAR: 2010-11) DCIT, CIRCLE-1, AHMEDABAD V/S M/S. AMBA TOWNSHIP PVT. LTD. 05, MAMTA PARK SOCIETY, B/H. NAVGUJARAT COLLEGE, USHMANPURA, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAFCA1933J APPELLANT BY : SHRI MUDIT NAGPAL, SR. D. R. RESPONDENT BY : SHRI DHINAL SHAH, A.R. ( )/ ORDER DATE OF HEARING : 05 -04-201 8 DATE OF PRONOUNCEMENT : -04-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER 1. THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)-6, AHMEDABAD DATED 21.02.2014 PERTAINING TO A.Y. 2010- 11. ITA NO. 1340 /AHD/2014 . A.Y. 2010-11 2 2. THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE LD. C IT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 1.17 CRORES BEING LAND CONVERSI ON PREMIUM EXPENSES. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSEE IS INTO THE BUSINESS OF THE DEVELOPMENT OF TOWNSHIP. WHILE SCRUTINIZING THE FINANCIAL STATEMENTS OF THE ASSESSEE DURING THE COURSE OF THE SCRUTINY ASSESSME NT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS DEBITED LAND ACQUISIT ION EXPENSES WHICH MAINLY CONSIST OF NA EXPENSE FOR CONVERSION OF AGRICULTURA L LAND INTO NON AGRICULTURAL LAND. THE A.O. FOUND THAT THE SAID LAND WAS NOT IN THE NAME OF THE DIRECTORS AND THE EXPENSE IS CLAIMED ON THE CONVERSION OF LAN D OWNED BY FARMERS. THE ASSESSEE WAS ASKED TO JUSTIFY ITS CLAIM OF THE SAID EXPENDITURE. 4. IN ITS REPLY, THE ASSESSEE EXPLAINED THAT AS PER AR RANGEMENT, THE LAND WERE TO BE PURCHASED IN THE NAME OF THE DIRECTORS AS AGRICULTU RAL LAND CANNOT BE PURCHASED BY THE COMPANY. THE DETAILS WERE FURNISHED AND THE A.O. FOUND THAT SOME LAND WERE NOT IN THE NAME OF THE DIRECTORS AND THEREFORE THE PREMIUM EXPENSES INCURRED ON SUCH LAND IS NOT ALLOWABLE. THE A.O. AC CORDINGLY DISALLOWED RS. 1.17 CRORES AND ADDED TO THE INCOME OF THE ASSESSEE . 5. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). IT WAS BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT THE OWNERS OF THE IMPUGNED L AND HAD TENDERED POWER OF ATTORNEY IN FAVOUR OF THE DIRECTOR OF THE ASSESSEE COMPANY AND THE ORDER OF THE DISTRICT COLLECTOR FOR PAYMENT OF PREMIUM CLEARLY M ENTIONS THAT THE OWNER HAS DONE THE TRANSACTION THROUGH HIS POWER OF ATTORNEY HOLDER. 6. THE LD. CIT(A) CALLED FOR A REMAND REPORT FROM THE A.O. AND AFTER CONSIDERING THE REMAND REPORT, THE LD. CIT(A) WAS CONVINCED THA T THE ASSESSEE INCURRED ITA NO. 1340 /AHD/2014 . A.Y. 2010-11 3 EXPENSES THROUGH THE POWER OF ATTORNEY OF THE FOUR PERSONS AND ACCEPTED THE CONTENTIONS OF THE ASSESSEE AND DELETED THE ADDITIO N OF RS. 1.17 CRORES. 7. BEFORE US, THE LD. D.R. RELIED UPON THE FINDINGS OF THE A.O. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN S TATED BEFORE THE LOWER AUTHORITIES. 8. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTH ORITIES BELOW. 9. THE UNDISPUTED FACT IS THAT THE LANDS WERE SHOWN IN THE BALANCE SHEET OF THE ASSESSEE SINCE PAST YEARS. IT IS ALSO NOT IN DISPUT E THAT THE AGRICULTURAL LAND CANNOT BE PURCHASED BY A BODY CORPORATE. BECAUSE OF THIS, THE LANDS WERE PURCHASED IN THE NAME OF THE DIRECTORS OF THE COMPA NY. IT IS TRUE THAT SOME LANDS WERE NOT IN THE NAME OF THE DIRECTOR OF THE C OMPANY BUT, AT THE SAME TIME, WE FIND THAT THE OWNERS OF THE LAND HAD GIVEN POWER OF ATTORNEY IN THE NAME OF ONE OF THE DIRECTORS OF THE COMPANY. EVEN, THE ORDER OF THE DISTRICT COLLECTOR ACKNOWLEDGES THIS FACT THAT THE PREMIUM H AS BEEN PAID BY THE POWER OF ATTORNEY HOLDER I.E. DIRECTOR OF THE COMPANY. T HE POWER OF ATTORNEY IS EXHIBITED AT PAGES 1 TO 3 OF THE PAPER BOOK. WE F IND THAT THE LAND ACQUISITION EXPENSES HAVE BEEN ADDED TO THE OPENING WORK IN PRO GRESS AS PER EXHIBITS 5 & 53 OF THE PAPER BOOK. THIS MEANS THAT THE ASSESSEE HAS NEVER CHARGED THE LAND PREMIUM EXPENSES TO ITS PROFIT AND LOSS ACCOUNT. BE THAT AS IT MAY, THE LAND CONVERSION PREMIUM EXPENSES HAVE BEEN INCURRED BY T HE ASSESSEE COMPANY AND THEREFORE THE SAME HAS TO BE ALLOWED. WE DECLINE T O INTERFERE. ITA NO. 1340 /AHD/2014 . A.Y. 2010-11 4 10. APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 09 - 04- 20 18 SD/- SD/- (S.S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY A CCOUNTANT MEMBER AHMEDABAD: DATED 09 /04/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD