Madan Lal Maheshwari, Kanpur V. ITO 2 (2), Kanpur

ITA 165/LKW/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54808 (ITAT-LUCKNOW)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-08-2014
• Assessment Year: misc
• Appeal Filed On: 25-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K RAM
• Keywords: Capital asset; Set aside; Capital Gains
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 165/LKW/2011 ASSESSMENT YEAR: 2007 - 08 MADAN LAL MAHESHWARI F - 3/75/232, HALSEY ROAD KAN PUR V. INCOME TAX OFFICER 2(2) KANPUR PAN: AASON9840N (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI. R. K. RAM, D.R. DATE OF HEARING: 22 08 2014 DATE OF PRONOUNCEMENT: 15 10 2014 O R D E R PER SUNIL KUM AR YADAV: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A). 2 . THE ORIGINAL GROUNDS FILED BY THE ASSESSEE WERE REVISED BY FILING REVISED GROUNDS OF APPEAL AND THE SAME ARE TAKEN ON RECORD IN PLACE OF ORIGINAL GROUNDS OF APPEAL. THE REVISED GROUNDS OF APPEAL ARE EXTRACTED HEREUNDER: - 1 . BECAUSE THE CIT (A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ADDITION OF RS.22,45,251 / - AS CAPITAL GAINS, WHICH ADDITION IS CONTRARY TO THE PROVISIONS OF LAW AND BE DELETED. 2 . BECAUSE THE CIT(A ) HAS FAILED TO APPRECIATE THE FACTS AND HAS ARBITRARILY HELD THAT THERE BEING TRANSFER OF IMMOVABLE PROPERTY PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : AS PER SEC. 2(47) OF THE I.T. ACT, 1961, AND THEREBY ERRED IN UPHOLDING THE ADDITION OF RS.22,45,251/ - . 3 . BECAUSE THERE BEING NEITHER ANY CONTRACT N OR ANY AGREEMENT, THE PROVISIONS OF SECTION 53A OF THE T.P. ACT WHEN READ WITH SECTION 2(47) OF THE I.T. ACT, IT WOULD BE FOUND THAT THERE IS NO TRANSFER OF IMMOVABLE PROPERTY AS CONTEMPLATED, THE ADDITION OF RS.22,45,251/ - IS CONTRARY TO FACTS, BAD IN LAW AND BE DELETED. 4 . BECAUSE THE CIT)A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THERE HAS TAKEN TRANSFER OF IMMOVABLE PROPERTY AS PER SECTION 2(47) OF THE ACT, AND SUCH THERE ARISES A LIABILITY FOR PAYMENT OF CAPITAL GAINS. 5 . BECAUSE THE CIT(A) HAS FAILED TO APPRECIATE THE FACTS THAT THE APPELLANT HAS NOT EXECUTED ANY DOCUMENT RESULTING INTO 'TRANSFER' AS PER SECTION 2(47) OF THE ACT; THE UNILATERAL BOOK ENTRIES MADE BY DIFFERENT ENTITIES COULD NOT BE CONSTRUED AS TRANSFER ON THE PART OF THE ASSESSEE. 6 . BECAU SE IN ANY CASE AND IN ALL CIRCUMSTANCES OF THE CASE, THE ADDITION OF RS.22,45,251/ - MADE BY THE ASSESSING OFFICER AND UPHELD BY THE CIT(A) AS CAPITAL GAINS, IS CONTRARY TO THE PROVISIONS OF LAW AND BE DELETED. 7 . BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN L AW IN UPHOLDING THE ADDITION OF RS.1,00,000/ - ON ACCOUNT OF LOW WITHDRAWALS. 8 . BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN ARBITRARILY HOLDING THAT THE NO DETAILS WERE PROVIDED TO THE A.O. BY THE APPELLANT IN RESPECT OF THE WITHDRAWALS MADE AND AS SU CH, THERE REMAINS FAULT WITH THE APPELLANT CALLING FOR ADDITION, WHICH FINDING IS CONTRARY TO FACTS AND BAD IN LAW. 9 . BECAUSE THE CIT(A) HAS FAILED TO APPRECIATE THAT THE DETAILS FILED BEFORE THE CIT(A) WITH RESPECT TO THE WITHDRAWALS MADE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : WAS NEITHER ANY FR ESH EVIDENCE OR MATERIAL, BUT ON THE CONTRARY, WERE ONLY EXPLANATION OF THE DOCUMENTS ALREADY ON RECORD, AND WHICH WAS FURNISHED BEFORE THE ASSESSING OFFICER. 10 . BECAUSE IN ANY CASE AND IN ALL CIRCUMSTANCES OF THE CASE BOTH THE CIT(A) AND THE A.O. HAVE FAILED TO BRING ANY MATERIAL ON RECORD PROVING THAT ANY EXPENDITURE HAS BEEN INCURRED BY THE APPELLANT FOR THE PURPOSE OF HIS HOUSEHOLD EXPENSES OTHER THAN AS DECLARED BY THE APPELLANT. THE ADDITION MADE IS CONTRARY TO THE PROVISIONS OF LAW BE DELETED. 3 . THOUGH V ARIOUS GROUNDS ARE RAISED, BUT THEY MAINLY RELATE TO THE ADDITION OF RS.22,45,000/ - MADE ON ACCOUNT OF CAPITAL GAIN. 4 . THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT THE ASSESSING OFFICER HAS NOTICED FROM THE COPY OF THE ACCOUNT OF M/S LAKHOTIA AGRO S ORTEX PVT. LTD. FILED BY THE ASSESSEE THAT THE SAID COMPANY HAD CREDITED THE ACCOUNT OF THE ASSESSEE BY A SUM OF RS.15,90,999/ - ON 1.4.2006 WITH THE NARRATION AMOUNT OF LAND. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE CREDIT OF RS.15,90,999/ - GIVEN BY M/S LAKHOTIA AGRO SORTEX PVT. LTD. MAY NOT BE TREATED AS TRANSFER AS ENVISAGED UNDER SECTION 2(47) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT') READ WITH SECTION 53A OF THE TRANSFER OF PROPERTY ACT AND CAPITAL GAINS ON TRANSFER OF LAND BY THE ASSESSEE TO THE COMPANY MAY NOT BE WORKED OUT AND BROUGHT TO TAX AS PER THE PROVISIONS OF THE INCOME - TAX ACT. IN RESPONSE THERETO, IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE LAND WAS OBTAINED FROM UPSIDC BY M/S LAKHOTIA AGRO IN DUSTRIES AND NAME OF BUSINESS WAS CHANGED TO M/S LAKHOTIA AGRO SORTEX PVT. LTD. THE LAND WAS TAKEN FOR THE BUSINESS AND HAD BEEN USED FOR BUSINESS AND THERE WAS NO TRANSFER AS SUCH. IT WAS FURTHER EXPLAINED THAT THE CIRCLE RATE WAS SIMILAR TO UPSIDC RATE AND THE LAND WAS CREDITED IN THE BOOKS OF ACCOUNT OF THE COMPANY IN FINANCIAL YEAR 2005 - 06. THEREFORE, IT BELONGS TO ASSESSMENT YEAR 2006 - 07. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE AND NOTED FROM THE AUDITED FINANC IAL STATEMENT OF M/S LAKHOTIA AGRO SORTEX PVT. LTD. FOR ASSESSMENT YEAR 2007 - 08 THAT IN SCHEDULE - A RELATING TO F IXED ASSETS, THE SAID COMPANY HAD SHOWN AN ADDITION DURING THE YEAR UNDER THE HEAD LAND AMOUNTING TO RS.15,90,999/ - . THE OPENING BALANCE OF L AND IN THE SAID SCHEDULE HAS BEEN SHOWN AT NIL AND THE ASSESSING OFFICER HAS CONCLUDED THAT THE ASSESSEE HAS TRANSFERRED THE LAND BELONGING TO HIM ON 1.4.2006 TO A PRIVATE LIMITED COMPANY IN WHICH HE WAS HOLDING 14.78% OF THE OUTSTANDING SHARES AND HE WAS A LSO A DIRECTOR THEREIN . THE ASSESSING OFFICER ACCORDINGLY TREATED IT TO BE A TRANSFER OF LAND IN FAVOUR OF THE COMPANY AND COMPUTED THE CAPITAL GAINS AT RS.22,45,251/ - , HAVING APPLIED THE CIRCLE RATE AS ON 1.4.2006. 5 . AN APPEAL WAS PREFERRED BEFORE THE LD . CIT(A) WITH THE SUBMISSION THAT THE TRANSACTION INVOLVED DOES NOT FALL WITHIN THE DEFINITION OF TRANSFER AND IS ACCORDINGLY NOT HIT BY THE PROVISIONS OF CAPITAL GAINS. WITHOUT PREJUDICE TO HIS EARLIER CONTENTION, IT WAS ALSO CONTENDED THAT CALCULATION O F CAPITAL GAINS IS ERRONEOUS, INASMUCH AS THE ASSESSING OFFICER HAS ESTIMATED THE CIRCLE RATE ON THE HIGHER SIDE. AS PER THE ASSESSEE, THE CIRCLE RATE OUGHT TO HAVE BEEN AT RS.2,200/ - PER SM AS AGAINST RS.3,000/ - PER SM ADOPTED BY THE ASSESSING OFFICER. IT WA S FURTHER CONTENDED THAT THERE WA S NO AGREEMENT OR ANY OTHER DOCUMENT EXECUTED BETWEEN THE ASSESSEE AND THE COMPANY. THE COMPANY ON 1.4.2006 HAS DEBITED ITS BOOKS BY RS.15,90,999/ - UNDER THE HEAD LAND AND CREDITED THE SAID AMOUNT AT THE SAME TIME T O THE ACCOUNT OF THE ASSESSEE. THIS IS A NOTIONAL ENTRY MADE BY THE COMPANY AND THERE IS NO ACTUAL FLOW OF CASH OR EXECUTION OF ANY DOCUMENT. THIS ENTRY HAS BEEN DONE BY THE COMPANY TO PRESENT A DECENT PICTURE TO THE BANK IN ORDER TO AVAIL CREDIT FACILIT IES. IT WAS FURTHER CONTENDED THAT THE LAND AND ITS REGISTRATION CONTINUES TO BE IN THE NAME OF THE ASSESSEE BOTH IN THE RECORDS OF UPSIDC AND ALSO IN THE TITLE DEEDS. THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : LD. CIT(A) WAS NOT CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE AND HE ACCORDIN GLY HELD THAT THE LAND WAS TRANSFERRED TO THE COMPANY AND CAPITAL GAIN IS TO BE WORKED OUT. 6 . WITH REGARD TO THE CIRCLE RATE, HE RESTORED THE MATTER TO THE ASSESSING OFFICER WITH A DIRECTION TO TAKE THE DOCUMENTS FILED BY THE ASSESSEE WITH REGARD TO THE CIRC LE RATE AND GET IT V ERIFIED FROM THE CONCERNED AUTHORITY. 7 . AGGRIEVED, THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT THE LAND WAS ACQUIRED BY THE ASSESSEE FROM UPSIDC FOR A PERIOD OF 90 YEARS AT A PARTICULAR RENT FOR DIFFE RENT PERIOD OF YEARS ON 15.10.2004. AS PER TERMS OF LEASE DEED, THIS LAND WAS NOT TRANSFERABLE AND CANNOT BE TRANSFERRED WITHOUT THE CONSENT OF THE LESSER I.E. UPSIDC. THEREFORE, THE ASSESSEE DID NOT HAVE ANY ABSOLUTE RIGHT OR TITLE IN THE SAID LAND. SI NCE THE SAID LAND WAS A COMMERCIAL LAND, IT WAS USED FOR THE BUSINESS OF THE ASSESSEE RUNNING IN THE NAME OF M/S LAKHOTIA AGRO INDUSTRIES. LATER ON A PRIVATE LIMITED COMPANY UNDER THE NAME M/S LAKHOTIA AGRO SORTEX PVT. LTD. WAS FORMED IN WHICH THE ASSESS EE AND HIS BROTHER WERE SHAREHOLDERS AND DIRECTORS. THE COMPANY HAS TAKEN OVER THE ENTIRE BUSINESS OF THE ASSESSEES PROPRIETORSHIP CONCERN, M/S LAKHOTIA AGRO INDUSTRIES AND ACCORDINGLY THE LAND WAS ALSO TAKEN OVER BY THE COMPANY AND CORRESPONDING ENTRIES WERE MADE IN THE BOOKS OF ACCOUNT OF THE COMPANY. THE COMPANY ACCORDINGLY DEBITED ITS BOOKS BY AN AMOUNT OF RS.15,90,999/ - UNDER THE HEAD LAND AND CREDITED THE SAID AMOUNT AT THE SAME TIME TO THE ACCOUNT OF THE ASSESSEE. THESE ARE NOTIONAL ENTRIES MAD E BY THE COMPANY AND THERE IS NO ACTUAL FLOW OF CASH OR EXECUTION OF ANY DOCUMENT. IT WAS FURTHER CONTENDED THAT IN THE LIGHT OF THESE FACTS WHE RE THERE WAS NO ACTUAL TRANSFER OF LAND AS PER PROVISIONS OF SECTION 2(47)(V) OF THE ACT, THE CAPITAL GAIN CANN OT BE COMPUTED. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO PLACED RELIANCE UPON THE PROVISIONS OF SECTION 47 (XIV) OF PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 6 - : THE ACT WITH THE SUBMISSION THAT WHERE A SOLE PROPRIETARY CONCERN IS SUCCEEDED BY A COMPANY IN THE BUSINESS CARRIED ON BY IT AS A RESULT OF WHICH THE SOLE PROPRIETARY CONCERN SELLS OR OTHERWISE TRANSFERS ANY CAPITAL ASSET OR INTANGIBLE ASSET TO THE COMPANY, PROVISIONS OF SECTION 45 OF THE ACT SHALL NOT APPLY. 8 . THE LD. D.R., ON THE OTHER HAND, HAS PLACED RELIANCE UPON THE ORDERS OF THE AUTHORIT IES BELOW. 9 . HAVING CAREFULLY EXAMINED THE ORDERS OF THE AUTHORITIES BELOW AND THE DOCUMENTS PLACED ON RECORD IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT UNDENIABLY THE ASSESSEE HAS ACQUIRED THE LAND ON LEASE FROM UPSIDC THROUGH LEASE DEED EXECUTED O N 15.10.2003. COPY OF THE LEASE DEED IS ALSO PLACED ON RECORD AND AS PER ITS CLAUSE J, THE LESSEE (ASSESSEE) WILL NOT WITHOUT THE PREVIOUS CONSENT IN WRITING OF THE LESSOR, TRANSFER, SUBLET, RELINQUISH, MORTGAGE OR ASSIGN ITS INTEREST IN THE LAND OR BUI LDING STANDING THEREON TO ANYONE. THEREFORE, THE ASSESSEE DOES NOT ENJOY ABSOLUTE TITLE IN THE LAND OBTAINED ON LEASE FROM THE UPSIDC. THE RELEVANT CLAUSE OF THE LEASE DEED IS EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: - (I) THAT THE LESSEE WILL NOT WITHOUT PREVIOUS CONSENT IN WRITING OF THE LESSOR, TRANSFER, SUBLET, RELINQUISH, MORTGAGE OR ASSIGN ITS INTEREST IN THE DEMISED PROMISES OR THE BUILDINGS STANDING THEREON OR BOTH AS A WHOLE AND EVERY SUCH TRANSFER, ASSIGNMENT, RELINQUISHMENT, MORTGAGE OR S UBLETTING OR BOTH SHALL BE SUBJECT TO AND THE TRANSFEREES OR ASSIGNS SHALL BE BOUND BY ALL THE COVENANTS AND CONDITIONS HEREIN CONTAINED AND BE ANSWERABLE TO THE LESSOR IN ALL RESPECT THEREFOR, AND THE LESSEE WILL IN NO CASE ASSIGN, RELINQUISH, MORTGAGE, S UBJECT, TRANSFER OR PART WITH THE POSSESSION OF ANY PORTION LESS THAN THE WHOLE OF THE DEMISED PROMISES OR CAUSE ANY SUB - DIVISION THEREOF BY METES AND BOUND OR OTHERWISE. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 7 - : 10 . IT IS ALSO OBVIOUS FROM THE MEMORANDUM AND ARTICLE OF ASSOCIATION OF M/S LAKHOTIA A GRO SORTEX PVT. LTD. THAT IT WAS CONSTITUTED VIDE CERTIFICATE FOR INCORPORATION DATED 14.6.2005 AND SHAREHOLDING OF THE ASSESSEE AND HIS BROTHER WAS EQUAL HAVING 5500 SHARES EACH. BOTH THE BROTHERS ARE THE DIRECTORS OF THE COMPANY. EXCEPT THE ASSESSEE AN D HIS BROTHER, NO SHARE WAS ALLOTTED TO ANYONE. DURING THE COURSE OF HEARING, IT WAS NOTED THAT THE ASSESSEE NAME IS MADAN LAL MAHESHWARI WHEREAS AS PER MEMORANDUM AND ARTICLE OF ASSOCIATION , IT WAS MADAN LAL LAKHOTIA. IN ORDER TO ASCERTAIN WHETHER MADAN LAL MAHESHWARI AND MADAN LAL LAKHOTIA WAS ONE AND THE SAME PERSON, ASSESSEE WAS ASKED TO FILE AN AFFIDAVIT AND ACCORDINGLY AN AFFIDAVIT WAS FILED STATING THEREIN THAT MADAN LAL MAHESHWARI AND MADAN LAL LAKHOTIA IS THE SAME PERSON AND SOMETIME IN THE DOCUM ENTS THE NAME WAS MENTIONED AS MADAN LAL MAHESHWARI AND S OMETIME IT WAS MENTIONED AS MADAN LAL LAKHOTIA. THESE FACTS WERE NOT DISPUTED BY THE REVENUE. WE, THEREFORE, ADMIT THE SAME. 11 . THE SHORT QUESTION ARISES BEFORE US IN THE PRESENT CASE IS WHETHER THE C OMPANY HAS TAKEN OVER THE BUSINESS OF THE ASSESSEES PROPRIETORSHIP CONCERN ALONG WITH THE LAND OBTAINED BY THE ASSESSEE ON LEASE FROM UPSIDC AND THE PRO VISIONS OF SECTION 45 OF THE ACT CAN BE INVOKED ON THE BASIS OF THE BOOK ENTRIES PASSED IN THE ACCOUNTS OF THE COMPANY. THE ASSESSING OFFICER HAS INVOKED PROVISIONS OF SECTION 45 OF THE ACT HAVING RELIED UPON THE DEFINITION OF TRANSFER GIVEN IN SECTION 2(47) (V) OF THE ACT. THE OBJECT OF SECTION 2(47) (V) OF THE ACT IS ENTIRELY DIFFERENT AND THE SAME CANNO T BE INVOKED FOR DETERMINING THE NATURE OF TRANSFER IN THOSE CASES WHERE THE BUSINESS OF ONE BUSINESS CONCERN IS TAKEN OVER BY OTHER BUSINESS CONCERN. AS PER SECTION 2(47)(V) OF THE ACT , ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF ANY IMMO VABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 8 - : SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 AMOUNTS TO A PROPER TRANSFER FOR THE PURPOSE OF INCOME - TAX ACT . IN THE LIGHT OF THE AFORESAID PROVISION S, THE EXECUTION OF TRANSFER/SALE DEED IS NOT THE DETERMINING FACTOR TO DECIDE WHETHER THE IMMOVABLE PROPERTY IS TRANSFERRED IN FAVOUR OF THE PERSON OR NOT. WHEN T HE CONTRACT FOR SALE IS PARTLY PERFORMED BESIDES HANDING OVER THE POSSESSION OF ANY IMMOVEAB LE PROPERTY, THE TRANSACTION WOULD BE A TRANSFER OF THE CAPITAL ASSET. BUT FOR THAT PURPOSE, ONE HAS TO LOOK IN TO THE DOCUMENTS EXECUTED BETWEEN THE TRANSFEREE AND TRANSFEROR. MERE HANDING OVER THE POSSESSION WITHOUT MAKING ANY PART PERFORMANCE OF THE CO NTRACT CANNOT BE TERMED AS TRANSFER OF THE CAPITAL ASSET. WHEREVER CONTRACT FOR TRANSFER OF IMMOVABLE PROPERTY IS PARTLY PERFORMED EITHER BY MAKING A PART PAYMENT BESIDES HANDING OVER THE POSSESSION, THE TRANSFER WOULD BE COMPLETE IN VIEW OF THE PROVISION S OF SECTION 2(47)(V) OF THE ACT THOUGH THE ENTIRE SALE CONSIDERATION MAY NOT BE PASSED ON. BUT WITHOUT PASSING ON ANY PART OF SALE CONSIDERATION OR EXECUTION OF ANY DOCUMENT, THE TRANSFER WOULD NOT BE COMPLETE ONLY ON THE BASIS OF THE HANDING OVER OF THE POSSESSION. SO IN THE PRESENT CASE, WE ARE OF THE VIEW THAT BY INVOKING THE PROVISIONS OF SECTION 2(47)(V) OF THE ACT, IT CANNOT BE HELD THAT THE LAND OBTAINED BY THE ASSESSEE ON LEASE FROM UPSIDC HAVE BEEN TRANSFERRED TO A PRIVATE LIMITED COMPANY, IN WH ICH ASSESSEE IS A DIRECTOR HOLDING 50% SHARES THEREIN. WE HAVE ALSO EXAMINED THE PROVISIONS OF SECTION 47(XIV) OF THE ACT, ACCORDING TO WHICH WHERE A SOLE PROPRIETARY CONCERN IS SUCCEEDED BY A COMPANY IN THE BUSINESS CARRIED ON BY IT AS A RESULT OF WHICH THE SOLE PROPRIETARY CONCERN SELLS OR OTHERWISE TRANSFERS ANY CAPITAL ASSET OR INTANGIBLE ASSET TO THE COMPANY, THE SAID TRANSFER WOULD NOT ATTRACT PROVISIONS OF SECTION 45 OF THE ACT FOR COMPUTING THE CAPITAL GAIN. THE RIDER TO APPLICABILITY OF THIS EXEM PTION CLAUSE IS THAT THE ASSESSEE / S PROPRIETOR SHOULD NOT HAVE LESS THAN 50% SHARES IN THE COMPANY. IN THE INSTANT CASE, THE COMPANY HAS ONLY TWO DIRECTORS HOLDING EQUAL SHARES. THEREFORE, IN PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 9 - : THE LIGHT OF PROVISIONS OF SECTION 47(XIV) OF THE ACT, PROVISIO NS OF SECTION 45 OF THE ACT CANNOT BE INVOKED AND CAPITAL GAIN CANNOT BE COMPUTED. 12 . WE HAVE ALSO EXAMINED THE CONTENTS OF THE LEASE DEED AND WE FIND THAT THE ASSESSEE DID NOT ENJOY THE ABSOLUTE TITLE IN THE LAND, THEREFORE, THE TRANSFER OF THE LAND WAS NOT PERMISSIBLE WITHOUT PRIOR CONSENT OF THE UPSIDC. IN THE INSTANT CASE, NO PERMISSION WAS SOUGHT BY THE ASSESSEE WHILE THE LAND WAS HANDED OVER TO THE COMPANY INASMUCH AS THE ASSESSEE IS ALSO BENEFITED BY THE COMPANYS PERFORMANCE IN WHICH HE HIMSELF IS A D IRECTOR HOLDING 50% SHARES. TO KEEP THE ACCOUNT STRAIGHT, THE COMPANY HAS PASSED A BOOK ENTRY IN THE BOOKS OF ACCOUNT BY DEBITING THE LAND ACCOUNT AND CREDITING THE ACCOUNT OF THE ASSESSEE. AT THE MOST, THE AMOUNT CREDITED TO THE ASSESSEE BE CONSIDERED A S A LOAN IN THE HANDS OF THE COMPANY OR A PART SHARE CAPITAL IN THE NAME OF THE ASSESSEE. BUT IN ANY CASE PROVISIONS OF SECTION 45 OF THE ACT FOR COMPUTING THE CAPITAL GAINS ARE NOT ATTRACTED. IN THE LIGHT OF THESE FACTS, WE DO NOT FIND OURSELVES IN AGRE EMENT WITH THE FINDINGS OF THE LD. CIT(A) AND WE ACCORDINGLY SET ASIDE HIS ORDER AND DELETE THE ADDITION MADE ON ACCOUNT OF COMPUTATION OF CAPITAL GAIN IN THE HANDS OF THE ASSESSEE. 13 . THE OTHER GROUND RELATES TO THE ADDITION OF RS.1 LAKH MADE ON ACCOUNT OF H OUSEHOLD WITHDRAWALS. 14 . IN THIS REGARD, IT IS NOTICED THAT THE ASSESSEE HAS SHOWN CASH WITHDRAWAL OF RS.96,000/ - WHICH WAS CONSIDERED TO BE AT LOWER SIDE BY THE ASSESSING OFFICER IN THE LIGHT OF EXPENDITURE INCURRED ON HIS SON FOR STUDYING AT BANGALORE. HE ACCORDINGLY ESTIMATED THE HOUSEHOLD WITHDRAWALS AND MADE ADDITION OF RS.3.76 LAKHS WHICH WAS REDUCED TO RS.1 LAKH BY THE LD. CIT(A). WE HAVE CAREFULLY EXAMINED THE ORDER OF THE LD. CIT(A) AND WE FIND NO INFIRMITY THEREIN. HOWEVER, FOR THE SAKE OF REFEREN CE, WE EXTRACT OBSERVATIONS OF THE LD. CIT(A) IN THIS REGARD AS UNDER: - PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 10 - : IN THIS CONNECTION, THE LD. AR HAS SUBMITTED SOME FRESH DETAILS OF WITHDRAWALS WHICH WERE NOT SUBMITTED BEFORE THE AO. THE APPELLANT WAS NEITHER TO ABLE TO SUBSTANTIATE THE SAME WITH CONFIRMATIONS NOR ANY REASONS HAVE BEEN ADDUCED TO JUSTIFY AS TO WHY SUCH DETAILS COULD NOT BE PRESENTED BEFORE THE A.O. AS THE RESULT, NO COGNIZANCE OF THE SAME IS HEREBY TAKEN OF SUCH DETAILS. HOWEVER, IN THE INTEREST OF JUSTICE, THE SUBMISSION THAT THE PAYMENT OF RS.2,43,460/ - FOR ONE OF HIS SON'S EDUCATION WAS SEPARATELY MADE FROM THE HDFC BANK, IS BEING CONSIDERED WHILE DECIDING THE ISSUE OF LOW WITHDRAWALS. THE AO IS DIRECTED TO VERIFY IF SUCH WITHDRAWALS HAD INDEED BEEN MADE FROM THE BANK A/C AS SUB MITTED BY THE APPELLANT. LOOKING TO THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE (INCLUDING THE FACT THAT THE SUBSTANTIAL EXPENSES ON ACCOUNT OF EDUCATION OF HIS SON HAVE, BEEN MADE FROM THE BANK AND NOT INCLUDED IN CASH WITHDRAWALS), I REDUCE THE ADDIT ION MADE ON THIS ACCOUNT TO RS. 1,00,000/ - PROVIDED THE APPELLANT IS ABOVE TO PROVE THE PAYMENT OF FEES (SUPRA) FROM BANK A/C. 15 . SINCE NO INFIRMITY IS POINTED OUT IN THE ORDER OF THE LD. CIT(A), WE CONFIRM THE SAME. 16 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENT I ONED ON THE CAPTION PAGE. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15 TH OCTOBER , 2014 JJ: 2309 PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 11 - : COPY FORWARDED TO: 1 . APPELLANT 2 . R ESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )