M/s. Zambad Mount View Project Pvt. Ltd., Aurangabad V. Income-tax Officer,

ITA 1856/PUN/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6566 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-08-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 29-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Keywords: Capital asset; Business expenditure; Capital expenditure
• Section: 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI VIKAS AWASTHY, JM . / ITA NO .1856 /P U N/201 6 / ASSESSMENT YEAR : 20 1 2 - 13 M/S. ZAMBAD MOUNT VIEW PROJECT PVT. LTD., PLOT NO. 2 & 3, N - 2, MUKUNDWADI, CIDCO, JALNA ROAD, AURANGABAD PAN : AAACZ4417D ....... / APPELLANT ....... / APPELLANT / V/S. THE INCOME TAX OFFICER, WARD 3(1), AURANGABAD / RESPONDENT ASSESSEE BY : S HRI J.P. BAIRAGRA REVENUE BY : S HRI PANKAJ GARG / DATE OF HEARING : 30 - 1 0 - 201 8 / DATE OF PRONOUNCEMENT : 14 - 01 - 201 9 / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 2, AURANGABAD DATED 20 - 06 - 2016 FOR THE ASSESSMENT YEAR 2012 - 13. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE IS A BUILDER AND DEVELOPER. IT IS ALSO ENGAGED IN THE BUSINESS OF REAL ESTATE. THE ASSESSEE FILED ITS RE TURN OF INCOME FOR THE IMPUGNED 2 ITA NO .1856/PUN/2016, A.Y. 2012 - 13 ASSESSMENT YEAR ON 21 - 09 - 2012 DECLARING TOTAL INCOME OF RS.2,395/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY THROUGH CASS , ACCORDINGLY , STATUTORY NOTICE U/S. 143(2) O F THE INCOME TAX ACT, 1961 (HEREINAFTER STATUTORY NOTICE U/S. 143(2) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) WAS ISSUED TO THE ASSESSEE ON 23 - 09 - 2013. THE ASSESSEE HAD ENTERED INTO A MOU WITH DEOGIRI SAHKARI SAKHAR KARKHANA LTD. (DEOGIRI SSK LTD.) FOR SETTLING THE CLAIM OF CREDITORS. THE ASSESSEE PAID RS.1,51,00,000/ - TO THE CREDITORS OF DEOGIRI SSK LTD. THE ASSESSEE HAD PURCHASED LAND OF DEOGIRI SSK LTD. THROUGH DRT FOR A CONSIDERATION OF RS.17,01,56,625/ - . THE SAID SALE WAS CANCELLED BY THE HONBLE HIGH COURT RS.17,01,56,625/ - . THE SAID SALE WAS CANCELLED BY THE HONBLE HIGH COURT IN WRIT PROCEEDINGS BY INTERESTED PARTIES OBJECTING SALE OF LAND. CONSEQU ENTLY, THE ENTIRE TRANSACTION WITH DEOGIRI SSK LTD. FAILED. THOUGH BY VIRTUE OF HIGH COURT ORDER THE ASSESSEE COULD RECOVER SALE CONSIDERATION PAID FOR PURCHASE OF LAND, THE ASSESSEE ALLEGEDLY COULD NOT RECOVER THE AMOUNT PAID TO SETTLE THE CLAIM OF CREDI TORS OF DEOGIRI SSK LTD. SUBSEQUENTLY, THE ASSESSEE SOLD INTEREST IN CREDITORS TO ITS GROUP CONCERN SUBSEQUENTLY, THE ASSESSEE SOLD INTEREST IN CREDITORS TO ITS GROUP CONCERN M/S. ZAMBAD INFRASTRUCTURE LIMITED FOR RS.31,60,247/ - . THE BALANCE AMOUNT RS. 1, 19,39,753/ - WAS WRITTEN OFF IN THE BOOKS BY ASSESSEE AND OFFERED RS.31,60,2 47/ - AS INCOME. THE ASSESSING OFFICER HELD THAT THE AMOUNT WRITTEN OFF BY THE ASSESSEE RS.1,51,00,000/ - IS NOT ACCEPTABLE AS NO EFFORT WAS MADE BY THE ASSESSEE TO RECOVER THE SAME. FURTHER, THE AMOUNT WAS PAID WITH A MOTIVE TO ACQUIRE A CAPITAL ASSET , TH EREFORE, ALL AMOUNT WAS PAID WITH A MOTIVE TO ACQUIRE A CAPITAL ASSET , TH EREFORE, ALL EXPENSES IN RELATION THERETO SHOULD BE CAPITALIZED. THE ASSESSING OFFICER MADE ADDITION OF ENTIRE AMOUNT RS.1,51,00,000/ - . AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 28 - 03 - 2015, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUGNED ORDER IN PRINCIPLE UPHELD THE FINDINGS OF ASSESSING OFFICER IN TREATING THE AMOUNT WRITTEN OFF BY THE ASSESSEE AS CAPITAL. HOWEVER, THE COMMISSIONER OF 3 ITA NO .1856/PUN/2016, A.Y. 2012 - 13 INCOME TAX (APPEALS) GAVE PART RELIEF IN RESTRICTING THE DISALLOWANCE TO RS.1,91,39,753/ - I.E. AFTER REDUCING THE AMOUNT OF RS.31,60,247/ - RECOVERED BY THE ASSESSEE ON ASSIGNING THE RIGHTS TO RECOVER THE AMOUNT RECOVERED BY THE ASSESSEE ON ASSIGNING THE RIGHTS TO RECOVER THE AMOUNT FROM CREDITORS TO M/S. ZAMBAD INFRASTRUCTURE LIMITED. AGAINST THE ORDER OF FIRST APPELLATE A UTHORITY , THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL AND HAS ASSAILED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) ON FOLLOWING GROUNDS : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE ADVANCE WRITTEN OFF OF RS.1,19,39,753/ - DEBITED TO PROFIT & LOSS ACCOUNT WHILE OFF OF RS.1,19,39,753/ - DEBITED TO PROFIT & LOSS ACCOUNT WHILE COMPUTING TAXABLE INCOME OF THE APPELLANT. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT THE ADVANCES GIVEN BY THE APPELLANT WERE ON CAPITAL ACCOUNT AND NOT ON REVENUE ACCOUNT, HENCE THE ADVANCE WRITTEN OFF CANNOT BE ALLOWED AS REVENUE EXPENSE. 3. SHRI J.P. BAIRAGRA APPEARIN G ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD PURCHASED LAND OF DEOGIRI SSK LTD. THROUGH DEBT RECOVERY TRIBUNAL (DRT) FOR A CONSIDERATION OF RS.1 7,01,56,625/ - . APART FROM ABOVE THE ASSESSEE HAD AGREED TO SETTLE THE CLAIM OF CREDITORS OF DEOG IRI SSK LTD. AMOUNTING TO RS.1,51,00,000/ - IN ORDER TO SEEK CONSENT FOR SALE OF LAND. THE CREDITORS TO WHOM PAYMENTS WERE MADE INCLUDE; INTERNATIONAL ASSETS RECONSTRUCTION CO. PVT. LTD. (IARC) (RS.40,00,000/ - ) AND ASSISTANT COMMISSIONER OF PF (RS.1,01,00, 000/ - ). THE SAID AMOUNT WAS DIRECTLY PAID BY THE ASSESSEE TO THE AFORESAID CREDITORS OF DEOGIRI SSK LTD. THE DRT ISSUED SALE CERTIFICATE IN RESPECT OF THE LAND IN FAVOUR OF ASSESSEE AND THE ASSESSEE PAID CONSIDERATION FIXED BY DRT . THE ORDER OF DRT WAS CHALLENGED BEFORE THE HONBLE BOMBAY HIGH COURT BY INTERESTED PARTIES. THE HONBLE HIGH COURT SET ASIDE THE ORDER OF DRT CONFIRMING SALE OF LAND TO ASSESSEE. RESULTANTLY, THE AMOUNT PAID BY ASSESSEE TOWARDS CONSIDERATION FOR PURCHASE OF LAND ALONG WITH I NTEREST WAS REFUNDED TO THE 4 ITA NO .1856/PUN/2016, A.Y. 2012 - 13 ASSESSEE. HOWEVER, THE AMOUNT OF RS.1,51,00,000/ - DIRECTLY PAID BY THE ASSESSEE TO THE CREDITORS OF DEOGIRI SSK LTD. COULD NOT BE RECOVERED. THE ASSESSEE IN ORDER TO AVOID PROTRACTED LITIGATION ASSIGNED THE RIGHTS TO ASSESSEE IN ORDER TO AVOID PROTRACTED LITIGATION ASSIGNED THE RIGHTS TO RECOVER R S.1,51,00,000/ - FROM DEOGIRI SSK LTD. TO M/S. ZAMBAD INFRASTRUCTURE LIMITED FOR RS.31,60,247/ - AND CLAIM ED THE BALANCE AMOUNT OF RS.1, 19,39,753/ - AS LOSS. THE SAID AMOUNT WAS WRITTEN OFF AS BAD DEBT BY THE ASSESSEE IN ITS BOOKS. THE LD. AR SUBMITTED THAT DEOGIRI SSK LTD. WAS UNDER FINANCIAL CRUNCH AND COULD NOT PAY ITS LIABILITIES, THEREFORE, IT WAS BEFORE THE DRT. THE SUGAR FACTORY WAS SHUT DOWN AND THERE WAS WAS BEFORE THE DRT. THE SUGAR FACTORY WAS SHUT DOWN AND THERE WAS REMOTE POSSIBILITY OF RESTARTING THE SAME IN NEAR FUTURE. THE RE WERE PENDING RECOVERY SUITS FROM THE CREDITORS IN DRT. THUS, THERE WAS NO WAY THE ASSESSEE COULD HAVE RECOVERED THE AMOUNT OF RS.1,51,00,000/ - PAID ON BEHALF OF THE DEOGIRI SS K LTD. TO ITS CREDITORS. THE ASSESSEE PAID THE SAID AMOUNT TO CLEAR ENCUMBRANCES AND TO SECURE THE TRANSACTION OF SALE OF LAND THROUGH DRT. SINCE, THE S ALE OF LAND EXECUTE D IN FAVOUR OF THE LAND THROUGH DRT. SINCE, THE S ALE OF LAND EXECUTE D IN FAVOUR OF THE ASSESSEE THROUGH DRT WAS SET ASIDE BY THE HONBLE BOMBAY HIGH CO URT , THE ENTIRE TRANSACTION COULD NOT MATERIALIZE . T HE ASSESSEE SUFFERED LOSS ON ACCOUNT OF NON RECOVERY OF PAYMENTS MADE TO THE CREDITORS OF DEOGIRI SSK LTD. THE LD. AR SUBMITTED THAT AFTER THE ISSUANCE OF SALE CERTIFICATE BY DRT THE NAME OF ASSESSEE WA S ENTERED IN THE REVENUE RECORDS. THE LD. AR REFERRED TO PAGES 77 TO 85 OF THE PAPER BOOK I.E. 7/12 EXTRACTS INDICATING REFERRED TO PAGES 77 TO 85 OF THE PAPER BOOK I.E. 7/12 EXTRACTS INDICATING NAME OF THE ASSESSEE IN THE REVENUE RECORDS . THE LD. AR SUBMITTED THAT THE LOSS SUFFERED BY THE ASSESSEE IN RESPECT OF PAYMENTS MADE T O CREDITORS OF DEORIGI SSK LD. IS ON REVENUE ACCOUNT. TO SUPPORT HIS SUBMISSIONS THE LD. AR PLACED RELIANCE ON THE FOLLOWING DECISIONS : I . INDO RAMA SYNTHETICS (I) LTD. VS. COMMISSIONER OF INCOME TAX, 333 ITR 18 (DELHI); ITR 18 (DELHI); II . COMMISSIONER OF INCOME TAX VS. PRIYA VILLAGE ROADSHOWS LTD., 332 ITR 594 (DELHI); 5 ITA NO .1856/PUN/2016, A.Y. 2012 - 13 III . COMMISSIONER OF INCOME TAX VS. ANJANI KUMAR CO. LTD., 259 ITR 114 (RAJ.); IV . CHEMPLAST SANMAR LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX, IV . CHEMPLAST SANMAR LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX, 97 TAXMANN.COM 347 (MADRAS); V . BINANI CEMENT LTD. VS. COMMISSIONER OF INCOME TAX, 380 ITR 116 (CALCUTTA); VI . M/S. PIK PEN PRIVATE LIMITED VS. INCOME TAX OFFICER IN ITA NO. 6847/MUM/2008 FOR ASSESSMENT YEAR 2005 - 06 DECIDED ON 28 - 01 - 2010; 28 - 01 - 2010; VII . ADITYA BIRLA POWER COMPANY LIMITED VS. ASSISTANT COMMISSIONER OF INCOME TAX IN ITA NO. 1115 /MUM/2012 FOR ASSESSMENT YEAR 2007 - 08 DECIDED ON 07 - 09 - 2018. 4. ON THE OTHER HAND SHRI PANKAJ GARG REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN VEHEMENTLY DEFENDED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN HOLDING THE AMOUNT PAID BY THE ASSESSEE TO TH E CREDITORS OF DEOGIRI SSK LTD. AS CAPITAL EXPENDITURE. THE LD. DR SUBMITTED THAT IN THE FIRST INSTANCE THE ASSESSEE CANNOT CLAIM THE AMOUNT AS BAD DEBT AS THE AMOUNT WAS PAID BY M/S. ZAMBAD INFRASTRUCTURE LIMITED A SISTER CONCERN OF THE ASSESSEE. THE ASSESSEE HAS NOT PLACED ON RECORD ANY AGREEMENT OR MOU TO SHOW THAT THE ASSESSEE WOULD BECOME THE OWNER OF LAND AFTER EXECUTION OF SALE THE ASSESSEE WOULD BECOME THE OWNER OF LAND AFTER EXECUTION OF SALE APPROVED BY THE DRT. THE LD. DR FURTHER SUBMITTED THAT IF AT ALL THE CONTENTIONS OF THE ASSESSEE ARE TO BE BELIEVED THA T THE AMOUNT WAS PAID ON BEHALF OF THE ASSESSEE, THE SAME IS CAPITAL IN NATURE AS IT WAS PAID TO ACQUIRE CAPITAL ASSET. IF THE ASSESSEE HAS SUFFERED ANY LOSS IN THE TRANSACTION IT HAS TO BE CAPITALIZED. THE ASSESSEE IN NO MANNER CAN BE ALLOWED TO CLAIM T HE EXPENDITURE /LOSS ON REVENUE ACCOUNT. ALLOWED TO CLAIM T HE EXPENDITURE /LOSS ON REVENUE ACCOUNT. 6 ITA NO .1856/PUN/2016, A.Y. 2012 - 13 5. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW . THE SOLITARY ISSUE RAISED IN THE APPEAL BY THE ASSESSEE IS AGAINST REJECTING ASSESSEES CL AIM OF RAISED IN THE APPEAL BY THE ASSESSEE IS AGAINST REJECTING ASSESSEES CL AIM OF WRITING OFF OF RS.1,19,39,753/ - HOLDING IT TO BE CAPITAL IN NATURE. WHETHER THE EXPENDITURE INCURRED BY THE ASSESSEE ON PAYMENTS MADE TO CREDITORS OF DEOGIRI SSK LTD. AS PART OF TRANSACTION FOR ACQUIRING LAND IS CAPITAL OR REVENUE IS A MIXED QUESTI ON OF LAW AND FACT. 6. A S PER THE CONTENTIONS OF ASSESSEE , THE ASSESSEE COMPANY WAS 6. A S PER THE CONTENTIONS OF ASSESSEE , THE ASSESSEE COMPANY WAS INCORPORATED WITH A SPECIAL PURPOSE FOR GENERATING FUNDS AND ACQUIRING LAND OF DEOGIRI SSK LTD. THAT WAS UNDER LITIGATION PENDING WITH DRT. THE DRT VIDE ORDER DATED 14 - 05 - 2010 GRANTED PERMISSION FOR SALE OF LAND OWNED BY THE DEOGIRI SSK LTD. SINCE, ZAMBAD INFRASTRUCTURE LTD. WAS UNABLE TO GENERATE FUNDS REQUISITE FUNDS FOR PURCHASING LAND, THE ASSESSEE COMPANY WERE INCORPORATED PARTICULARLY WITH THIS OBJECT ON 26 - 07 - 2010. A COMPANY WERE INCORPORATED PARTICULARLY WITH THIS OBJECT ON 26 - 07 - 2010. A PERUSAL OF CERTIFICATE OF SALE DATED 04 - 11 - 2010 ISSUED BY THE AURANGABAD BENCH OF DRT AT PAGES 68 TO 70 OF THE PAPER BOOK SHOWS THAT THE CERTIFICATE HAS BEEN ISSUED IN FAVOUR OF ASSESSEE FOR PURCHASE OF LAND ADMEASURING 62H 52R. THE POSSESSION OF AFORESAID LAND WAS HANDED OVER TO ASSESSEE VIDE P OSSESSION/ K ABZA P AVTI DATED 11 - 11 - 2010 AT PAGES 71 TO 73 OF THE PAPER BOOK. THE NAME OF ASSESSEE WAS ENTERED IN R EVENUE 73 OF THE PAPER BOOK. THE NAME OF ASSESSEE WAS ENTERED IN R EVENUE RECORDS (7/12 EXTRACTS). IN THE MEANTIME THE ORDER OF DRT WAS CHALLENGED BEFORE THE HONBLE BOMBAY HIGH COURT BY THE INTERVENERS/ INTER ESTED PARTIES. THE HONBLE HIGH COURT VIDE ORDER DATED 29 - 11 - 2011 SET ASIDE THE ORDER OF TRIBUNAL IN WRIT PETITION NO. 10934 OF 2010. CONSEQUENT TO THE ORDER OF HONBLE HIGH COURT THE AMOUNT DEPOSITED BY ASSESSEE/ON BEHALF OF ASSESSEE IN RESPECT OF THE LAND IN QUESTION RS.17,01,56,625/ - WAS PAID ASSESSEE IN RESPECT OF THE LAND IN QUESTION RS.17,01,56,625/ - WAS PAID BACK TO THE ASSESSEE ALONG WITH INTEREST THEREON RS.1,38,16,181/ - . THUS, THE TRANSACTION OF PURCHASE OF LAND BY THE ASSESSEE DID NOT FRUCTIFY. 7 ITA NO .1856/PUN/2016, A.Y. 2012 - 13 7. APART FROM THE PAYMENT MADE FOR PURCHASE OF LAND , ANOTHER SUM OF RS.1,51,00,000/ - WAS PAID BY M/S. ZAMBAD INFRASTRUCTURE LIMITED DIRECTLY TO THE CREDITORS OF DEOGIRI SSK LTD. WHICH INCLUDED IARC, MUMBAI AND TO THE CREDITORS OF DEOGIRI SSK LTD. WHICH INCLUDED IARC, MUMBAI AND ASSISTANT COMMISSIONER OF PROVIDENT FUND. THE SAID PAYMENT WAS MADE FOR OBTAINING CONSENT FOR SALE OF LAND FROM CREDITORS. HOWEVER, AFTER CANCELLATION OF TRANSACTION FOR SALE OF LAND , THE ASSESSEE COULD NOT RECOVER THE SAID AMOUNT FROM DEOGIRI SSK LTD. AS IT WAS UNDER FINANCIAL DISTRESS. THE ASSESSEE RELINQUISHED I TS CLAIM OVER THE CREDITORS AND ASSIGNED THE RIGHTS TO REC OVER RS.1,51,00,000/ - FROM DEOGIRI SSK LTD. AGAINST RIGHTS TO REC OVER RS.1,51,00,000/ - FROM DEOGIRI SSK LTD. AGAINST CONSIDERATION OF RS.31,60,247/ - TO ZAMBAD INFRASTRUCTURE LTD., ITS PARENT COMPANY. THE ASSESSEE THEREAFTER CLAIMED LOSS OF RS.1,19,39,753/ - (RS.1 ,51,00,000/ - - RS.31,60,247/ - ) AND DECIDED TO WRITE OFF THE SAME. THE DEPARTMENT DISALLOWED ASSESSEES CLAIM HOLDING THE EXPENDITURE/LOSS ON CAPITAL ACCOUNT. THE DISPUTE IN PRESENT APPEAL IS WHETHER THE EXPENDITURE/LOSS OF RS.1,19,39,753/ - IS ON CAPITAL OR REVENUE ACCOUNT. EXPENDITURE/LOSS OF RS.1,19,39,753/ - IS ON CAPITAL OR REVENUE ACCOUNT. 8. TO DECIDE THE ISSUE, IT WOULD BE RELEVANT TO EXAMINE THE PURPOSE FOR INCURRING EXPENDITURE OF RS.1,51,00,000/ - . AS IS EVIDENT FROM THE ORDER OF DRT THE AFORESAID PAYMENT IS NOT PART OF CONSIDERATION FIXED FOR SALE OF LAND. THE A SSESSEE PAID RS.1,51,00,000/ - OVER AND ABOVE THE PRICE FIXED BY DRT FOR SALE OF LAND. THE ASSESSEE PAID SAID AMOUNT TO THE CREDITORS TO BY DRT FOR SALE OF LAND. THE ASSESSEE PAID SAID AMOUNT TO THE CREDITORS TO ENSURE THAT THE TRANSACTION FOR PURCHASE OF LAND IS CARRIED OUT WITHOUT OBJECTION FROM ANY QUARTERS. THE AFORESAID AMO UNT WAS PAID BY THE ASSESSEE TO DISCHARGE STATUTORY LIABILITIES OF DEOGIRI SSK LTD. THE AMOUNT WAS PAID TO IARC R S .40,00,000/ - AND ASSISTANT COMMISSIONER OF PROVIDENT FUND RS.1,01,00,000/ - AND DEOGIRI SSK LTD. RS.5,00,000/ - TO PAY SOME OTHER CREDITORS. T HE SAID AMOUNT WAS PAID IN FURTHERANCE OF THE OBJECT OF OTHER CREDITORS. T HE SAID AMOUNT WAS PAID IN FURTHERANCE OF THE OBJECT OF ACQUIRING LAND BUT NOT AS PART OF CONSIDERATION FOR ACQUIRING CAPITAL ASSET. NO CAPITAL ASSET WAS ACQUIRED BY THE ASSESSEE BY VIRTUE OF SUCH PAYMENT. 8 ITA NO .1856/PUN/2016, A.Y. 2012 - 13 THE ASSESSEE PAID THE AMOUNT FOR UNHINDERED EXEC UTION OF TRANSACTION OF SALE OF LAND. IN OUR CONSIDERED VIE W S, THE AMOUNT OF RS.1,51,00,000/ - PAID BY ASSESSEE IS NOT CAPITAL IN NATURE AND IS ALLOWABLE U/S. 37(1) OF THE ACT. BY ASSESSEE IS NOT CAPITAL IN NATURE AND IS ALLOWABLE U/S. 37(1) OF THE ACT. 9. THE ASSESSEE ASSIGNED ITS RIGHT TO RECOVER ABOVE SAID AMOUNT FROM DEOGIRI SSK LTD. TO ITS PARENT COMPANY ZAMBAD INFRASTRUCTURE LTD. FOR RS.31,60,247/ - AND HAS OFFERED THE SAME TO TAX, THE REMAINING AMOUNT I.E. RS.1,19,39,753/ - IS ALLOWABLE AS BUSINESS EXPENDITURE U/S. 37(1) OF THE ACT. ACT. 10. I N A CASE C OMMISSIONER OF INCOME TAX VS. ANJANI KUMAR CO. LTD. (SUPRA) , WHERE THE ASSESSEE HAD PAID ADVANCE FOR ACQUIRING LAND TO SET UP A FACTORY BUT FAILED TO RECOVER THE SAID ADVANCE, AS THE TRANSACTION FAILED TO MATERIALIZE THE HONBLE RAJASTHAN HIGH COURT HELD T HAT WHEN LAND WAS NOT ACQUIRED, NO CAPITAL ASSET HAD COME INTO EXISTENCE, THEREFORE, THE PAYMENT ACQUIRED, NO CAPITAL ASSET HAD COME INTO EXISTENCE, THEREFORE, THE PAYMENT OF ADVANCE IS TO BE ALLOWED AS BUSINESS LOSS. SIMILAR VIEW WAS TAKEN BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF M/S. PIK PEN PRIVATE LIMITED VS. INC OME TAX OFFICER (SUPRA) FOLLOWING THE RATIO LAID DOWN IN COMMISSIONER OF INCOME TAX VS. ANJANI KUMAR CO. LTD. (SUPRA). 11. THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF BINANI CEMENT LTD. VS. COMMISSIONER OF INCOME TAX (SUPRA) HAS HELD THAT THE EXPENDI TURE INCURRED ON CONSTRUCTION OF NEW FACTORY WHICH WAS SUBSEQUENTLY ABANDONED, IS ALLOWABLE U/S. 37 OF THE ACT. 12. WE ARE OF THE VIEW THAT THE CASE OF ASSESSEE IS RATHER ON BETTER PEDESTAL , AS THE PAYMENT MADE BY ASSESSEE TO THE CREDITORS OF DEOGIRI SSK 9 ITA NO .1856/PUN/2016, A.Y. 2012 - 13 LTD. WAS NOT PART OF CONSIDERATION FOR ACQUIRING CAPITAL ASSET. THUS, IN VIEW OF THE FACTS OF THE CASE AND VARIOUS CASE LAWS DISCUSSED ABOVE , THE APPEAL OF ASSESSEE DESERVES TO BE ALLOWED. THE IMPUGNED ORDER IS SET ASIDE APPEAL OF ASSESSEE DESERVES TO BE ALLOWED. THE IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF ASSESSEE IS ALLOWED. 13. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON M O N D A Y , THE 1 4 T H DAY OF JANUARY, 201 9 . SD/ - SD/ - ( R.S. SYAL ) (VIKAS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 1 4 T H JANUARY, 2019 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 2, AURANGABAD 4. THE PR. COMMISSIONER OF INCOME TAX - 2, AURANGABAD 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / / / TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE