Nath Developers, Pune V. DCIT, Circle 11(2), Pune

ITA 2208/PUN/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5899 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 06-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Assessee Lawyers: SACHIN SHASHIKANT AMDEKAR
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHE A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.2208/PN/2012 (ASSESSMENT YEAR : 2008-09) NATH DEVELOPERS, 512, 513, 514, SWAPNAPOORTI APPT., NARAYAN PETH, PUNE 411 030. PAN : AAGFN0442B . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 11(2), PUNE. . RESPONDENT APPELLANT BY : MR. SACHIN SHASHIKANT AMDEKAR RESPONDENT BY : MR. P. L. PATHADE DATE OF HEARING : 23-12-2013 DATE OF PRONOUNCEMENT : 28-01-2014 ORDER PER G. S. PANNU, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST AN ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, PUNE DATED 23.04.2012 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 27.12.2010 PAS SED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2008-09. 2. IN THIS APPEAL, THE ONLY ISSUE RAISED BY THE ASS ESSEE IS WITH REGARD TO BUSINESS LOSSES AMOUNTING TO RS.7,50,000/- DISALLOW ED BY THE INCOME-TAX AUTHORITIES. 3. BRIEFLY PUT THE RELEVANT FACTS ARE THAT ASSESSEE IS AN INDIVIDUAL WHO CARRIES ON THE BUSINESS OF CIVIL CONTRACTING AND DE ALING IN LANDS. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, ASSESSEE FILED A RETURN OF INCOME DECLARING TOTAL INCOME OF RS.28,41,350/-. THE ASSE SSING OFFICER NOTED THAT IN THE PROFIT & LOSS ACCOUNT ASSESSEE HAD CLAIMED AN A MOUNT OF RS.7,50,000/- ITA NO.2208/PN/2012 A.Y. 2008-09 BY WAY OF DEBIT UNDER HEAD PURCHASES OF LAND. TH E ASSESSEE EXPLAINED THAT THE SAID CLAIM REPRESENTED TWO AMOUNTS OF RS.1,50,0 00/- AND RS.6,00,000/- WHICH WERE ADVANCES GIVEN BY HIM TO TWO DIFFERENT P ERSONS FOR PURCHASE OF LANDS, WHICH ULTIMATE DID NOT MATERIALIZE AND THE A MOUNTS WERE NOT RECOVERED. AN AMOUNT OF RS.1,50,000/- WAS GIVEN IN THE FINANCI AL YEAR 2006-07 FOR ADVANCE AGAINST PURCHASE OF LAND AT VILLAGE- TAKAVE , TALUKA- MAVAL, DIST.- PUNE IN TERMS OF AN AGREEMENT OF SALE DATED 16.12.2 006. SUBSEQUENTLY, THE SAID AGREEMENT WAS CANCELLED BY THE ASSESSEE, BECAU SE A THIRD PARTY RAISED AN OBJECTION THAT THE LAND WAS ALREADY SOLD. SINCE ASSESSEE DID NOT RECOVER THE ADVANCE, IT WAS CLAIMED AS A LOSS BY WAY OF DEB IT TO THE PROFIT & LOSS ACCOUNT. SECONDLY, A SUM OF RS.6,00,000/- WAS GIVE N AS ADVANCE AGAINST THE PURCHASE OF LAND AT VILLAGE- KURWANDE, TALUKA- LONA VALA, DIST.- PUNE IN TERMS OF AN AGREEMENT OF SALE DATED 13.08.2007 AND THE TO TAL COST OF THE PROPERTY WAS FIXED AT RS.10,50,00,000/-. THE SAID DEED WAS ALSO SUBSEQUENTLY CANCELLED BUT ASSESSEE DID NOT RECEIVE BACK THE ADV ANCE OF RS.6,00,000/- AND THEREFORE IT WAS CLAIMED AS A LOSS BY WAY OF DEBIT TO THE PROFIT & LOSS ACCOUNT. 4. FACTUALLY SPEAKING, THERE IS NO DISPUTE THAT THE IMPUGNED SUMS WERE ADVANCED BY THE ASSESSEE DURING THE COURSE OF HIS B USINESS OF DEALING IN LANDS. BOTH THE LOWER AUTHORITIES HAVE NOT DISPUTE D THE SAID POSITION. IT IS ALSO NOT FACTUALLY DISPUTED BY ANY OF THE AUTHORITIES BE LOW THAT THE SAID ADVANCES HAVE NOT BEEN RECOVERED. THE POINT MADE BY THE ASS ESSING OFFICER, AND WHICH HAS BEEN AFFIRMED BY THE CIT(A) IS TO THE EFF ECT THAT NO EFFORTS WERE SHOWN TO HAVE BEEN MADE TO RECOVER THE SAID ADVANCE S. THE CIT(A) HAS ALSO OBSERVED THAT THE ASSESSEE COULD HAVE RECOVERED THE AMOUNTS BUT NOT ACCOUNTED FOR IT IN THE ACCOUNT BOOKS. IN VIEW OF THE AFORESAID OBJECTIONS, THE CLAIM OF THE ASSESSEE HAS BEEN REJECTED. 5. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE IS ENGAGED IN DEALING OF LANDS AND THE IMP UGNED AMOUNTS HAVE ITA NO.2208/PN/2012 A.Y. 2008-09 BEEN ADVANCED IN THE COURSE OF SUCH BUSINESS AND TH AT THE LOWER AUTHORITIES HAVE REJECTED THE CLAIM ON MERE CONJECTURES AND SUR MISES. 6. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE HAS REITERATED THE STAND OF THE AUTHORITIES BELOW BY PO INTING OUT THAT THE REASONS CONTAINED IN THE RESPECTIVE ORDERS, WHICH WE HAVE A LREADY ADVERTED TO IN PARA 4 ABOVE, AND ARE NOT BEING REPEATED FOR THE SAKE OF BREVITY. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN THIS CASE, IN OUR CONSIDERED OPINION, THE CLAIM OF THE ASSESSEE HAS B EEN REJECTED BY THE LOWER AUTHORITIES ON INSUFFICIENT AND IRRELEVANT CONSIDER ATIONS. THE ASSESSING OFFICER HAS NOT OBJECTED TO THE POSITION THAT THE AMOUNTS W ERE ADVANCED TO THE PARTIES IN THE COURSE OF BUSINESS OF DEALING IN LANDS. IT IS ALSO NOT DISPUTED THAT THE INTENDED PURCHASE OF LANDS DID NOT FRUCTIFY AND FUR THER THERE IS NO MATERIAL TO SHOW THAT THE AMOUNTS HAVE INDEED BEEN RECOVERED. THE CIT(A) HAS MERELY RAISED A SUSPICION THAT THE ASSESSEE COULD HAVE REC OVERED THE AMOUNTS AND NOT ACCOUNTED FOR. THERE IS NO MATERIAL, MUCH LESS ANY VERIFICATION CARRIED OUT BY THE LOWER AUTHORITIES WHICH COULD SUPPORT THE AF ORESAID PREMISE OF THE CIT(A). CONSIDERING THAT THE ADVANCES ARE MADE DUR ING THE COURSE OF BUSINESS AND THE SAME WERE CONNECTED WITH THE BUSIN ESS ACTIVITY OF LAND DEALINGS CARRIED OUT BY THE ASSESSEE, ANY LOSS SUFF ERED IN CARRYING OUT OF SUCH BUSINESS IS TO BE ALLOWED. MERELY BECAUSE THE ASSE SSING OFFICER DID NOT PERCEIVE THAT EFFORTS WERE MADE BY THE ASSESSEE TO RECOVER THE IMPUGNED AMOUNTS CANNOT BE A GROUND TO DENY DEDUCTION OF THE IMPUGNED LOSS BECAUSE IT IS QUITE CLEAR THAT THE IMPUGNED ADVANCES HAVE N OT BEEN RECOVERED AND THE ASSESSEE HAS SUFFERED A LOSS IN THE COURSE OF CARRY ING OUT OF BUSINESS OF LAND DEALINGS. FOR THE AFORESAID REASONS, WE DEEM IT FI T AND PROPER TO SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICE R TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF LOSS AMOUNT TO RS.7,50,00 0/-. THE ASSESSEE ACCORDINGLY SUCCEEDS. ITA NO.2208/PN/2012 A.Y. 2008-09 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED , AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH JANUARY, 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE, DATED : 28 TH JANUARY, 2014 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, PUNE; 4) THE CIT-I, PUNE; 5) THE DR, A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE