ITO 2(1)(2), MUMBAI V. CHIRAAYU ESTATE & DEVELOPMNET P. LTD, MUMBAI

ITA 263/MUM/2010

• Counselvise Citation: 26319914 RSA 2010
• Duration Of Justice: 1 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 02-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 11-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D EVI SINGH
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Capital asset; Valuation report
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, MUMBAI BEFORE SHRI R.V. EASWAR, PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 263/MUM/2010 (ASSESSMENT YEAR: 2006-07) INCOME TAX OFFICER - 2(1)(2) M/S. CHIRAAYU ESTATE & DEV. PVT. LTD. ROOM NO. 543, 5TH FLOOR SAHARA INDIA POINT, CTS 40- 44 AAYAKAR BHAVAN, M.K. ROAD VS. S.V. ROAD, GOREGAON (W) MUMBAI 400020 MUMBAI 400014 PAN - AACCC 3729 H APPELLANT RESPONDENT APPELLANT BY: SHRI DEVI SINGH RESPONDENT BY: SHRI VIJAY MEHTA DATE OF HEARING: 02.08.2011 DATE OF PRONOUNCEMENT: 24.08.2011 O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A) IV, MUMBAI DATED 27.10.2009. 2. REVENUE IS AGGRIEVED ON THE FOLLOWING GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.1,61,95 ,917/- MADE U/S. 69B WITHOUT APPRECIATING THE FACT THAT THE TRA NSACTIONS REFLECTED IN THE ASSESSEES BOOKS WERE SHAM. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.1,26,64 ,239/- BY HOLDING THAT NO CAPITAL GAIN AROSE TO THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE PROVISIONS OF SEC. 4 5(3) WERE APPLICABLE IN RESPECT OF THE TRANSFER OF LAND BY TH E ASSESSEE TO THE JOINT VENTURE COMPANY AND THAT THE VALUE OF THE LAND TRANSFERRED WAS RECORDED AT A FIGURE LOWER THAN THE MARKET VALUE IN THE BOOKS OF THE JOINT VENTURE. 3. BRIEFLY STATED, ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF REAL ESTATE, WHICH HAS FILED ITS RETURN OF INCOME DECLAR ING LOSS OF ` 575/-. IT HAS PURCHASED LAND FOR DEVELOPMENT OF RESIDENTIAL AND C OMMERCIAL PROPERTIES AT ITA NO. 263/MUM/2010 M/S. CHIRAAYU ESTATE & DEV. PVT. LTD. 2 VARIOUS PLACES WHICH INCLUDES KATNI, HARDWAR, ANANT APUR, CHANDIGARH, BENGUSARAI, ETC. PART OF THESE PROPERTIES PURCHASED IN EARLIER YEARS AND DURING THE YEAR UNDER CONSIDERATION WERE TRANSFERRE D TO A JOINT VENTURE COMPANY FORMED WITH M/S. SAHARA (INDIA) COMMERCIAL CORPORATION LTD. (SICCL) ALONG OTHER GROUP CONCERNS. IN THE BOOKS OF ACCOUNT ASSESSEE SHOWN THAT THESE PROPERTIES ARE TRANSFERRED TO THE JOINT VENTURE AT THE SAME COST PRICE. THE A.O. NOTICED THAT THE LANDS WERE PURCHAS ED ON THE LOAN TAKEN FROM SICCL ALONG WITH A FEW ENTITIES AND TRANSFERRE D TO THE JOINT VENTURE WITH OTHER ENTITIES AT THE COST PRICE. THE LANDS WE RE TRANSFERRED TO THE JOINT VENTURE WAS TREATED AS CAPITAL CONTRIBUTION BY THE AMOUNT OF LAND COST. THE CAPITAL ACCOUNT OF ASSESSEE HAS BEEN CREDITED IN TH E JOINT VENTURE. THE A.O. NOTICED THAT THE ENTIRE EXERCISE UNDERTAKEN BY THE ASSESSEE IN PURCHASE OF LAND AND TRANSFER TO THE JOINT VENTURE IS A SHAM AN D BOGUS TRANSACTION UNDERTAKEN FOR THE PURPOSE OF TAX EVASION AND GAVE A FINDING THAT THE INCOMES ARISE IN THE HANDS OF THE SICCL. HOWEVER, H E ALSO NOTICED THAT THE LAND HAS BEEN PURCHASED AT VARIOUS PLACES AND THE V ARIATION IN THE RATE OF LAND WAS VERY SIGNIFICANT. HE NOTICED THAT THE VARI ATION WAS FROM ` 9,00,000/- TO ` 9,50,000/- FOR KATNI, ` 6.43 LAKHS TO 143.86 LAKHS FOR ANANTPUR AND LIKEWISE. ON LOOKING ON THE HUGE VARIA TION IN THE RATE THE A.O. CAME TO THE CONCLUSION THAT THE TRANSACTION PATTERN IS NOT REAL AND AFTER ISSUING A SHOW CAUSE NOTICE TO THE ASSESSEE TO EXPL AIN THE VARIATIONS AND ASKING FOR REPORT OF THE DVO TOWARDS THE COST OF LA ND FOR PURCHASE PRICE HE DETERMINED THE UNDISCLOSED AMOUNT AT ` 60,56,27,667/- AS ADDITION UNDER SECTION 69B. SIMILAR AMOUNT WAS ALSO ADDED AS ADDIT ION UNDER SECTION 45(3) AS THE PROPERTY STOOD TRANSFERRED TO THE JOINT VENT URE COMPANY. THUS THE A.O. MADE TWO ADDITIONS AND RAISED THE DEMAND. 4. ASSESSEE POINTED OUT THAT THE A.O. TOOK THE PURCHAS E PRICE OF THE ENTIRE LAND NOT ONLY BY THE ASSESSEE BUT ALSO BY TH E OTHER GROUP CONCERNS INTO CONSIDERATION AND ARRIVED AT THE AMOUNTS WRONG LY AND FURNISHED DETAILS OF THE VALUE AT WHICH IT IS PURCHASED AND THE MAXIM UM APPLICABLE RATE AND DIFFERENCE, IF ANY, ON THE SAME PRICE ADOPTED BY TH E A.O. THE A.O. NOTICING THE MISTAKE MODIFIED THE ORDER AND DETERMINED THE U NDISCLOSED INVESTMENT UNDER SECTION 69B AT ` 1,61,95,917/- AS AGAINST ` 60,57,27,667/-. AS TWO OF ITA NO. 263/MUM/2010 M/S. CHIRAAYU ESTATE & DEV. PVT. LTD. 3 THE LANDS AT BENGUSARI AND VELLORE WERE NOT TRANSFE RRED TO THE JOINT VENTURE THE ADDITION UNDER SECTION 45(3) WAS RESTRICTED TO ` 1,26,64,239/- AS AGAINST THE AMOUNT OF ` 60,57,27,667/- ORIGINALLY ADDED BY THE A.O. ASSESSE E PREFERRED APPEAL BEFORE THE CIT(A) ON THE ORIGINAL AMOUNTS OF ADDITION AND SUBSEQUENTLY RESTRICTED TO THE REVISED ADDITIONS. T HE CIT(A) VIDE HIS ABOVE REFERRED ORDER EXAMINED THE ISSUE AND DELETED THE A DDITIONS MADE UNDER SECTION 69B AS WELL AS 45(3). 5. THE CIT(A) IN HIS ORDER HAS HELD THAT THE LAND HAS BEEN PURCHASED UNDER REGISTERED AGREEMENTS AND SINCE THE AGREEMENT S WERE REGISTERED THERE IS NO NEED FOR VALUATION REPORT. HE ALSO FURTHER HE LD THAT THERE IS NOTHING ON RECORD TO SUGGEST THAT THERE IS UNEXPLAINED INVESTM ENT AND AS INVESTMENT HAS BEEN BOOKED PROPERLY IN THE BOOKS, PROVISIONS O F SECTION 69B ARE NOT ATTRACTED. HE ALSO RELIED ON VARIOUS CASE LAWS RELI ED BY THE ASSESSEE IN COMING TO THE CONCLUSION THAT THE ADDITION MADE BY THE A.O. CANNOT BE SUSTAINED. APART FROM THAT HE ALSO HELD THAT THE VA LUE RECORDED IN THE BOOKS OF THE JOINT VENTURE IS THE SAME AS THAT OF RECORDE D BY THE ASSESSEE IN THE BOOKS OF ACCOUNT AND, THEREFORE, ADDITION UNDER SEC TION 45(3) CANNOT BE MADE. FOR THESE REASONS, VIDE HIS DETAILED ORDER, H E DELETED THE ADDITIONS, HENCE, REVENUE IS AGGRIEVED. 6. DRAWING OUR ATTENTION TO THE ORDERS OF THE A.O. AND THE CIT(A) THE LEARNED D.R. SUBMITTED THAT THE CIT(A) ERRED IN DEL ETING THE ADDITION MADE UNDER SECTION 69B AS ASSESSEE COULD NOT EXPLAIN THE VARIATIONS IN PRICES PROPERLY. HE HAS FILED A WRITTEN SUBMISSION IN THIS REGARD EXPLAINING THE FACTS AND RELYING ON THE ORDERS OF THE A.O. 7. THE LEARNED COUNSEL REFERRED TO THE FACTS AND SUBMI TTED THAT THE A.O. UNDERTAKEN THE EXERCISE TO EXAMINE THE PURCHASE OF PROPERTIES AND ENTERING INTO THE JOINT VENTURE AND HE DISCUSSED THE ISSUE T HAT ASSESSEES TRANSACTIONS ARE SHAM AND BOGUS VIDE HIS DISCUSSION UPTO PARA 21. THEN HE REFERRED TO THE WORKING IN PAGE 33 OF THE ORDER AND HOW THE A.O. ARRIVED AT THE DIFFERENCE AT ` 60,57,27,667/-, WHICH WAS SUBSEQUENTLY RESTRICTED T O ` 1,61,95,917/-. IT WAS THE SUBMISSION OF THE LEARNED COUNSEL THAT THE ASSESSEE PURCHASED THE PROPERTIES NOT ONLY IN EARLI ER YEARS BUT ALSO IN THIS ITA NO. 263/MUM/2010 M/S. CHIRAAYU ESTATE & DEV. PVT. LTD. 4 YEAR AND IT WAS CATEGORICALLY EXPLAINED TO THE A.O. THAT THE RATES OF PURCHASES OF LAND DIFFER FROM PERSON TO PERSON DEPE NDING UPON VARIOUS CIRCUMSTANCES, NAMELY (I) TIME OF PURCHASES, (II) L OCATION OF PARTICULAR LAND, (III) SIZE OF LAND, (IV) NATURE AND QUALITY OF LAND AND (V) EXTENT OF NEED OF SELLER AND PURCHASER. IT WAS ALSO EXPLAINED THAT IF A MAJO R VENTURE IS TAKEN UP IN A PARTICULAR PLACE IMMEDIATELY THE LAND RATES OF ADJO INING AND ADJACENT LAND INCREASES AND THE ASSESSEE WAS MADE TO PURCHASE THE LAND AT MARKET PRICE THEN AVAILABLE. IT WAS SUBMITTED THAT THE RATES VAR Y OVER A PERIOD OF TIME AND WHATEVER PRICE IT HAS PAID TO VARIOUS SELLERS OF TH E PROPERTIES, THE SAME WAS RECORDED AND THE DEEDS WERE ALSO REGISTERED, THEREF ORE, THE ALLEGATION THAT ASSESSEE MUST HAVE PAID UNIFORM PRICE FOR LANDS PUR CHASED OVER A PERIOD OF TIME HAS NO SUBSTANCE. IT WAS ALSO SUBMITTED THAT T HE A.O. DOES NOT HAVE ANY EVIDENCE THAT ASSESSEE MADE UNDISCLOSED INVESTM ENTS IN LAND AT VARIOUS LOCATIONS. HE THEN REFERRED TO THE DETAILED ORDER O F THE CIT(A) INCLUDING VARIOUS CASE LAWS GOVERNING THE CONDITIONS UNDER SE CTION 69B. HE DREW OUR ATTENTION TO THE PRINCIPLES ESTABLISHED BY THE ITAT IN THE CASE OF DILSHAD TRADING CO. (P) LTD. VS. ITO 49 ITD 348 (BOM), CIT VS. LALIT BHASIN 290 ITR 245 (DEL) AND CIT VS. K.K. ENTERPRISES 178 TAXMAN 1 87 (RAJ.). WITH REFERENCE TO THE ADDITION UNDER SECTION 45(3) IT WA S HIS SUBMISSION THAT PROVISIONS OF SECTION 45(3) ARE NOT APPLICABLE AS T HE SAID PROVISION DEEMS THE FULL VALUE OF CONSIDERATION, THE AMOUNT RECORDED IN THE BOOKS AND THE A.O. ACCEPTS THAT THE AMOUNT RECORDED IN THE BOOKS OF TH E JOINT VENTURE IS THE SAME AS THAT OF COST OF THE ASSESSEE IN ITS BOOKS. THEREFORE, THERE IS NO SCOPE FOR ANY PRESUMPTION UNDER SECTION 45(3) FOR MAKING AN ADDITION OF THE DIFFERENCE AMOUNT AS SOUGHT OUT BY THE A.O. 8. WE HAVE CONSIDERED THE ISSUE. AS SEEN FROM THE ORDE R OF THE A.O. HIS MAIN FOCUS IN THE ASSESSMENT UNDER SECTION 143(3) D ATED 31.12.2008 IS TO HOLD THAT THE TRANSACTIONS OF THE ASSESSEE COMPANY IN PURCHASE OF LAND, TAKING LOANS FROM SICCL AND TRANSFERRING THE LAND T O THE JOINT VENTURE FOR EFFECTIVE DEVELOPMENT WAS A SHAM TRANSACTION. HE AL SO HELD THAT THESE TRANSACTIONS ARE FICTITIOUS IN NATURE AND AS A TOOL FOR TAX EVASION AND ASSESSEE COMPANY IS A MERE NAME LENDER TO ALL THE T RANSACTIONS ROUTED THROUGH SICCL. THAT ISSUE WAS NOT BEFORE US FOR CON SIDERATION EVENTHOUGH ITA NO. 263/MUM/2010 M/S. CHIRAAYU ESTATE & DEV. PVT. LTD. 5 THE A.O. ELABORATELY DISCUSSED FROM PARAS 12 TO 21, THOSE OBSERVATIONS ARE IRRELEVANT TO THE ADDITIONS MADE UNDER SECTION 69B AND 45(3). THE REVENUE IS AGGRIEVED ON THE DELETION OF THE TWO ADDITIONS U NDER SECTION 69B AND 45(3). 9. COMING TO THE ADDITION UNDER SECTION 69B WE NOTICE THAT THE A.O. HAS NOT MADE OUT ANY CASE FOR MAKING THE ADDITION UNDER SECTION 69B. THE PROVISIONS OF SECTION 69B ARE AS UNDER: - 69B. WHERE IN ANY FINANCIAL YEAR THE ASSESSEE HAS MADE INVESTMENTS OR IS FOUND TO BE THE OWNER OF ANY BULL ION, JEWELLERY OR OTHER VALUABLE ARTICLE, AND THE [ASSESSING] OFFICER FINDS THAT THE AMOUNT EXPENDED ON MAKING SUCH INVESTMENTS OR IN AC QUIRING SUCH BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE EXCEED S THE AMOUNT RECORDED IN THIS BEHALF IN THE BOOKS OF ACCOUNT MAI NTAINED BY THE ASSESSEE FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT SUCH EXCESS AMOUNT OR THE EXPLANA TION OFFERED BY HIM IS NOT, IN THE OPINION OF THE [ASSESSING] OFFIC ER, SATISFACTORY, THE EXCESS AMOUNT MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. 10. AS PER THE SECTION THE FOLLOWING INGREDIENTS MUST P RE-EXIST BEFORE INVOKING THE PROVISIONS OF SECTION 69B:- I) IT IS FOUND THAT THE ASSESSEE HAS MADE INVESTMENT O R THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE, AND II) IT IS FOUND THAT THE AMOUNT EXPENDED ON MAKING SUCH INVESTMENT OR IN ACQUIRING SUCH BULLION, JEWELLERY OR OTHER VA LUABLE ARTICLE EXCEEDS THE AMOUNT RECORDED IN THAT BEHALF IN THE B OOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE, AND III) EITHER THE ASSESSEE OFFERS NO EXPLANATION ABOUT SUC H EXCESS AMOUNT, OR THE EXPLANATION OFFERED BY HIM IS NOT SA TISFACTORY. THE ABOVE CIRCUMSTANCES ARE CUMULATIVE. IF ALL THE CIRCUMSTANCES EXIST, THE EXCESS AMOUNT MAY BE DEEMED TO BE INCOME OF THE ASSESSEE FOR THE FINANCIAL YEAR IN WHICH SUCH INVESTMENT WAS MADE. I T MAY BE NOTED THAT THE LEGAL FICTION ENACTED IN SECTION 69B COMES INTO EFF ECT ONLY WHERE ALL THE ABOVE CIRCUMSTANCES DO EXIST. THE ONUS IS ON THE RE VENUE TO PROVE THE ITA NO. 263/MUM/2010 M/S. CHIRAAYU ESTATE & DEV. PVT. LTD. 6 EXISTENCE OF ALL THE CIRCUMSTANCES. THERE IS NO ROO M OR SCOPE FOR MAKING ANY PRESUMPTION ABOUT THE EXISTENCE OF ANY REQUISITE CI RCUMSTANCES. THE FACTS IN THE PRESENT CASE ARE THAT ASSESSEE PURCHASED LAN D AT DIFFERENT PLACES AT DIFFERENT INTERVALS AT DIFFERENT PRICES. THESE PURC HASES WERE REGISTERED AND THE VALUE SHOWN IN THE PURCHASE AGREEMENT IS IN CON FORMITY WITH VALUATION OF STAMP DUTY AUTHORITIES. ASSESSEE EXPLAINED THAT THERE ARE VARIATIONS IN PURCHASES DUE TO SEVERAL FACTORS LIKE TIMINGS, LOCA TION, DEMAND AND THE FACT THAT THE PROJECT IS COMING UP NEAR THE AREA THE LAN D OWNERS INCREASE THE PRICE AUTOMATICALLY DEPENDING ON THE LOCATIONAL ADV ANTAGE. THERE IS NOTHING ON RECORD TO INDICATE THAT THE A.O. HAS FOUND ANY E VIDENCE TO SAY THAT MOST OF THE PURCHASES RECORDED WERE LESS THAN THE AMOUNT S ACTUALLY INVESTED. WHAT THE A.O. DID WAS TO TALLY THE PURCHASE PRICES OF LAND PURCHASED EARLIER TO THE VALUE OF THE LAND PURCHASED LATER OR THE MAX IMUM AMOUNT OF INVESTMENT PER ACRE IN A PARTICULAR PLACE. HE HAS N OT TAKEN INTO CONSIDERATION THE EXPLANATION OF THE ASSESSEE ABOUT THE VARIATIONS IN PURCHASE PRICES. IT IS ON RECORD THAT ALL THE PARTI ES IN THE GROUP HAVE JOINTLY AND SEVERALLY MADE THE INVESTMENT IN PARTICULAR PIE CE OF LAND, WHICH WAS ULTIMATELY TRANSFERRED TO THE JOINT VENTURE AS CAPI TAL CONTRIBUTION. LOOKING INTO THE FACTS OF THE CASE IN ITS ENTIRETY WE AGREE WITH THE FINDINGS OF THE CIT(A) THAT THE A.O. HAS NOT FOUND ANY MATERIAL, WH ATSOEVER, SO AS TO INVOKE THE PROVISIONS OF SECTION 69B. THE FINDINGS OF THE CIT(A) ON THIS ISSUE ARE AS UNDER: - 2.16 LOOKING TO THE FACTS OF THE CASE IN ITS ENTIR ETY, I FIND THAT THE A.O. HAS NOT FOUND ANY MATERIAL, WHATSOEVER, SO AS TO INVOKE THE PROVISIONS OF SECTION 69B OF THE I.T. ACT. THE APPE LLANT HAS PURCHASED LAND ALONGWITH OTHER ENTITIES AT DIFFERENT INTERVAL S DURING THE YEAR AT VARIOUS PRICES. THESE PRICES ARE DETERMINED ON VARI OUS FACTORS. THE FORCES OF MARKET CONDITIONS AND THE PHENOMENA OF DE MAND & SUPPLY WOULD BE A DETERMINATIVE FACTOR IN FIXING THE PRICE OF THE LAND AT THE SAME PLACE DURING DIFFERENT TIME. A LAND WHICH IS P URCHASED, SAY AT RS.1,00,000/- PER ACRE, 3 TO 4 MONTHS AGO AT A PLAC E, MAY COST MORE AFTER 3 TO 4 MONTHS LATER. DUE TO RAPID DEVELOPMENT OF INFRASTRUCTURE AND COMING OF BIG PROJECTS EVEN IN TIER 2 & 3 CITIE S OF THE COUNTRY, THE LAND PRICES ARE GOING STEADILY UP. THE LAND PRICES CANNOT BE STAGNANT. THIS PHENOMENA IN THE APPRECIATION OF LAND PRICES F ULLY JUSTIFIES THE PURCHASE OF LAND BY THE APPELLANT AT HIGHER PRICE A T THE SAME PLACE DURING THE YEAR THAN THE LAND PURCHASED EARLIER. I, THEREFORE, FIND THAT THERE IS NO JUSTIFICATION ON THE PART OF THE A.O. I N HOLDING THAT THE ITA NO. 263/MUM/2010 M/S. CHIRAAYU ESTATE & DEV. PVT. LTD. 7 MAXIMUM LAND PRICE PAID AT A GIVEN TIME MIGHT HAVE ALSO BEEN PAID FOR THE LAND PURCHASED EARLIER DURING THE YEAR. 11. WE AGREE WITH THE ABOVE FINDINGS AS THERE IS NOTHIN G ON RECORD TO INDICATE THAT ASSESSEE HAS INVESTED MORE THAN WHAT WAS RECORDED IN THE BOOKS OF ACCOUNT. IN FACT THE ASSESSING OFFICERS A PPROACH IN MAKING THE ADDITION ORIGINALLY AT ` 60,57,27,667/- IS ALSO NOT CORRECT AND RECTIFIED BY THE ORDER U/S154 SUBSEQUENTLY. THERE SEEMS TO BE CASUAL AND PEDANTIC APPROACH IN EXAMINING THE ISSUE AND MAKING THE ADDI TION BY THE A.O. 12. THE LEARNED COUNSEL RELIED ON THE JUDICIAL PRINCIPL ES ESTABLISHED IN THE CASE OF DILSHAD TRADING CO. (P) LTD. VS. ITO 49 ITD 348 (BOM), CIT VS. LALIT BHASIN 290 ITR 245 (DEL) AND THE DECISION OF THE HO N'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. K.K. ENTERPRISES 178 T AXMAN 187. ALL THE ABOVE JUDGEMENTS ARE IN SUPPORT OF THE ASSESSEE, WHERE IT WAS HELD THAT FOR INVOKING THE PROVISIONS OF SECTION 69B THERE SHOULD BE JUSTIFIABLE EVIDENCES FOR MAKING THE ADDITION. IN THE ABSENCE OF ANY MATE RIAL ON THE BASIS OF WHICH ADDITION UNDER SECTION 69B CAN BE MADE THAT A DDITION CAN ONLY BE CONSIDERED AS PRIMARILY ON IMAGINATIVE BASIS AND CO NJUNCTURES RATHER THAN ON THE BASIS OF ANY RECORD OR EVIDENCE. THERE IS NO BASIS FOR CONSIDERING THAT ASSESSEE HAS MADE ANY UNEXPLAINED INVESTMENT SO AS TO INVOKE PROVISIONS OF SECTION 69B. A.O. CANNOT PRESUME THE DIFFERENCE BET WEEN THE PURCHASE PRICE ON THE BASIS OF THE ENTRIES IN THE BOOKS OF ACCOUNT AS UNACCOUNTED INVESTMENTS IN THIS CASE. AS RIGHTLY POINTED OUT BY THE CIT(A) EVEN A REFERENCE TO VALUATION DOES NOT BRING INTO EXISTENC E THE SCOPE FOR MAKING THE ADDITION AS PROVISIONS OF SECTION 50C WERE ALSO ON STATUTE AND THERE IS NO DIFFERENCE BETWEEN THE VALUE AS REGISTERED AND THE VALUE AS MADE BY THE ASSESSEE IN THE BOOKS OF ACCOUNT. IN VIEW OF THIS, THERE IS NO MERIT IN REVENUES GROUND IN CONTESTING THE ORDER OF THE CIT (A), WHO DELETED THE ADDITION NOT ONLY ON THE BASIS OF THE FACTS BUT ALS O ON PRINCIPLES OF LAW. WE ACCORDINGLY CONFIRM THE ORDER OF THE CIT(A) AND REJ ECT THE GROUND. ITA NO. 263/MUM/2010 M/S. CHIRAAYU ESTATE & DEV. PVT. LTD. 8 13. WITH REFERENCE TO SECOND GROUND, I.E. ADDITION MADE UNDER SECTION 45(3), PROVISIONS OF SECTION 45(3) ARE AS UNDER: - 45. (1) .. (2).. (3) THE PROFITS OR GAINS ARISING FROM THE T RANSFER OF A CAPITAL ASSET BY A PERSON TO A FIRM OR OTHER ASSOCIATION OF PERSONS OR BODY OF INDIVIDUALS (NOT BEING A COMPANY OR A CO-OPERATIVE SOCIETY) IN WHICH HE IS OR BECOMES A PARTNER OR MEMBER, BY WAY OF CAP ITAL CONTRIBUTION OR OTHERWISE, SHALL BE CHARGEABLE TO TAX AS HIS INC OME OF THE PREVIOUS YEAR IN WHICH SUCH TRANSFER TAKES PLACE AND, FOR TH E PURPOSES OF SECTION 48, THE AMOUNT RECORDED IN THE BOOKS OF ACC OUNT OF THE FIRM, ASSOCIATION OR BODY AS THE VALUE OF THE CAPITAL ASS ET SHALL BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET . 14. A PLAIN READING OF THE SAID PROVISION WOULD REVEAL THAT THE PROFITS OR GAINS ARISING FROM THE TRANSFER OF A CAPITAL ASSET TO ANOTHER ENTITY BY WAY OF CAPITAL CONTRIBUTION OR OTHERWISE SHALL BE CHARGEAB LE TO TAX. THE PROFIT OR GAIN WOULD ARISE ONLY WHEN THE TRANSFER HAS BEEN MA DE AT A PRICE WHICH IS MORE THAN THE COST PRICE AND THE DIFFERENCE BETWEEN THE COST PRICE AND AMOUNT AT WHICH TRANSFER HAS TAKEN PLACE CAN BE CHA RGED UNDER SECTION 45(3). IN THE INSTANT CASE THE PURCHASE PRICE OF LA ND AS RECORDED IN THE TRANSFERORS BOOK AND RECORDED IN THE BOOKS OF THE JOINT VENTURE ARE THE SAME. AS PER PROVISIONS OF SECTION 45(3) PRICE OF L AND RECORDED IN THE BOOKS OF JOINT VENTURE IS REQUIRED TO BE CONSIDERED AS RE CEIPT OF FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUED AS A RESULT OF TR ANSFER OF CAPITAL ASSETS. ONCE THE PRICE RECORDED IN THE JOINT VENTURES BOOK S IS TREATED AS FULL VALUE OF CONSIDERATION, THE PROVISIONS DO NOT PERMIT SUBS TITUTION OF ANY VALUE SO AS TO MAKE ADDITION UNDER SECTION 45(3). IN FACT THE A PPROACH OF THE A.O. IS ALSO NOT CORRECT IN THE SENSE THAT UNDER SECTION 45(3) O NCE THE FULL VALUE OF CONSIDERATION IS TAKEN AS THE AMOUNT RECORDED IN TH E BOOKS OF THE JOINT VENTURE, THE CAPITAL GAIN CAN BE WORKED OUT BY REDU CING THE COST OF PURCHASE AS PER THE BOOKS OF ASSESSEE. IN CASE THE A.O. SUBS TITUTES THE COST OF PURCHASE, BY WHATEVER MEANS, THEN THAT COST PRICE H AS TO BE ADJUSTED IN THE CAPITAL GAINS. THIS MAY RESULT IN A LOSS OF EQUAL A MOUNT AS THE BOOKS OF JOINT ITA NO. 263/MUM/2010 M/S. CHIRAAYU ESTATE & DEV. PVT. LTD. 9 VENTURE SHOW THE BOOK VALUE AS CONSIDERATION AND SU BSTITUTED COST PRICE( VALUE DETERMINED BY AO IN THE ORDER) AS A DEDUCTION . THIS WORKING WOULD RESULT IN A LOSS BUT NOT A GAIN. THIS SIMPLE ARITHM ETIC CALCULATION WAS MISSED BY THE A.O. AND HE MADE THE ADDITION UNDER S ECTION 45(3) WHICH DOES NOT PERMIT HIM TO SUBSTITUTE THE FULL VALUE OF CONSIDERATION OTHER THAN THE AMOUNT RECORDED IN THE BOOKS OF ACCOUNT OF THE JOINT VENTURE. AS THE ASSESSING OFFICERS ACTION IS NOT ACCORDING TO THE PROVISIONS OF SEC 45(3), THERE IS NO JUSTIFICATION FOR UPHOLDING THE CONTENT IONS OF REVENUE. WE UPHOLD THE ORDER OF THE CIT(A) AND REJECT THE GROUN D OF APPEAL. 15. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH AUGUST 2011. SD/- SD/- (R.V. EASWAR) (B. RAMAKOTAIAH) PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED: 24 TH AUGUST 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) IV, MUMBAI 4. THE CIT II, MUMBAI CITY 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.