MEMA ENGINEERS & CONTRCTORS P. LTD, MUMBAI V. ITO 6(3)(3), MUMBAI

ITA 3253/MUM/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9654 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 15-03-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 26-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Opportunity of being heard; Principle of natural justice
• Section: 43B; 50C; 28; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE D.T. GARASIA, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.3253/M/2013 ASSESSMENT YEAR: 2008-09 M/S. MEMA ENGINEERS & CONTRACTORS PVT. LTD., B WING, G6, NAVBHARAT ESTATE, ZAKARIA BUNDER ROAD, SEWRI (W), MUMBAI 400 015 PAN: AAACH 1383F VS. ITO 6(3)(3), MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : MS. DINKLE HARIYA, A.R. REVENUE BY : SHRI SUMAN KUMAR, D.R. DATE OF HEARING : 22.06.2017 DATE OF PRONOUNCEMENT : 21.09.2017 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 25.02.2013 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2008-09. GROUND NO.1 2. THIS GROUND IS RELATING TO ADDITION MADE BY THE AO. ITA NO.3253/M/2013 M/S. MEMA ENGINEERS & CONTRACTORS PVT. LTD. 2 THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE W AS GRANTED THE LAND OF 55 ACRES OF MAHARASHTRA LAND VIDE LETTER DA TED 15.06.1968 FROM COLLECTORS OFFICE, BSA, MUMBAI. THE ASSESSEE WAS REQUIRED TO INCUR EXPENSES FOR DEVELOPMENT OF ROAD AND INFRASTR UCTURE FACILITIES. THE ASSESSEE HAS SOLD SOME OF THE PLOTS TO EXISTING LESSEE SINCE THEY WERE OCCUPANTS OF PLOTS SINCE LAST SEVERAL YEARS AN D HAD OFFERED THE SAME AS BUSINESS INCOME. DURING THE YEAR THE ASSES SEE HAD SOLD LAND TO M/S BHARAT INSULATIONS CO. AND HAD DECLARED RECEIPT OF SALE CONSIDERATION OF RS.1,79,265/-. FROM THE COPY OF RE GISTRATION DEED IT WAS NOTICED BY THE ASSESSING OFFICER (HEREINAFTER R EFERRED TO AS THE AO) THAT AS PER THE REGISTRATION AUTHORITY THE MARK ET VALUE OF THE PROPERTY WAS RS.25,65,000/- AND ACCORDINGLY REGISTR ATION CHARGES OF 1,28,250/- WAS PAID. THE AO ISSUED SHOW CAUSE NOTI CE AND IN REPLY TO SHOW CAUSE NOTICE ASSESSEE CONTENDED THAT ASSESS EE HAD GIVEN PLOT NO.844/25 AND PLOT NO.111-D ON LEASE TO M/S BHARAT INSULATIONS CO. IN THE YEAR 1972 FOR A PERIOD OF 98 YEARS. THE ASS ESSEE HAS CONSTRUCTED FACTORY BUILDING ON THE SAID PLOT AND H AS BEEN CARRYING MANUFACTURING ACTIVITIES SINCE LAST SEVERAL YEARS. THE UNEXPIRED PERIOD OF LEASE AS ON 31.03.08 WAS 62 YEARS. THE L ESSEE APPROACHED THE ASSESSEE FOR CONVEYANCE OF THE LAND FOR WHICH T HE MATTER WAS TAKEN UPTO THE COLLECTORS OFFICE AND COLLECTOR OF LAND, MUMBAI TO ARRIVE AT THE RATES FOR THE PURPOSE OF STAMP DUTY A ND REGISTRATION AND ALSO TO ARRIVE AT THE RATES AT WHICH THE PLOTS ARE TO BE ALLOTTED AND THE PRICE WAS DECIDED AT RS.1,79,266/-. THE ASSESSEE C ONTENDED THAT THIS IS NOT A SALE OF LAND. IT IS MERELY CONVEYANCE OF LAND ALREADY ITA NO.3253/M/2013 M/S. MEMA ENGINEERS & CONTRACTORS PVT. LTD. 3 OCCUPIED AND USED BY THE ASSESSEE. THE AO WAS OF A VIEW THAT SINCE ASSESSEE WAS LEASEHOLDER OF LAND FOR 98 YEARS AND H E IS PERPETUAL OWNER OF THE LAND AND OWNERSHIP OF THE LAND HAS BEE N CHANGED FROM ASSESSEE TO OTHERS, THEREFORE TRANSACTION IS CLEAR SALE OF LAND. IN VIEW OF SECTION 50C, AMOUNT OF RS.23,85,735/- IS ADDED T O THE TOTAL INCOME OF THE ASSESSEE. THE AO ISSUED SHOW CAUSE NOTICE AND IN REPLY ASSESSEE STATED THAT WHAT HAS BEEN SOLD WAS A CTUALLY LEASEHOLD LAND AND PRICE OF SUCH SALE WAS R.S.1,79,266/-. THE RE WAS NO SALE OF LAND AND IT WAS MERELY CONVEYANCE OF THE LAND ALREA DY OCCUPIED AND IN USE BY THE LESSEE. THE AO DID NOT SATISFY WITH T HE EXPLANATION AND CONSIDERING SECTION 50 C OF THE INCOME TAX ACT, HE HELD THAT ASSESSEE WAS A LEASEHOLDER OF THE LAND FOR 98 YEARS AND THEREFORE A PERPETUAL OWNER OF THE LAND. WHEN SUCH OWNERSHIP O F THE LAND CHANGED HANDS THE TRANSACTION IS A CLEAR SALE OF LA ND AND ACCORDINGLY SECTION 50 C IS APPLICABLE. 3. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. 4. THE LD. A.R. HAS SUBMITTED THAT ASSESSEE HAS LEA SED THE PLOT NUMBER IN QUESTION IN THE YEAR 1972 FOR A PERIOD OF 98 YEARS AND HAD CONSTRUCTED FACTORY BUILDING ON THE SAID PLOT FOR C ARRYING MANUFACTURING ACTIVITIES. THE ASSESSEE HAD ENTERED INTO SALE OF SAID PLOT FOR CONSIDERATION OF RS.1,79,265/-. THE ASSES SEE WAS LESSEE OF THE PROPERTY FOR REMAINING 62 YEARS. IT IS THE GOV ERNMENT LAND, THEREFORE, THE ASSESSEE HAS APPROACHED THE COLLECTO R OFFICE AND THE ITA NO.3253/M/2013 M/S. MEMA ENGINEERS & CONTRACTORS PVT. LTD. 4 COLLECTOR HAS ARRIVED AT A PRICE AT WHICH RATE THE LAND HAS TO BE TRANSFERRED AND THE PRICE WAS DECIDED AT RS.1,79,26 6/-. THE LD. A.R. HAS DRAWN OUR ATTENTION TO THE PROFIT & LOSS ACCOUN T AND SUBMITTED THAT ASSESSEE HAS TREATED THIS LAND AS STOCK IN TRA DE AND AS PER BOOKS OF ACCOUNTS OF THE ASSESSEE, ASSESSEE IS NEVER THE OWNER OF THE LAND TO WHICH HE WAS ONLY THE LICENSEE OF THE LAND. WHEN A SSESSEE HAS TREATED THIS LAND AS BUSINESS ASSET THE PROVISIONS OF SECTION 50C IS NOT APPLICABLE. THE LD. A.R. RELIED UPON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. THIRUVENGA DAM INVESTMENTS PVT. LTD. (2010) 320 ITR 345 (MAD), DEC ISION OF MUMBAI BENCH, ITAT IN ITA NO.8101/M/2011 IN THE CAS E OF SHAVO NORGREN (P) LTD. AND HONBLE JURISDICTIONAL BOMBAY HIGH COURT JUDGMENT IN THE CASE OF CIT VS. NEELKAMAL REALTORS & ERECTORS INDIA (P.) LTD. (2017) 79 TAXMANN.COM 238 (BOMBAY). THE LD. A.R. FURTHER SUBMITTED THAT THE SALE OF REVISIONARY RIGH T IN LEASEHOLD LAND IS NOT ALLOWED BY THE PROVISIONS OF SECTION 50C. TH E LD. A.R. RELIED UPON THE COPY OF THE AGREEMENT AND SUBMITTED THAT N O DISALLOWANCE CAN BE MADE. 5. THE LD. D.R. RELIED UPON THE ORDERS OF REVENUE A UTHORITIES. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES. LOOKING INTO THE FACTS AND CIRCUMSTANCES OF THE CAS E, WE FIND THAT THE ASSESSEE HAS GIVEN PLOT NO.844/25 AND PLOT NO.111-D ON LEASE TO M/S ITA NO.3253/M/2013 M/S. MEMA ENGINEERS & CONTRACTORS PVT. LTD. 5 BHARAT INSULATIONS CO. IN 1972 FOR A PERIOD OF 98 Y EARS. LESSEE HAS CONSTRUCTED FACTORY BUILDING ON THE SAID PLOT AND H AS BEEN CARRYING OUT MANUFACTURING ACTIVITIES SINCE LAST SEVERAL YEA RS. THE UNEXPIRED PERIOD OF LEASE AS ON 31.03.08 WAS 62 YEARS. THE L ESSEE APPROACHED THE ASSESSEE FOR CONVEYANCE OF THE LAND FOR WHICH T HE MATTER WAS TAKEN TO THE COLLECTORS OFFICE AND COLLECTOR OF LA ND, MUMBAI BEING AN AUTHORITY TO ARRIVE AT THE RATES FOR THE PURPOSE OF STAMP DUTY AND REGISTRATION AND ALSO TO ARRIVE AT THE RATES AT WHI CH THE PLOTS ARE TO BE ALLOTTED AND THE PRICE WAS DECIDED AT RS.1,79,266/- BY THE COLLECTOR. WE FIND THAT ASSESSEE WAS ALLOTTED 55 ACRES OF LAND IN 1962. THE ASSESSEE HAD SHOWN THIS PLOT AS STOCK IN TRADE IN H IS BALANCE SHEET. THE LD. A.R. DRAWN OUR ATTENTION TO THE PROFIT & LO SS ACCOUNT WHEREIN THIS LAND WAS SHOWN AS STOCK IN TRADE. THE QUESTION HAS TO BE DETERMINED WHETHER SECTION 50C IS APPLICABLE WHE N THE LAND IS SHOWN AS STOCK IN TRADE IN THE BOOKS OF ACCOUNTS. THE ASSESSEE WAS NEVER THE OWNER OF THE LAND. THE OWNER OF THE LAND WAS THE GOVERNMENT. THE COLLECTOR HAS DECIDED THE PRICE FO R TRANSFER OF THIS LAND. THE ASSESSEE IS NOT THE OWNER OF THE PROPERT Y AND IT HAS BEEN TREATED AS BUSINESS ASSET AND NOT THE CAPITAL ASSET . FROM THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS FOUND THAT THE PRO PERTY IN HANDS OF THE ASSESSEE WAS TREATED AS BUSINESS ASSET AND NOT AS C APITAL ASSET. THEREFORE, SECTION 50C IS NOT APPLICABLE. SIMILAR ISSUE HAD COME UP BEFORE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. ITA NO.3253/M/2013 M/S. MEMA ENGINEERS & CONTRACTORS PVT. LTD. 6 THIRUVENGADAM INVESTMENTS PVT. LTD. (2010) 320 ITR 345 (MAD) WHEREIN THE HONBLE HIGH COURT HELD THAT WHEN ASSES SEE IS SELLING ANY PROPERTY WHICH WAS TREATED BY ASSESSEE AS A BUS INESS ASSET THEN IT CANNOT BE TREATED AS CAPITAL ASSET AND THERE IS NO QUESTION OF INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT. IN THIS INSTANT CASE, THE ASSESSEE IS NOT A OWNER OF THE PROPERTY/LAND BUT AS SESSEE IS LEASEHOLDER OF THE LAND AND THE ASSESSEE, WITH PERM ISSION OF THE COLLECTOR, HAS TRANSFERRED THIS REVISIONARY RIGHT I N LEASE FOR LAND TO THIRD PARTY AND THAT TRANSFER IS BY THE AGREEMENT. THEREFORE, WHEN ASSESSEE HIMSELF HAS TREATED THIS LAND AS HIS BUSIN ESS ASSETS, SECTION 50C IS NOT APPLICABLE. WE ALSO GET SUPPORTS FROM T HE DECISION OF HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CAS E OF CIT VS. NEELKAMAL REALTORS & ERECTORS INDIA (P.) LTD. (2017 ) 79 TAXMANN.COM 238 (BOMBAY) WHEREIN IT IS HELD THAT WH EN ANY BUSINESS ASSET IS SOLD SECTION 50C IS NOT APPLICABL E AS IT IS A BUSINESS ASSET. IN THE INSTANT CASE, ASSESSEE WAS A BUILDER FOLLOWING THE PROJECT COMPLETION METHOD OF ACCOUNTING. DURING TH E RELEVANT ASSESSMENT YEAR ASSESSEE HAS OFFERED CERTAIN NET PR OFIT ON SALE OF FLAT AS HIS BUSINESS INCOME. THE HIGH COURT HELD THAT S ECTION 50C IS NOT APPLICABLE AS IT IS A BUSINESS INCOME. SIMILARLY I N THE INSTANT CASE, THE ASSESSEE TREATED THE PLOT AS STOCK IN TRADE AND NOT THE CAPITAL ASSETS. MOREOVER, WE FIND THAT THE OWNERSHIP OF TH E PLOT IS THE COLLECTOR OF MUMBAI AND 50% SHARE OF INCOME HAS TO BE PAID AS ITA NO.3253/M/2013 M/S. MEMA ENGINEERS & CONTRACTORS PVT. LTD. 7 EARNED INCOME. THEREFORE, WE ARE OF THE VIEW THAT AO AND LD. CIT(A) ARE NOT JUSTIFIED. WE FIND THAT ASSESSEE HA S GIVEN PLOT NO.844/25 AND PLOT NO.111-D ON LEASE TO M/S BHARAT INSULATIONS CO. AND ASSESSEE IS HOLDING ABOVE ASSET AS BUSINESS ASS ET SINCE INCEPTION, THEREFORE WE ALLOW THIS GROUND OF THE ASSESSEE. 7. IN THE RESULT, GROUND NO.1 OF THE APPEAL IS ALLO WED. GROUND NO.2 8. GROUND NO.2 RELATES TO DISALLOWANCE UNDER SECTIO N 43B OF THE ACT. THE AO NOTICED THAT ASSESSEE HAS CLAIMED THE AMOUN T OF RS.11,04,587/- AS AMOUNT PAYABLE TO COLLECTOR, MUMB AI FOR SALE OF 3 PLOTS OF LAND. EARLIER, ASSESSEE CONTESTED THE PAY MENT OF DUES TO COLLECTOR ON SALE OF PLOT OF LAND. A SUM OF RS.40, 25,000/- WAS PAYABLE IN RESPECT OF SALE OF PLOTS PRIOR TO FINANC IAL YEAR 2007-08. THEREFORE, AO HELD THAT DEDUCTION OF RS.11,04,587/- FROM THE SALE PROCEEDS OF LAND IS NOT JUSTIFIED. A SUM PAYABLE T O COLLECTOR IS COVERED BY SECTION 43B OF THE INCOME TAX ACT. THE AO FURTHER OBSERVED THAT ASSESSEE HAD TREATED SAID LIABILITIES PAYABLE TO COLLECTOR AS COVERED UNDER SECTION 43B OF THE INCOME TAX ACT IN A.Y. 1998- 99. ACCORDINGLY, AO HAS PROCEEDED TO DISALLOW THE CLAIM OF DEDUCTION OF THE ASSESSEE. 9. THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE A SSESSEE ON THE ITA NO.3253/M/2013 M/S. MEMA ENGINEERS & CONTRACTORS PVT. LTD. 8 SAME GROUND. 10. DURING THE COURSE OF HEARING, THE LD. A.R. HAS SUBMITTED THAT THE SIMILAR ISSUE HAD COME UP BEFORE THE TRIBUNAL F OR THE ASSESSMENT YEAR 2006-07 IN ASSESSEES OWN CASE IN ITA NO.654/M /2011 WHEREIN THE TRIBUNAL HAS RESTORED THIS ISSUE TO THE FILE OF AO, THEREFORE, THIS ISSUE MAY BE RESTORED TO THE AO AS PER THE ORDER OF THE TRIBUNAL. 11. THE LD. D.R. HAS NO OBJECTION. 12. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING INTO THE FACTS AND CIRCUMSTANCES OF THE CAS E, WE FIND THAT THE SIMILAR ISSUE HAD COME UP BEFORE THE TRIBUNAL IN TH E ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 IN ITA NO.654/M/20 11 WHEREIN THE TRIBUNAL HAS RESTORED THIS ISSUE TO THE FILE OF THE AO BY OBSERVING AS UNDER: 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND ALSO P ERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE ASSESSEE COMPA NY HAS ENTERED INTO AN AGREEMENT WITH ADDITIONAL COLLECTOR OF BOMBAY VIDE AGREEMENT DATED 03-07-1964 WHEREBY THE ASSESSEE COMPANY WAS GRANTED LAND ADMEA SURING 55 ACRES AS SPECIFIED IN SCHEDULE-I TO THE AGREEMENT DATED 03-07-1964 ON THE TERMS AND CONDITIONS AS CONTAINED IN THE AGREEMENT DATED 03-07-1964. UNDER THE AFORE-STATED AGREEMENT, 50% OF THE UNEARNED INCREMENT IN THE EVENT OF SALE OR TRANSFER OF PROPERTY IS PAYABLE TO THE GOVERNMENT AS PER CLAUSE 2(G) OF THE SCHEDULE -II OF SAID AGREEMENT DATED 03- 07-1964 WHICH IS REPRODUCED BELOW : 'THAT THE GOVERNMENT WILL BE ENTITLED TO HALF THE U NEARNED INCREMENT IN THE EVENT OF SALE OR TRANSFER WHETHER OUTRIGHT OR AS A RESULT OF UNREDEEMED MORTGAGE AND THAT THE LAND SO SOLD OR TRANSFERRED S HOULD BE USED FOR A PURPOSE APPROVED BY THE GOVT. IF IT IS TO BE USED F OR A PURPOSE OTHER THAN APPROVED INDUSTRIAL OR COMMERCIAL PURPOSES.' WE HAVE OBSERVED THAT THERE IS A CONDITION STIPULAT ED IN AFORE-STATED CLAUSE 2(G) OF THE AGREEMENT DATED 03-07-1964, SHARING OF 50% OF U NEARNED INCREMENT IN THE LAND WITH THE GOVERNMENT IN THE EVENT OF SALE OR TR ANSFER OF PLOT OF LAND , AND THE LIABILITY OF THE ASSESSEE COMPANY WITH RESPECT THER ETO HAS ARISEN FROM THE AGREEMENT DATED 03-07-1964 RATHER THAN ARISING OUT OF ANY LAW IN FORCE WHICH IS THE ITA NO.3253/M/2013 M/S. MEMA ENGINEERS & CONTRACTORS PVT. LTD. 9 ESSENTIAL REQUIREMENT TO BE MADE LIABLE TO BE COVER ED UNDER THE PROVISION OF SECTION 43B(A) OF THE ACT WHICH IS REPRODUCED BELOW : ' [CERTAIN DEDUCTIONS TO BE ONLY ON ACTUAL PAYMENT6 . 43B. NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHE R PROVISION OF THIS ACT, A DEDUCTION OTHERWISE ALLOWABLE UNDER THIS ACT IN R ESPECT OF [(A) ANY SUM PAYABLE BY THE ASSESSEE BY WAY OF TAX6 , DUTY, CESS OR FEE, BY WHATEVER NAME CALLED, UNDER ANY LAW FOR THE TIME BE ING IN FORCE, OR] ****** ****** SHALL BE ALLOWED (IRRESPECTIVE OF THE PREVIO US YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED BY THE ASSES SEE ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY HIM) ONL Y IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 OF THAT PREVIOUS Y EAR IN WHICH SUCH SUM IS ACTUALLY PAID BY HIM : [PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SH ALL APPLY IN RELATION TO ANY SUM [***] WHICH IS ACTUALLY PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 IN RESPECT OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED AS AFORESAID AND THE EVIDENCE OF SUCH PAYMENT IS FURNISHED BY THE ASSESSEE ALONG WITH SUCH RETURN. [***]] ***** *****' THE REVENUE FAILED TO BRING ON RECORD PROVISIONS OF ANY LAW IN FORCE UNDER WHICH THIS LIABILITY OF SHARING OF 50% UNEARNED INCREASE IN THE LAND ON SALE OR TRANSFER WITH THE GOVERNMENT CAN BE CRYSTALLIZED OR FASTENED ON T HE ASSESSEE COMPANY , RATHER IT IS A CONTRACTUAL LIABILITY ARISING FROM CONTRACT BE TWEEN THE TWO CONTRACTING PARTIES VIZ. THE ASSESSEE COMPANY ON THE ONE HAND AND GOVER NMENT ON THE OTHER HAND THROUGH COLLECTOR. IN OUR CONSIDERED VIEW, THE AFOR E-STATED AMOUNT OF RS.4,55,422/- STATED TO BE PAYABLE TOWARDS UNEARNED INCREASE IN T HE PLOT OF LAND IN THE EVENT OF SALE OR TRANSFER VIDE CLAUSE 2(G) OF SCHEDULE II OF THE AGREEMENT DATED 03-07-194 ENTERED INTO BY THE ASSESSEE COMPANY AND ADDITIONAL COLLECTOR OF BOMBAY FOR GRANT OF LAND IN FAVOUR OF THE ASSESSEE COMPANY IS NOT HI T BY PROVISIONS OF SECTION 43B OF THE ACT AS THE LIABILITY HAS NOT ARISEN ON ACCOUNT OF ANY SUM PAYABLE BY THE ASSESSEE BY WAY OF TAX, DUTY, CESS OR FEE, BY WHATEVER NAME CALLED, UNDER ANY LAW FOR THE TIME BEING IN FORCE , BUT THE LIABILITY HAS ARISEN OUT OF THE CONTRACT BETWEEN THE TWO CONTRACTING PARTIES AND NOT ARISING OUT OF ANY LAW IN FORCE. THUS, WE HOLD THAT THIS AMOUNT STATED TO BE PAYABLE OF RS.4,55,422/- TO COL LECTOR TOWARDS UNEARNED INCREASE IN THE LAND ON SALE OF REVERSIONARY RIGHTS IN THE PLOT IS NOT HIT BY PROVISIONS OF SECTION 43B OF THE ACT. THERE IS ANOTHER ASPECT TO THIS ISSUE WHICH ALSO NEEDS TO BE DEALT WITH IS WITH RESPECT TO THE VERIFICATION O F THE COMPUTATION OF RS.4,55,422/- AS COMPUTED BY THE ASSESSEE COMPANY , I.E. WHETHER OR NOT A CORRECT AMOUNT OF LIABILITY ALBEIT NOT PAID WHICH HAS ACCRUED AND CRY STALLIZED IN FAVOUR OF THE COLLECTOR VIDE AGREEMENT DATED 03-07-1964 WITH RESPECT TO THE SALE OF REVERSIONARY RIGHTS IN THE TWO PLOTS AND HENCE LIMITED VERIFICATION IS REQ UIRED TO BE DONE BY THE REVENUE ON THE COMPUTATION OF WORKING OF RS.4,55,422/- WHIC H HAS BEEN PRODUCED BEFORE US ITA NO.3253/M/2013 M/S. MEMA ENGINEERS & CONTRACTORS PVT. LTD. 10 AS THE AUTHORITIES BELOW HAVE NOT ACCEPTED THE CLAI M OF THE ASSESSEE COMPANY OF RS.4,55,422/- BEING PAYABLE TO THE COLLECTOR AND AL LOWED THE ACTUAL AMOUNT OF RS.64890/- PAID TO THE COLLECTOR WHICH WAS COMPUTED BY THE ARCHITECT VIDE WORKING ENCLOSED IN PAPER BOOK PAGE 44-45 FILED WITH THE TR IBUNAL . ACCORDINGLY, WE SET ASIDE AND RESTORE THIS ISSUE TO THE FILE OF THE A.O. WITH LIMITED DIRECTION TO VERIFY THE COMPUTATION OF THE WORKING OF THE UNEARNED INCREMENT OF RS.4,55,422/- MADE BY THE ASSESSEEE COMPANY WITH RE SPECT TO THE SALE OF THE REVERSIONARY RIGHTS IN THE TWO PLOTS BY THE ASSESSE E COMPANY AND CORRESPONDING EXISTENCE OF LIABILITY OF THE ASSESSEE COMPANY TO T HE TUNE OF RS.4,55,422/- IN FAVOUR OF THE COLLECTOR IN ACCORDANCE WITH THE AGREEMENT D ATED 03-07-1964 . THE AO SHALL ACCORDINGLY THERE-AFTER VERIFICATION ALLOW THE AMOU NT PAYABLE TO THE COLLECTOR IN ACCORDANCE WITH THE TERMS OF AGREEMENT DATED 03-07- 1964 . OUR DIRECTIONS ARE ONLY LIMITED TO THE CHECKING OF THE COMPUTATIONAL WORKIN G OF THE AMOUNT AS CLAIMED BY THE ASSESSEE COMPANY STATED TO BE PAYABLE TO THE CO LLECTOR IN ACCORDANCE WITH THE AGREEMENT DATED 03-07-1964 BEING UNEARNED INCREMENT ON SALE OF THE REVERSIONARY RIGHTS IN TWO PLOTS OF LAND. THE ASSESSEE COMPANY I S DIRECTED TO APPEAR BEFORE THE LEARNED AO AND PRODUCE AND JUSTIFY THE COMPUTATION OF WORKING OF COLLECTOR CHARGES STATED TO HAVE ACCRUED AND PAYABLE TO THE C OLLECTOR TO THE TUNE OF RS.4,55,422/- TOWARDS UNEARNED INCREMENT IN THE LAN D ON THE SALE OF REVERSIONARY RIGHTS IN TWO PLOTS IN ACCORDANCE AND IN TERMS OF A GREEMENT DATED 03-07-1964 . NEEDLESS TO SAY PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD WILL BE PROVIDED BY THE AO TO THE ASSESSEE COMPANY IN ACCORDANCE WIT H THE PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH THE LAW. THE AO SHALL AL LOW AND ADMIT THE RELEVANT EVIDENCES AND EXPLANATION SUBMITTED BY THE ASSESSEE COMPANY TO SUPPORT AND SUBSTANTIATE ITS CLAIM IN ITS DEFENSE. WE ORDER ACC ORDINGLY. RESPECTFULLY FOLLOWING THE SAME, WE RESTORE THIS IS SUE TO THE FILE OF AO. 13. IN THE RESULT, GROUND NO.2 OF THE APPEAL IS ALL OWED FOR STATISTICAL PURPOSES. GROUND NO.3 14. THIS GROUND IS REGARDING DISALLOWANCE OF EXPEND ITURE. THE AO FOUND THAT ASSESSEE HAD SHOWN INCOME OF RS.8,28,410/- AS WORK BILL. THE ASSESSEE HAS RECEI VED RS.17.41 LAKHS FOR DIGGING AND LAYING OF CABLES IN THE PREMISES. THE ASSESSEE ITA NO.3253/M/2013 M/S. MEMA ENGINEERS & CONTRACTORS PVT. LTD. 11 EXPLAINED THAT THE PURPOSE OF DOING SUCH WORK, MR. K.N. VARMA HAD BEEN APPOINTED CONTRACTOR. THE AO HAS PAID RS.9.13 LAKHS AND AFTER DEDUCTING THE SAME FROM THE AMOUNT RECEIVED THE BAL ANCE WAS OFFERED AS INCOME BY THE ASSESSEE. THE AO EXAMINED THE DETAILS AND WAS OF A VIEW THAT THERE WAS NO WRITTEN CONTRACT BE TWEEN TWO PARTIES TO SHOW THAT A SUB CONTRACTOR HAD BEEN ASSIGNED BY M/S. TATA TELESERVICES (MAHARASHTRA) LTD. 15. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CI T(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. 16. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING INTO THE FACTS AND CIRCUMSTANCES OF THE CAS E, WE FIND THAT ASSESSEE HAS RECEIVED ORDER FROM M/S. TATA TELESERV ICES (MAHARASHTRA) LTD. FOR RS.17,41,600/- TOWARDS CABLE LAYING IN PREMISES OF SHAH INDUSTRIAL ESTATE VIDE LETTER DATE D 01.08.07. FOR THE SAID WORK ASSESSEE HAS APPOINTED MR. K.N. VARMA AS CONTRACTOR FOR DOING PART OF WORK AS SPECIFICATION GIVEN BY M/S. T ATA TELESERVICES (MAHARASHTRA) LTD. THE ASSESSEE HAS PA ID ITS AMOUNT BY CHEQUE AND TDS IS ALSO DEDUCTED. THEREFORE, WE ALL OW THE SAME. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.09.2017. SD/- SD/- (G. MANJUNATHA) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 21.09.2017. * KISHORE, SR. P.S. ITA NO.3253/M/2013 M/S. MEMA ENGINEERS & CONTRACTORS PVT. LTD. 12 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.