M/s. Archana Traders Private Limited, Bangalore V. Income Tax Officer, Ward- 1(1)(4), Bangalore

ITA 408/BANG/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1884 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-04-2021
• Assessment Year: 2011-2012
• Appeal Filed On: 19-05-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKAS SURYAVANSH
• Keywords: Reopening of assessment; Capital asset; Business income; Capital receipt
• Section: 143(1); 148; 28

Judgement Text

ITA NO.408/BANG/2020 M/S. ARCHANA TRADERS PVT. LTD., BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO.408/BANG/2020 ASSESSMENT YEAR : 2011-12 M/S. ARCHANA TRADERS PVT. LTD. COTTAGE NO.4, BANGALORE PALACE VASANTHNAGAR, BANGALORE 560 052 PAN NO : AACCA3590N VS. INCOME TAX OFFICER WARD-1(1)(4) BANGALORE APPELLANT RESPONDENT APPELLANT BY : SHRI SIDDESH GADDI, A.R. RESPONDENT BY : SHRI VIKAS SURYAVANSH, D.R. DATE OF HEARING : 22.04.2021 DATE OF PRONOUNCEMENT : 30.06.2021 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 4.2.2020 PASSED BY LD. CIT(A)-1 BENGALURU AND IT RE LATES TO THE ASSESSMENT YEAR 2011-12. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD. CIT(A) IN CONFIRMING THE ADDITION MADE BY TH E A.O. U/S 28(IV) OF THE ACT. 2. AT THE TIME OF HEARING, THE ASSESSEE DID NOT P RESS THE GROUND RELATING TO VALIDITY OF REOPENING OF ASSESSMENT U/S 148 OF THE ACT. ACCORDINGLY, THE SAID GROUND IS DISMISSED AS NOT PR ESSED. ITA NO.408/BANG/2020 M/S. ARCHANA TRADERS PVT. LTD., BANGALORE PAGE 2 OF 10 3. THE FACTS RELATING TO THE ISSUE ARE STATED I N BRIEF. THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND IS ENGAGED IN THE BUSINESS OF TRADING IN REFINED SALT. THE RETURN FILED BY THE A SSESSEE FOR THE YEAR UNDER CONSIDERATION WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE A.O. RE-OPENED THE ASSESSMENT BY ISSUING NOTICE U/S 148 OF THE ACT. THE AO. HAD RECEIVED INFORMATI ON FROM ENFORCEMENT DIRECTORATE, NEW DELHI THAT ONE OF THE DIRECTORS OF THE ASSESSEE COMPANY NAMED SHRI NAVEEN P. PATIL HAD INF ORMED THAT A SUM OF RS.3.00 CRORES GIVEN BY HIM TO THE ASSESSEE COMPANY HAD BEEN FORFEITED BY THE ASSESSEE COMPANY. SHRI NAVEE N P. PATIL HAD CLAIMED SET OFF OF ABOVE SAID RS.3.00 CRORES AGAINS T HIS INCOME DECLARED UNDER THE HEAD INCOME FROM OTHER SOURCES . ACCORDINGLY, THE A.O. HAS TAKEN THE VIEW THAT THE AMOUNT OF RS.3 CRORES FORFEITED BY THE ASSESSEE REPRESENTS INCOME OF THE ASSESSEE A ND THE SAME HAS NOT BEEN DECLARED IN THE RETURN OF INCOME. HENCE, THE A.O. HAS REOPENED THE ASSESSMENT. 4. BEFORE THE AO, THE ASSESSEE SUBMITTED THAT MR. N AVEEN P. PATIL IS ONE OF THE SHAREHOLDERS AND DIRECTORS OF THE ASS ESSEE COMPANY WHO HAD INITIALLY ADVANCED A LOAN OF RS.3.77 CRORES TO IT IN THE FINANCIAL YEAR 2006-07. SINCE THE ASSESSEE COMPANY COULD NOT REPAY THE ABOVE SAID LOAN, IT WAS AGREED THAT THE ASSESSE E COMPANY WOULD SELL ITS PROPERTY LOCATED AT NARAIN MANZIL, BARAKHA MBA ROAD, NEW DELHI FOR A CONSIDERATION OF RS.9 CRORES. IN THIS REGARD, AN AGREEMENT FOR SALE WAS EXECUTED ON 29.8.2008, AS PER WHICH SH RI NAVEEN P PATIL SHALL PAY THE BALANCE AMOUNT OF SALE CONSIDERATION AND COMPLETE THE SALE TRANSACTION BY THE END OF DECEMBER, 2008. HOW EVER, MR. NAVEEN P. PATIL FAILED TO PAY BALANCE SALE CONSIDERATION A ND HENCE THE ASSESSEE HAS FORFEITED THE ADVANCE AMOUNT OF RS.3 C RORES, AS PER THE TERMS OF AGREEMENT FOR SALE. THE ASSESSEE SUBMITTE D BEFORE A.O. THAT THE AMOUNT OF RS.3 CRORES FORFEITED BY IT IS A CAPI TAL RECEIPT IN ITS HAND ITA NO.408/BANG/2020 M/S. ARCHANA TRADERS PVT. LTD., BANGALORE PAGE 3 OF 10 AND THE SAME IS NOT TAXABLE. THE ASSESSEE ALSO SUB MITTED THAT, AS PER PROVISIONS OF SECTION 51 OF THE ACT, THE AMOUNT OF RS.3 CRORES WOULD GO TO REDUCE THE COST OF PROPERTY. THE ASSES SEE PLACED ITS RELIANCE ON THE DECISION RENDERED BY HONBLE SUPREM E COURT IN THE CASE OF TRAVANCORE RUBBER LTD. 5. THE A.O., HOWEVER, TOOK THE VIEW THAT THE ASSESS EE HAS GIVEN COLOUR OF A PROPERTY TRANSACTION FOR THE FORFEITED AMOUNT OF RS.3 CRORES. ACCORDINGLY, HE TOOK THE VIEW THAT THE AGR EEMENT FOR SALE ENTERED BETWEEN THE ASSESSEE AND SHRI NAVEEN P. PAT IL IS AN AFTERTHOUGHT. THE OBSERVATIONS MADE BY THE AO ARE EXTRACTED BELOW:- 5.3 THE ASSESSEE COMPANY FORFEITED AN AMOUNT OF R S. 3 CR GIVEN BY SH NAVIN P PATIL AS LOAN. IT THUS GOT BEN EFITTED BY FORFEITING THIS AMOUNT. THE ASSESSEE HAS TRIED TO LATER COLOUR THE LOAN TRANSACTION AS AN ADVANCE FOR A PROPERTY. SH NAVIN P PATIL IS ONE OF THE DIRECTORS IN THE ASSESSEE COMPANY AND IS CONTROLLING AND MANAGING ITS AFFAIRS. THE ASSESSEE CO. TRIED T O ADJUST THE LOAN AMOUNT AGAINST ADVANCE FOR SALE OF A PROPERTY. THE FACT THAT SH NAVIN P PATIL DID NOT LAUNCH ANY LEGAL PROC EEDINGS TO CLAIM THE AMOUNT SO FORFEITED AS ADVANCE FOR PROPER TY SHOWS THAT THE AMOUNT WAS IN THE NATURE OF LOAN ONLY. TH E ASSESSEE COMPANY NEVER INTENDED TO SELL THE PROPERTY WHICH I T SHOWED AS BEING SOLD TO SH NAVIN P PATIL. IT WAS ONLY AN AFT ERTHOUGHT TO TREAT THE LOAN GIVEN AS ADVANCE FOR PROPERTY. THE AGREEMENT TO SELL ENTERED BY THE ASSESSEE CO. IS A STEP IN THIS DIRECTION. THUS, SECTION 51 OF THE INCOME TAX ACT 1961 WOULD NOT BE APPLICABLE TO THIS CASE. HE ALSO OBSERVED THAT SHRI NAVEEN P. PATIL HAS CLAI MED THE AMOUNT FORFEITED BY THE ASSESSEE AS A REVENUE LOSS. HE AL SO NOTICED THAT THE AGREEMENT FOR SALE STATED THAT SHRI NAVEEN P. PATIL HAD INVESTED A SUM OF RS.3.72 CRORES IN RESPECT OF PROJECTS UNDERT AKEN BY THE ITA NO.408/BANG/2020 M/S. ARCHANA TRADERS PVT. LTD., BANGALORE PAGE 4 OF 10 ASSESSEE COMPANY, OUT OF WHICH RS.3.00 CRORE HAS BE EN FORFEITED. THE ASSESSEE HAS ALSO SHOWN THE ABOVE SAID AMOUNT A S UNSECURED LOANS ONLY IN ITS BOOKS OF ACCOUNTS. ACCORDINGLY, THE AO TOOK THE VIEW THAT THE ABOVE SAID FORFEITED AMOUNT IS A BEN EFIT ACCRUED TO THE ASSESSEE AND SAME WOULD FALL WITHIN THE PURVIEW OF SEC.28(IV) OF THE ACT. ACCORDINGLY HE HELD THAT THE IMPUGNED AMOUNT OF RS.3 CRORES IS ASSESSABLE AS INCOME OF THE ASSESSEE U/S 28(IV) OF THE ACT. IN THIS REGARD, THE A.O. PLACED HIS RELIANCE ON THE DECISIO N RENDERED BY HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. RA MANIYAM HOMES PVT. LTD. (2016) 68 TAXMANN.COM 289. ACCORDINGLY, HE ASSESSED THE ABOVE AMOUNT U/S 28(IV) OF THE ACT. 6. THE LD. CIT(A) OBSERVED THAT NEITHER THE ASSESSE E NOR SHRI NAVEEN P. PATIL HAD FURNISHED THE DETAILS OF PROJEC T FOR WHICH SHRI NAVEEN P. PATIL HAD GIVEN THE SUM OF RS.3.77 CRORES TO THE ASSESSEE COMPANY. HE FURTHER NOTICED THAT, AS PER THE AGREE MENT TO SALE DATED 29.8.2008, SHRI NAVEEN P. PATIL SHALL COMPLETE HIS PART OF THE CONTRACT ON OR BEFORE 31.12.2009, I.E. SHRI NAVEEN P. PATIL SHALL PAY BALANCE VALUE OF PURCHASES CONSIDERATION TO THE ASSESSEE B Y 31.12.2009. THE LD. CIT(A) FURTHER NOTICED THAT THE ASSESSEE HAS LE ASED OUT THE PROPERTY, WHICH IS SOUGHT TO BE SOLD TO SHRI NAVEEN P. PATIL, IN FEBRUARY, 2010 I.E. BEFORE THE AMOUNT WAS FORFEITED BY THE ASSESSEE COMPANY THE PROPERTY HAS BEEN LEASED OUT. ACCORDIN GLY, THE LD. CIT(A) CONCURRED WITH THE VIEW OF THE A.O. THAT THE SALE AGREEMENT IS A COLOURABLE DEVICE ADOPTED BY THE ASSESSEE IN ORDE R TO AVOID TAXATION OF FORFEITED AMOUNT OF RS.3 CRORES. 7. THE ASSESSEE CONTENDED BEFORE LD. CIT(A) THAT TH E AMOUNT FORFEITED BY IT CANNOT BE TREATED AS A BENEFIT WITH IN THE MEANING OF SECTION 28(IV) OF THE ACT. IN THIS REGARD, THE ASS ESSEE PLACED ITS RELIANCE ON THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN ITA NO.408/BANG/2020 M/S. ARCHANA TRADERS PVT. LTD., BANGALORE PAGE 5 OF 10 THE CASE OF MAHINDRA & MAHINDRA LTD. 261 ITR 501, W HEREIN IT WAS HELD THAT THE PROVISIONS OF SECTION 28(IV) OF THE A CT WOULD NOT HAVE APPLICATION TO ANY TRANSACTION INVOLVING MONEY. TH E ABOVE CONTENTION OF THE ASSESSEE WAS REJECTED BY LD. CIT( A) BY FOLLOWING THE DECISION RENDERED BY HONBLE MADRAS HIGH COURT IN T HE CASE OF CIT VS. RAMANIYAM HOMES PVT. LTD. (SUPRA). IN THE ABOV E SAID CASE, THE HONBLE MADRAS HIGH COURT HAD EXPRESSED THE VIEW TH AT WAIVER OF A PORTION OF THE LOAN WOULD CERTAINLY TANTAMOUNT TO T HE VALUE OF BENEFIT WITHIN THE MEANING OF SECTION 28(IV) OF THE ACT. A CCORDINGLY, THE LD. CIT(A) UPHELD THE ADDITION MADE BY THE A.O. 8. THE LD. A.R. SUBMITTED THAT THE TAX AUTHORITIES HAVE ASSESSED THAT THE ABOVE SAID AMOUNT OF RS.3 CRORES FORFEITED BY THE ASSESSEE AS A BENEFIT U/S 28(IV) OF THE ACT. HE SUBMITTED T HAT HONBLE BOMBAY HIGH COURT HAS HELD THAT THE PROVISIONS OF SECTION 28(IV) OF THE ACT WOULD NOT HAVE APPLICATION TO ANY TRANSACTION INVOL VING MONEY. THOUGH THE LD. CIT(A) HAS REFUSED TO FOLLOW THE DEC ISION RENDERED BY HONBLE BOMBAY HIGH COURT AND FOLLOWED THE DECISION RENDERED BY HONBLE MADRAS HIGH COURT IN THE CASE OF RAMANIYAM HOMES PVT. LTD. (SUPRA), YET IT IS PERTINENT TO NOTE THAT THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF MAHINDRA & MAHINDRA LTD. (SUPRA) HAS SINCE BEEN UPHELD BY HONBLE SUPREME CO URT IN THE CASE OF CIT VS. MAHINDRA & MAHINDRA LTD. (2018) 404 ITR 1. ACCORDINGLY, THE LD. A.R. SUBMITTED THAT THE DECISION RENDERED B Y HONBLE MADRAS HIGH COURT IN THE CASE OF RAMANIYAM HOMES PVT. LTD. (SUPRA) IS NO MORE A GOOD LAW. THE LD. A.R. FURTHER SUBMITTED TH AT THOUGH THE ASSESSEE HAD RECEIVED THE LOAN FROM NAVEEN P. PATIL IN THE FINANCIAL YEAR 2006-07, THE SAME WAS CONVERTED INTO AN ADVANC E MONEY RECEIVED BY THE ASSESSEE FOR SALE OF ITS PROPERTY, BY VIRTUE OF AGREEMENT FOR SALE ENTERED BETWEEN PARTIES. SINCE T HE BUYER OF PROPERTY SHRI NAVEEN P. PATIL COULD NOT PURCHASE TH E PROPERTY BY ITA NO.408/BANG/2020 M/S. ARCHANA TRADERS PVT. LTD., BANGALORE PAGE 6 OF 10 PAYING THE REMAINING AMOUNT, THE AMOUNT OF RS.3 CRO RES WAS FORFEITED BY THE ASSESSEE IN TERMS OF AGREEMENT FOR SALE. HE FURTHER SUBMITTED THAT THERE IS NO REASON TO SUSPECT THE AG REEMENT FOR SALE ENTERED BETWEEN THE PARTIES. HE FURTHER SUBMITTED THAT THE TREATMENT GIVEN BY SHRI NAVEEN P. PATIL IN HIS RETURN OF INCO ME WOULD NOT DETERMINE THE NATURE OF TRANSACTION IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, HE SUBMITTED THAT THE AMOUNT OF RS.3 C RORES FORFEITED BY THE ASSESSEE WOULD GO TO REDUCE THE COST OF PROPERT Y AS PER PROVISIONS OF SECTION 51 OF THE ACT. ACCORDINGLY, HE SUBMITTE D THAT THE ADDITION MADE BY THE TAX AUTHORITIES SHOULD BE DELETED. 9. THE LD. D.R., ON THE CONTRARY, SUPPORTED THE ORD ER PASSED BY LD. CIT(A). HE FURTHER INVITED OUR ATTENTION TO TH E CLAUSE 11 OF THE AGREEMENT FOR SALE DATED 29.8.2008. THE SAID CLAUS E PROVIDED A RIGHT TO THE PURCHASER TO RECOVER ADVANCE MONEY PAID, IF THE VENDOR FAILS TO COMPLY WITH ALL OR ANY OF THE CONDITIONS OF THE AGREEMENT. HE SUBMITTED THAT THE BUYER SHRI NAVEEN P. PATIL DID N OT TAKE ANY STEP TO RECOVER THE ADVANCE MONEY AS PER THIS CLAUSE. 10. IN THE REJOINDER, THE LD. A.R. SUBMITTED THAT T HERE IS NO FAILURE ON THE PART OF THE ASSESSEE (VENDOR) TO COMPLY WITH ANY OF THE CLAUSES OF THE AGREEMENT AND HENCE CLAUSE 11 OF THE AGREEME NT WOULD NOT BE APPLICABLE TO THE PRESENT CASE. ON THE CONTRARY, A S PER CLAUSE 12 OF THE AGREEMENT, THE ASSESSEE WAS HAVING RIGHT TO FOR FEIT THE ADVANCE MONEY RECEIVED, IF THE PURCHASER FAILS TO PAY THE B ALANCE SALE CONSIDERATION. 11. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE HAVE NOTICED EARLIER THAT THE TAX AUTHORITIES HAVE ASSESSED THE IMPUGNED AMOUNT OF RS. 3 CRORES U/S 28(IV) OF THE A CT. THE ABOVE SAID SECTION STATES THAT THE VALUE OF ANY BENEFIT O R PERQUISITE, WHETHER ITA NO.408/BANG/2020 M/S. ARCHANA TRADERS PVT. LTD., BANGALORE PAGE 7 OF 10 CONVERTIBLE INTO MONEY OR NOT, ARISING FROM BUSINES S OR EXERCISE OF PROFESSION IS ASSESSABLE AS BUSINESS INCOME. THE H ONBLE BOMBAY HIGH COURT HAS HELD IN THE CASE OF MAHINDRA & MAHIN DRA LTD. (SUPRA) THAT THE PROVISIONS OF SECTION 28(IV) OF THE ACT WO ULD NOT HAVE APPLICATION TO ANY TRANSACTION INVOLVING MONEY. HO WEVER, THE HONBLE MADRAS HIGH COURT HAS TAKEN A CONTRARY VIEW IN THE CASE OF RAMANIYAM HOMES PVT. LTD. (SUPRA). THIS CONTROVERS Y HAS BEEN SET AT REST BY HONBLE SUPREME COURT IN THE CASE OF MAH INDRA & MAHINDRA LTD. (2018) 404 ITR 1, WHEREIN, THE HONBL E SUPREME COURT HAS OBSERVED AS UNDER: 13. ON A PLAIN READING OF SECTION 28(IV) OF THE IT ACT, PRIMA FACIE, IT APPEARS THAT FOR THE APPLICABILITY OF THE SAID PROVISION, THE INCOME WHICH CAN BE TAXED SHALL ARISE FROM THE BUSI NESS OR PROFESSION. ALSO, IN ORDER TO INVOKE THE PROVISION OF SECTION 28 (IV) OF THE IT ACT, THE BENEFIT WHICH IS RECEIVED HAS TO BE IN SOME OTHER FORM OTHER THAN IN THE SHAPE OF MONEY. IN THE PRES ENT CASE, IT IS A MATTER OF RECORD THAT THE AMOUNT OF RS.57,74,064/- IS HAVING RECEIVED AS CASH RECEIPT DUE TO THE WAIVER OF LOAN. THEREFORE, THE VERY FIRST CONDITION OF SECTION 28 (IV) OF THE IT A CT WHICH SAYS ANY BENEFIT OR PERQUISITE ARISING FROM THE BUSINESS SHA LL BE IN THE FORM OF BENEFIT OR PERQUISITE OTHER THAN IN THE SHAPE OF MOKEY, IS NOT SATISFIED IN THE PRESENT CASE. HENCE, IN OUR VIEW, IN NO CIRCUMSTANCES, IT CAN BE SAID THAT THE AMOUNT OF RS .57,74,064/- CAN BE TAXED UNDER THE PROVISIONS OF SECTION 28(IV) OF THE I.T. ACT. 12. IT CAN BE NOTICED THAT THE HONBLE SUPREME COUR T WAS DEALING WITH A CASE OF WAIVER OF LOAN BY THE CREDITOR AND I T HAS BEEN HELD THAT THE PROVISIONS OF SECTION 28(IV) OF THE ACT IS NOT APPLICABLE. IN THE PRESENT CASE, RS.3 CRORES REPRESENTED ADVANCE MONEY FORFEITED BY THE ASSESSEE AND THE SAME ALSO REPRESENTS CASH RECEIVED ON FORFEITURE OF ADVANCE MONEY. IN THIS VIEW OF THE MATTER, THE PRO VISIONS OF SECTION 28(IV) OF THE ACT IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 13. WE NOTICE THAT THE TAX AUTHORITIES HAVE TAKEN T HE VIEW THAT THE AGREEMENT FOR SALE ENTERED BY THE ASSESSEE WITH NAV EEN P. PATIL IS A COLOURABLE DEVICE. HOWEVER, WE NOTICE THAT THE AS SESSING OFFICER HAS ITA NO.408/BANG/2020 M/S. ARCHANA TRADERS PVT. LTD., BANGALORE PAGE 8 OF 10 NOT BROUGHT ANY MATERIAL ON RECORD IN SUPPORT OF TH IS VIEW. IN OUR VIEW, THE ONLY FACT THAT HAS INDUCED THE TAX AUTHOR ITIES TO TAX THIS AMOUNT IN THE HANDS OF THE ASSESSEE IS THAT SHRI NA VEEN P. PATIL HAS TREATED THE FORFEITED AMOUNT OF RS. 3 CRORES AS HIS LOSS AND SET OFF THE SAME AGAINST HIS INCOME. ACCORDINGLY, THE AO HAS T AKEN THE VIEW THAT THE IMPUGNED AMOUNT OF RS.3.00 CRORES IS LIABL E TO BE TAXED IN THE HANDS OF THE ASSESSEE. IT IS ALWAYS NOT NECESS ARY THAT THE NATURE OF PAYMENT AND NATURE OF RECEIPT SHOULD BE THE SAME . FOR EXAMPLE, IF A CAR DEALER SELLS A CAR, THE SALE PROCEEDS ARE REVENUE RECEIPTS IN HIS HAND, WHILE IT MAY BE A CAPITAL ASSET IN THE HA NDS OF THE BUYER OF CAR. IF THE SAID BUYER, IN TURN, SELLS THE VERY SA ME CAR SUBSEQUENTLY, THE SALE CONSIDERATION IS A CAPITAL RECEIPT IN HIS HANDS. HENCE THE NATURE OF PAYMENT AND NATURE OF RECEIPT WOULD DEPEN D UPON THE FACTS PREVAILING IN THE CASE OF PAYER AND RECEIVER. 14. IN THE PRESENT CASE, THERE IS NO DISPUTE WIT H REGARD TO THE FACT THAT THE ASSESSEE HAS RECEIVED MONEY FROM NAVEEN P. PATIL INITIALLY IN THE FINANCIAL YEAR 2006-07. AS PER THE RECITAL IN THE AGREEMENT FOR SALE, THE ABOVE SAID AMOUNT WAS GIVEN AS INVESTMENT IN THE PROJECTS TAKEN UP BY THE ASSESSEE. WE NOTICE THAT THE LD CI T(A) HAS GIVEN MUCH IMPORTANCE TO THE RECITAL SO MADE IN THE AGREE MENT FOR SALE BY OBSERVING THAT NEITHER THE ASSESSEE NOR NAVEEN P PA TIL HAS GIVEN THE DETAILS OF PROJECT. IN FACT, THE PARTIES HAVE ONLY STATED THE PURPOSE OF GIVEN MONEY BY SHRI NAVEEN P PATIL TO THE ASSESSEE IN FY 2006-07. THE SAID FACTS ARE NOT RELEVANT TO THE ISSUE ON HAN D. THE ISSUE ON HAND IS RELATED TO THE PROPERTY TRANSACTION SUBSEQU ENTLY ENTERED BY THE PARTIES, I.E., SUBSEQUENTLY, THE ABOVE SAID LOA N AMOUNT WAS CONVERTED INTO ADVANCE MONEY IN THE PROPERTY TRANSA CTION, WHEREBY A PROPERTY BELONGING TO THE ASSESSEE WAS AGREED TO BE PURCHASED BY SHRI NAVEEN P. PATIL FOR A SUM OF RS.9.00 CRORES. THUS THE ISSUE IS RELATED TO THE PROPERTY TRANSACTION AND NOT THE EAR LIER LOAN TRANSACTION. ITA NO.408/BANG/2020 M/S. ARCHANA TRADERS PVT. LTD., BANGALORE PAGE 9 OF 10 15. AS PER THE AGREEMENT FOR SALE, SHRI NAVEEN P PATIL HAS TO PAY THE BALANCE AMOUNT OF SALE CONSIDERATION AND COMPLE TE THE SALE TRANSACTION. SINCE SHRI NAVEEN P. PATIL FAILED TO PAY THE BALANCE AMOUNT OF SALE CONSIDERATION, THE AMOUNT OF RS. 3 C RORES HAS BEEN FORFEITED BY THE ASSESSEE AS PER THE TERMS OF AGREE MENT FOR SALE. HENCE, THE FORFEITED AMOUNT RELATED TO PROPERTY TRA NSACTION ONLY. MERELY FOR THE REASON THAT THE AMOUNT RECEIVED AS L OAN IN AN EARLIER YEAR WAS CONVERTED INTO ADVANCE PAYMENT FOR PURCHAS E OF PROPERTY, THERE IS NO REASON TO DISBELIEVE THE PROPERTY TRANS ACTION AS A COLOURABLE DEVICE. NO MATERIAL HAS BEEN BROUGHT TO SUBSTANTIATE THE ABOVE SAID VIEW OF THE TAX AUTHORITIES, MEANING THE REBY, THEY HAVE ENTERTAINED THIS VIEW ONLY ON SURMISES AND CONJECTU RES. SINCE THE AMOUNT OF RS.3 CRORES FORFEITED BY THE ASSESSEE IS ON ACCOUNT OF SALE OF PROPERTY, WE AGREE WITH THE SUBMISSIONS OF THE A SSESSEE THAT THE PROVISIONS OF SECTION 51 OF THE ACT SHALL BE APPLIC ABLE AND THE ABOVE SAID AMOUNT WOULD GO TO REDUCE THE COST OF PROPERTY . 16. IN VIEW OF THE FOREGOING DISCUSSIONS, WE ARE OF THE VIEW THAT THE IMPUGNED AMOUNT OF RS.3 CRORES IS NOT TAXABLE IN TH E HANDS OF THE ASSESSEE U/S 28(IV) OF THE ACT. ACCORDINGLY, WE SE T ASIDE THE ORDER PASSED BY LD. CIT(A) ON THIS ISSUE AND DIRECT THE A .O. TO DELETE THE IMPUGNED ADDITION. 17. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE, 2021 SD/- (GEORGE GEORGE K. ) JUDICIAL MEMBER SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 30 TH JUNE, 2021. VG/SPS ITA NO.408/BANG/2020 M/S. ARCHANA TRADERS PVT. LTD., BANGALORE PAGE 10 OF 10 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.