Shri Sanjay Nemichand Lohade, Ahmednagar V. DCIT, Ahmednagar Circle, Ahmednagar

ITA 424/PUN/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2922 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 22-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 11-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Capital asset; Gift; Business income; Business expenditure; Corroborative evidences; Capital receipt; Commercial expediency
• Section: 54F; 2(14)

Judgement Text

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . . , , ! ' BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.424/PN/2013 !$ $ / ASSESSMENT YEAR : 2008-09 SHRI SANJAY NEMICHAND LOHADE, SUSHANT SATHE COLONY, STATION ROAD, AHMEDNAGAR 414 001 PAN NO.AAZPL9531A . / APPELLANT V/S DCIT, AHMEDNAGAR CIRCLE, AHMEDNAGAR . / RESPONDENT / ASSESSEE BY : SHRI SUNIL PATHAK & SHRI SUHAS BORA / DEPARTMENT BY : SHRI B.C. MALAKAR / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 02-11-2012 OF THE CIT(A)-I, PUNE RELATING TO ASSES SMENT YEAR 2008-09. / DATE OF HEARING : . 18.11.2015 / DATE OF PRONOUNCEMENT:18.01.2016 2 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A PARTNER IN M/S. REAL VALUE ADVERTISER AND DERIVES INCOME FROM REMUNER ATION FROM THE FIRM, SHARE OF PROFIT, INTEREST ON CAPITAL, DIVIDEND INCO ME AND BANK INTEREST. HE HAD FILED HIS ORIGINAL RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 30-09-2008 DECLARING BUSINE SS INCOME OF RS.40,31,860/-. 3. THE AO RECEIVED INFORMATION FROM ADDL.CIT, RANGE-3, PUNE THAT DURING SURVEY ACTION U/S.133A OF THE I.T. ACT, 1961 IN THE CASE OF SHRI KAILASH BABULAL WANI CONDUCTED ON 12-03-2008, IT WA S NOTICED THAT THE ASSESSEE HAS RECEIVED RS.3 CRORES FROM FULLMOON HOUSING & FINANCE PVT. LTD. TOWARDS SALE OF LAND SITUATED AT BANER, PUNE. ON RECEIPT OF THIS INFORMATION, THE AO ISSUED NOTICE U/S.148 TO THE ASSESSEE. IN RESPONSE TO THE SAID NOTICE, THE A SSESSEE FILED A LETTER STATING THEREIN THAT THE RETURN FILED ON 30-09-200 9 BE CONSIDERED AS RETURN FILED IN RESPONSE TO NOTICE U/S.148. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO, ON GOING THROUGH THE COMPUTATION OF INCOME NOTED THAT THE ASSES SEE HAS CLAIMED EXEMPTION U/S.54F OF RS.3.25 CRORES TREATING THE MO NEY RECEIVED OF RS.3 CRORES AS LONG TERM CAPITAL GAIN ON SALE OF PLOT AT BANER. HE NOTED THAT DURING THE SURVEY U/S.133A CONDU CTED ON 12- 03-2008 IN THE PREMISES OF SHRI KAILASH BABULAL WANI, A COPY OF THE MEMORANDUM OF UNDERSTANDING (MOU) WAS FOUND WHICH IS SIGNED BETWEEN FULLMOON HOUSING PVT. LTD. AND SHRI KAILASH BABULA L WANI. AS PER THE SAID MOU RS.3 CRORES HAS TO BE PAID TO ONE SHRI SANJAY NEMICHAND LOHADE. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS STATEM ENT OF THE ASSESSEE SHRI SANJAY NEMICHAND LOHADE U/S.131 OF THE I. T. ACT WAS RECORDED. THE ASSESSEE MOVED AN APPLICATION U/S.144A OF THE I.T. 3 ACT BEFORE THE ADDL.CIT, AHMEDNAGAR RANGE, AHMEDNAGAR W HO VIDE HIS LETTER DATED 30-12-2011 GAVE CERTAIN DIRECTIONS TO T HE AO. DURING THE PROCEEDING BEFORE THE ADDL.CIT, THE ASSESSEE FILED VARIOUS DETAILS SUCH AS THE POWER OF ATTORNEY DATED 16.07.2001, M OU DATED 16.07.2011, COURT PAPER SUIT NO.1006/1996, MOU DATED 16-0 5- 2007 (IN MARATI) ETC. THE ASSESSEE ALSO FILED ANOTHER MOU DATED 16- 07-2001 ON STAMP PAPER OF RS.20/- IN WHICH AS PER PARA 8 AND 9 THERE IS CLEAR MENTION OF DEVELOPMENT RIGHT TO THE ASSES SEE WITH RESPECT TO THE PROPERTY IN QUESTION. ACCORDING TO THE ADDL.CIT THE MOU SUBSEQUENTLY PREPARED IS IN ORDER TO SUIT THE ASSE SSEES CASE BECAUSE IT WAS NOT EVEN MENTIONED BEFORE THE AO OF MR. KAILASH WANI THAT THERE IS ANOTHER MOU. ACCORDING TO HIM THE MO U ON A STAMP PAPER OF RS.20/- WHICH WAS PRODUCED BEFORE THE AO OF MR. KAILASH WANI IS DIFFERENT FROM THE MOU PRODUCED BEFORE HIM. H E FURTHER NOTED THAT IN ABSENCE OF ANY SATISFACTORY REQUE ST TO ISSUE THE SUMMON ON BEHALF OF THE ASSESSEE TO THE NOTARY WHO HAS NOTARIZED BOTH THE MOUS AND CONSIDERING THE FACT THAT THE ASSESS EE HAS ONLY REQUESTED DIRECTION U/S.144A OF THE ACT FROM THE ADDL. CIT AT THE FAG END OF THE TIME BARRED ASSESSMENT PROCEEDINGS NO ACTION IS CALLED FOR. HE HELD THAT THE EVIDENCE PRODUCED BEFORE HIM NOW A RE NOT RELIABLE AND THEREFORE HE REJECTED THE SAME. HE ACCORDIN GLY DIRECTED THE AO TO TAX THE AMOUNT RS. 3 CRORES IN THE HANDS OF THE ASSESSEE AS BROKERAGE OR COMMISSION RECEIVED BY THE ASSESSEE FRO M FULLMOON HOUSING & FINANCE PVT. LTD. THE AO ACCORDINGLY MADE ADD ITION OF RS.3 CRORES TO THE TOTAL INCOME OF THE ASSESSEE AS BROK ERAGE OR COMMISSION AS AGAINST LONG TERM CAPITAL GAIN SHOWN BY THE ASSESSEE ON ACCOUNT OF SALE OF LAND AT BANER. 6. BEFORE CIT(A) THE ASSESSEE MADE ELABORATE SUBMISSIONS GIVING SEQUENCE OF EVENTS THAT HAS TAKEN PLACE. BASED ON THE VARIOUS 4 DOCUMENTS FILED BEFORE THE LD. CIT(A) IT WAS SUBMITTED THA T THE ASSESSEE SHRI SANJAY NEMICHAND LOHADE GOT ALL THE RIGHTS IN THE SAID PROPERTY. THEREAFTER SHRI KAILASH WANI APPROACHED THE ASSESSEE, I.E. SHRI SANJAY NEMICHAND LOHADE FOR WITHDRAWING THE SUIT NO. 1006/1996 AND FOR RELINQUISHMENT OF HIS RIGHTS IN T HE SAID PROPERTY, SHRI KAILASH WANI WAS READY TO PAY RS. 3 CRO RES TO HIM. ACCORDINGLY, SHRI SANJAY NEMICHAND LOHADE, I.E. THE ASSESSE E FILED APPLICATION IN THE COURT AND WITHDREW THE SPECIAL SUIT NO.1006/1996 BY USING THE POWER OF ATTORNEY. THEREAFTE R, SHRI KAILASH WANI SOLD THE ENTIRE PROPERTY TO FULLMOON HOUSING & FINANCE PVT. LTD. PUNE. THIS MOU WAS EXECUTED ON 16-05-20 07 BETWEEN FULLMOON HOUSING & FINANCE PVT. LTD. AND SHRI KAILAS H WANI. IN THE SAID MOU THE TOTAL PRICE OF THE PROPERTY AN D SCHEDULE FOR PAYMENT AND NAMES OF THE PARTY TO WHOM AND HOW MU CH AMOUNT TO BE PAID ON BEHALF OF SHRI KAILASH WANI BY THE PRO POSED PURCHASER FULLMOON HOUSING & FINANCE PVT. LTD. WAS MENTIONE D. IN THE SAID MOU IT WAS VERY SPECIFICALLY MENTIONED THAT THE T OTAL COST WAS FIXED AT RS.9,26,46,600/- WHICH IS INCLUSIVE OF RS. 3 CROR ES TO BE PAID TO THE ASSESSEE. SHRI SANJAY NEMICHAND LOHADE HA S RELEASED ALL HIS RIGHTS IN THE PROPERTY. THUS, THE ASSESSEE SHRI S ANJAY NEMICHAND LOHADE GOT RS.3 CRORES FOR RELINQUISHMENT OF ALL H IS RIGHTS WHICH WAS SHOWN AND DISCLOSED IN THE RETURN OF INC OME UNDER THE HEAD LONG TERM CAPITAL GAIN AND IT WAS CLAIMED EXEMPT U/S.54F FROM THE SAID AMOUNT AS THE SAID AMOUNT WAS UTILIZED FOR A CQUIRING THE RESIDENTIAL HOUSE. 7. HOWEVER, THE CIT(A) ALSO WAS NOT CONVINCED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND UPHELD THE ACTION OF THE AO BY OBSERVING AS UNDER : 6. I HAVE CAREFULLY PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS OF THE CASE ARE ENUMERATED BELOW : 5 6.1. PROPERTY OF 161 R AT SURVEY NO. 5/1A ADMEASURI NG ABOUT 81 R AND SURVEY NO. 5/1B ADMEASURING ABOUT 80R AT BANER W AS BELONGING TO LATE SHRI. VENKATESH KADAM WHO EXPIRED ON 4/2/1987. SHRI. PRADEEP KUMAR DHORJE APPROACHED KADAM FAMILY FOR SALE OF TH EIR LAND SITUATED AT SANER. THE KADAM FAMILY WAS LOOKING OUT FOR SALE O F THEIR LAND AS LAND WAS NOT YIELDING MUCH BENEFIT DUE TO WATER PROBLEM A ND VITHABAI KADAM, WIFE OF LATE VENKATESH KADAM, HAD TO RAISE MON EY FOR MARRIAGE OF HER DAUGHTERS. SHRI. DHORJE, THROUGH CONSENT DEED EXECUTED ON 24/8/1995, PAID RS.5 LACS VIDE CHEQUE DATED 28/8/1995 TOWARDS TOKEN FOR PURCHASE OF SAID LAND. AFTER GIVING PUBLIC NOTICE IN SAKAL PAPERS ON 2/9/1995, KADAM FAMILY ENTERED INTO WRITTEN AGREEME NT WITH DHORJE ON 1/10/1995 FOR ENTIRE LAND FOR CONSIDERATION OF RS. 1.61 CRS. ACCORDINGLY, ON ACCOUNT OF EARNEST MONEY DHORJE PAI D RS.25 LACS (INCLUDING RS. 5 LACS AS MENTIONED ABOVE) AND WAS MUTUA LLY AGREED THAT ON FULFILLMENT OF DOCUMENTS LIKE 230A CERTIFICATE FR OM INCOME TAX, 371 FROM INCOME TAX, ZONE CERTIFICATE FROM PMC AND DEMA RCATION OF LAND FROM GOVERNMENT OF MAHARASHTRA, FROM KADAM FAMILY, T HE PEACEFUL POSSESSION WILL BE HANDED OVER TO DHORJE. KADAM FAMILY ALSO AGREED IN WRITING THAT THEY WILL EXECUTE SALE DEED EITHER IN F AVOUR OF DHORJE OR HIS NOMINEE BY ONE OR MORE SALE DEEDS. SALE DEED FOR 80R WAS TO BE EXECUTED WITHIN 1 MONTH ON PAYMENT OF RS.20 LACS IN CASH AND RS.60 LACS BY CHEQUE. THE BALANCE 2 ACRES (81R) WOULD BE DI SPOSED OFF WITHIN 15 DAYS AFTER EXECUTING OF 1 ST SALE DEED. LATER ON KADAM FAMILY ENTERED INTO SALE DEED WITH KAILASH BABULAL WANI & ROUNDAL FA MILY BY 8 SALE DEEDS BY SE!LING 10R EACH TO 8 PERSONS FOR RS. 6 LACS PE R SALE DEED (I.E. RS.48 LACS FOR 80R). THE ABOVE 8 SALE DEEDS WERE REGISTE RED AT SL.NO.8883 TO 8890 ON 17/10/1995 IN THE OFFICE OF SU B REGISTRAR, HAVELI, PUNE. DHORJE FILED SUIT AGAINST KADAM FAMILY & WANI V IDE CIVIL SUIT NO. 1006/96 WITH THE PRAYER THAT A DECREE FOR DAMAGE OF RS.3.50 CRS BE PASSED. 6.2. LATER ON 12/10/2000 DHORJE & WANI EXECUTED M. O.U. THROUGH WHICH DHORJE COMPROMISED AND WITHDRAW THE SUIT FILED AGAINST 80R (WHICH WERE SOLD TO WANI AND OTHERS THROUGH 8 SALE DEE DS) AND CONTINUED CIVIL SUIT AGAINST KADAM FAMILY FOR POSSESSION OF 81 R. HOWEVER, THROUGH SAME M.O.U. DHORJE AGREED THAT WANI OR HIS NOMINEES WILL CONTINUE THE SAID CIVIL SUIT AGAINST KADA M FAMILY. ACCORDING TO THIS M.O.U., WANI PAID DHORJE RS.6 LACS A S COMPENSATION. DHORJE AGREED THAT HEREAFTER WANI WILL TAKE CARAE O F THE CIVIL SUIT ON BEHALF OF DHORJE. SUBSEQUENTLY SINCE DHORJE COULD NO T ATTEND COURT MATTERS AND OTHER MEETINGS REGARDING SALE OF LAND THER EFORE, HE GAVE POWER OF ATTORNEY TO SHRI. SANJAY LOHADE. THIS POWER OF ATTORNEY IN FAVOUR OF SHRI. SANJAY LOHADE, THE APPELLANT WAS SIGN ED ON 16.7.2007 AND THROUGH IT THE APPELLANT WAS GIVEN ALL THE RIGHT S ON BEHALF OF DHORJE FOR EXECUTING AND PERFORMING VARIOUS ACTS AND DEEDS AN D THINGS IN RESPECT OF ENTIRE LAND I.E. 161 R AND CIVIL SUIT NO. 1006/1996. 6.3. ON THE SAME DAY I.E.16/7/2001 DHORJE, WANI AND LOHADE ENTERED INTO A MEMORANDUM OF UNDERSTANDING (M.O.U.) ACCORDINGLY, WANI GRANTED DEVELOPMENT RIGHTS OF 40R OF PLOT B TO SANJAY LOHADE. FURTHER IT WAS NEGOTIATED THAT LOHADE WILL OBTAIN DE VELOPMENT RIGHTS FOR PLOT A FROM KADAM FAMILY IN HIS NAME OR IN THE N AME OF HIS NOMINEE. 6.4 ON 16/7/2007 ARVIND JAIN AND SHRAVAN AGARWAL ON BEHALF OF FULLMOON HOUSING PVT. LTD. ENTERED INTO M.O.U. WITH WANI REGARDING 81R OF PLOT A. OUT OF THIS KADAM FAMILY IS OWNER OF 4 0R AND REGARDING 41R SANJAY LOHADE WAS HOLDING DEVELOPMENT RIGHTS. AC CORDING TO THIS 6 M.O.U. FULLMOON HOUSING PVT. LTD. PAID RS. 3 CRS TO SA NJAY LOHADE, RS. 3.40 CRS TO KADAM FAMILY AND RS.2.11 CRS TO WANI. 7. THE CRUX OF THE ISSUE INVOLVED IN THE APPEAL IS WHE THER THE AMOUNT RECEIVED BY THE APPELLANT OF RS.3 CRORES AS PER THE MOU DATED 16.5.2007 BETWEEN M/S. FULLMOON HOUSING PVT. LTD. AND SHRI KAILASH BABULAL WANI IS TAXABLE AS CAPITAL GAINS OR NOT IN T HE HANDS OF THE APPELLANT. THE APPELLANT CONTENDS THAT ALL RIGHTS INC LUDING DEVELOPMENT RIGHTS WERE CONVEYED UPON HIM THROUGH THE MOU DATED 16.7.2001 BY SHRI WANI AND SHRI DHORJE. THE AMOUNTS IN QUESTION W ERE RECEIVED BY HIM ON VARIOUS DATES BETWEEN 2007 AND 2010 FROM THE M /S. FULLMOON HOUSING PVT. LTD. AND RELATE TO TRANSFER OF 41 ARES OF LAND OUT OF TOTAL 81 ARES OF S.NO.5/1A (PLOT A) OWNED BY THE KADAM FAMILY . 7.1 IT WOULD BE RELEVANT AT THIS STAGE TO REFER TO TH E DEFINITION OF TRANSFER IN RELATION TO CAPITAL ASSETS AS DEFINED U/S.2 (47) OF THE INCOME TAX ACT, 1961. (47) TRANSFER', IN RELATION TO A CAPITAL ASSET, INCLUDES,- (I) THE SALE, EXCHANGE OR RELINQUISHMENT OF THE ASSET; OR (II) THE EXTINGUISHMENT OF ANY RIGHTS THEREIN; OR (III) THE COMPULSORY ACQUISITION THEREOF UNDER ANY LA W; OR (IV) IN A CASE WHERE THE ASSET IS CONVERTED BY THE OWNE R THEREOF INTO, OR IS TREATED BY HIM AS, STOCK-IN-TRADE OF A BUSINESS CARRI ED ON BY HIM, SUCH CONVERSION OR TREATMENT;] OR] (IVA) THE MATURITY OR REDEMPTION OF A ZERO COUPON B OND; OR] (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSIO N OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882 ); OR (VI) ANY TRANSACTION (WHETHER BY WAY OF BECOMING A M EMBER OF, OR ACQUIRING SHARES IN, A CO-OPERATIVE SOCIETY, COMPANY O R OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT OR AN Y ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHICH HAS THE EFFE CT OF TRANSFERRING, OR ENABLING THE ENJOYMENT OF, ANY IMMO VABLE PROPERTY. EXPLANATION - FOR THE PURPOSES OF SUB- CLAUSES (V) AND (VI),' IMMOVABLE PROPERTY' SHALL HAVE THE SAME MEANING AS IN CLAUSE (D) OF SECTION 269UA;]. 7.2. THEREFORE, IT NEEDS TO BE EXAMINED WHETHER THE APPELLANT HAD ANY RIGHTS OVER THE CAPITAL ASSET DULY CONFERRED ON HI M BY THE OWNER OR WAS ALLOWED POSSESSION OF THE PROPERTY IN QUESTION IN PA RT PERFORMANCE OF A CONTRACT AS PER SEC. 53A OF THE TRANSFER OF PROPERTY ACT, 1882. THE SUBSEQUENT PARAS WOULD THEREFO RE, DISCUSSED WHAT WERE THE RIGHTS CONFERRED ON THE APPELLANT AND WHETHER ANY OF THOSE RIGHTS AND OBLIGATIONS FELL WITHIN THE DEFINITIO N OF TRANSFER' OR NOT. 7.3. AS ALREADY STATED ABOVE, AFTER THE EXPIRY OF TH E ORIGINAL OWNER SHRI VYANKATESH KADAM ON 4.2.1987 HIS WIDOW AND SIX DA UGHTERS BECAME THE LEGAL HEIRS OF THE 161 ARES OF PROPERTY SPE CIFICALLY BEARING 7 S.NOS. 5/1A (HEREIN REFERRED TO AS PLOT A) AND 5/1B ( HEREIN REFERRED TO AS PLOT B). KADAM FAMILY ENTERED INTO AGREEMENT OF SA LE WITH PRADEEPKUMAR & CO. (REPRESENTED BY SHRI PRADEEPKUMAR DHORJE) FOR THE ENTIRE PROPERTY ON 1.10.1995, AFTER AN INITIAL CONSENT DEED EXECUTED ON 24.8.1995. SHRI DHORJE PAID RS.25 LAKHS AS EARNEST MONEY AND IT WAS AGREED THAT SALE DEED FOR 80 ARES (PLOT A) WOULD BE EXECUTED DURING THE MONTH ON PAYMENT OF RS.20 LAKHS IN CASH AND RS.60 LAKHS IN CHEQUE. HOWEVER, THE KADAM FAMILY ENTERED INTO REGISTERED SAL E DEED IN RESPECT OF PLOT A WITH WANI AND ROUNDAL FAMILY FOR A CONSIDE RATION OF RS.48 LAKHS THROUGH 8 SEPARATE SALE DEEDS BEARING DOCUMENT NO . 8883 TO 8890/95 DATED 17.10.1995. SHRI DHORJE FILED A CIVIL SUIT AGAINST BOTH KADAM AND WANI FAMILIES BEARING CIVIL SUIT NO.1006/9 6. THROUGH THE SAID CIVIL SUIT SHRI DHORJE REQUESTED THE COURT THAT H E MAY BE HANDED OVER VACANT AND PEACEFUL POSSESSION OF PLOT A. ALTERNAT IVELY, HE REQUESTED THE COURT FOR DAMAGES OF RS.3,50,00,000 IN C ASE THE COURT CAME TO THE CONCLUSION THAT SPECIFIC PERFORMANCE WAS N OT POSSIBLE. IT IS IMPORTANT TO REMEMBER THAT THIS CIVIL SUIT WAS SUBSEQUEN TLY WITHDRAWN BY SHRI DHORJE (THROUGH HIS POWER OF ATTORNEY HOLDER ) ONLY ON 22.8.2007. THEREFORE, THE OWNERSHIP OF PLOT A (WHICH IS THE SUBJECT MATTER OF TRANSACTION IN THIS APPEAL) REMAINED IN DISP UTE BETWEEN THE YEARS 1996 TILL 2007. 7.4. SUBSEQUENTLY, AS PER AGREEMENT FOR SALE DATED 12 .10.2000 SHRI DHORJE AGREED TO TRANSFER ALL RIGHTS, TITLE AND INTER EST IN RESPECT OF PLOT A TO SHRI KAILASH BABULAL WANI, (WHOSE FAMILY WAS BY THE N IN POSSESSION OF PLOT B) FOR A CONSIDERATION OF RS.6 LAKHS. VIDE TH E SAID AGREEMENT, COMPROMISE WAS REACHED IN RESPECT OF PLOT B AND POWER OF ATTORNEY EXECUTED IN FAVOUR OF SHRI WANI FOR CONTINUATION OF CIVIL SUIT IN RESPECT OF PLOT A. THEREFORE, BY THIS AGREEMENT ALL RIGHTS O VER PLOT A WERE RELINQUISHED BY SHRI DHORJE TO SHRI WANI AND HE WAS T O CONTINUE THE LITIGATION AGAINST KADAM FAMILY. IT IS THEREFORE, SURP RISING THAT SHRI DHORJE AGAIN EXECUTED POWER OF ATTORNEY ON 16.7.200 1 IN FAVOUR OF SHRI SANJAY LOHADE AND APPOINTED HIM TO CONTINUE THE SAID SUIT. IT MAY BE MENTIONED HERE THAT THIS POA DOES NOT MAKE ANY REFERE NCE WHATSOEVER TO THE POA GRANTED AS PER AGREEMENT FOR SALE DATED 12 .10.2000. 7.5. FURTHER, ALTHOUGH ALL RIGHTS, TITLE AND INTEREST WERE VESTED IN SHRI WANI BY SHRI DHORJE, BY MOU DATED 12.10.2000 REFERR ED TO IN THE PRECEDING PARAGRAPH, SHRI DHORJE SIGNED A POWER OF A TTORNEY AGREEMENT IN FAVOUR OF APPELLANT ON 6.7.2001. ON TH E SAME DATE VIZ., 16.7.2001 SHRI DHORJE AGAIN ENTERED INTO MOU WITH S HRI WANI AND SHRI LOHADE WHREBY THE FOLLOWING WERE AGREED. A) THE SETTLEMENT / COMPROMISE BETWEEN SHRI DHORJE AND S HRI WANI FOR PLOT B IS REITERATED. B) CONSENT OF DHORJE FOR ANY TRANSACTION BETWEEN LOHADE AND KADAM FOR PLOT A IS RECORDED. C) SHRI LOHADE IS TO TAKE STEPS TO WITHDRAW THE CIVIL SUI T 1006/96 D) DEVELOPMENT RIGHTS IN RESPECT OF 40 ARES LAND IN PLOT B GIVEN TO SHRI LOHADE E) SHRI LOHADE IS TO EXECUTE DEEDS AND DOCUMENTS IN RESPEC T OF PLOTS A AND B F) SHRI DHORJE RECEIVES AGREED CONSIDERATION FROM SHRI W ANI AS FULL AND 8 FINAL SETTLEMENT IN EXCHANGE FOR HIS NO OBJECTION FOR ALL THE TRANSACTIONS REFERRED TO ABOVE. G) SHRI DHORJE AND SHRI WANI WOULD HAVE NO INTEREST IN PLOTS A AND B EXCEPT THE 4 DEVELOPMENT AGREEMENTS DULY BETWEEN WAN I (AND 3 OTHERS) WITH SHRI LOHADE AND HIS WIFE IN RESPECT OF PO RTION OF PLOT B. 7.6. THE APPELLANT HAS CONTENDED THAT ALL RIGHTS AND INTEREST INCLUDING DEVELOPMENT RIGHTS STAND VESTED IN HIM THROU GH THE ABOVE MENTIONED MOU. HOWEVER, AS DETAILED ABOVE, THE APPEL LANT HAS ONLY TO PERFORM CERTAIN SPECIFIC ACTS AS THE POWER OF ATTORNEY HOLDER OF SHRI PRADEEP DHORJE. THE ONLY DEVELOPMENT RIGHTS THAT HE RECEIVES AS PER THIS MOU IS IN RESPECT OF 40 ARES OF LAND IN PLOT B. NO RIGHTS INTEREST AND TITLE CAN BE SAID TO HAVE PASSED ON TO THE APPELLANT IN RESPECT OF PLOT A, TRANSACTION PERTAINING TO WHICH IS THE SUBJECT MATTER OF THE PRESENT APPEAL. EVEN NOTEWORTHY IS THE FACT THAT THE OWNERSHI P QUESTION OF PLOT A IS, AS ON THAT DATE, STILL DISPUTED IN VIEW OF THE PE NDENCY OF THE CIVIL SUIT 1006/96. AGAIN, IT IS HIGHLY SURPRISING THAT NO CONSIDERATION WA S PAID / PAYABLE BY THE APPELLANT SHRI SANJAY LOHADE EITHER TO SHR. PRADEEP DHORJE OR SHRI KAILASH WANI. THERE IS NO MEN TION IN THE MOU THAT ANY LAND/ RIGHTS IN LAND ARE GIFTED TO THE APPE LLANT. ALL THESE FACTS PROVE THAT THERE IS NO TRANSFER OF RIGHTS IN THE CAPIT AL ASSET TO THE APPELLANT. 7.7. SUBSEQUENTLY, AN MOU IS SIGNED ON 16.5.2007 BETW EEN FULLMOON HOUSING PVT. LTD AND SHRI KAILASH BABULAL WANI BY WH ICH 41 ARES OF LAND ARE AGREED TO BE TRANSFERRED FROM TOTAL 81 ARES IN RESPECT OF PLOT A TO FULLMOON HOUSING PVT. LTD. IT IS ALSO SEEN THAT IN N ONE OF THESE MOUS OR AGREEMENT FOR SALE DATED 12.10.2000, 16.7.2001 AN D 16.5.2007, THE OWNERS OF THE LAND OF PLOT A VIZ. KADAM FAMILY ARE A PARTY NOR IS THEIR CONSENT RECORDED. IT IS IMPORTANT TO REMEMBER THAT TH EY WERE IN PHYSICAL OCCUPATION OF THE ENTIRE 81 ARES OF LAND IN PLOT A TILL THE SUBSEQUENT SALE DEED FOR 41 ARES WAS REGISTERED ON 3.11.2 007. SUBSEQUENTLY, SALE DEED IS REGISTERED ON 3.11.2007 IN F AVOUR OF FULLMOON HOUSING PVT. LTD. BY SHRI WANI AND SHRI GAD EEYA IN RESPECT OF THESE 41 ARES OF LAND. THIS FOLLOWS THE WITHDRAWAL OF CIVIL SUIT 1006/96 BY SHRI LOHADE USING HIS POWER OF ATTORNEY ON 22.8.20 07. THE APPELLANT, SHRI SANJAY NEMICHAND LOHADE, IS NOT A PA RTY EITHER IN THE MOU DATED 16.5.2007 NOR IN THE REGISTERED SALE DEED D ATED 3.11.2007. THE SALE DEED DATED 3.11.2007 WAS NOT PRODUCED BEFORE ME; IT BEING STATED THAT A COPY THEREOF WAS NOT AVAILABLE WITH THE APPELLANT. 7.8. THEREFORE, ALL THE ABOVE FACTS GO TO SHOW THAT NO RIGHTS, TITLE OR INTEREST INCLUDING DEVELOPMENT RIGHTS ARE TRANSFERRED OR ASSIGNED TO THE APPELLANT SHRI SANJAY NEMICHAND LOHADE IN RESPECT OF PLOT A BY VIRTUE OF THE MOUS OR POA OR AGREEMENT TO SALE REFERRED TO I N THE PRECEDING PARAGRAPHS. EACH ONE OF THE DOCUMENTS REFERRED TO ABO VE ARE UNREGISTERED DOCUMENTS, MERELY DOCUMENTED ON RS.20 STAM P PAPER AND NOTARIZED. IN ALL THE DOCUMENTS REFERRED TO ABOV E, DATED 12.10.2000, 16.7.2001 AND 16.5.2007, THE DESCRIPTION OF THE PROPERTY SHOWS THAT KADAM PROPERTY IS IN POSSESSION OF PLOT A AND W ANI FAMILY IN POSSESSION OF PLOT B. THE LAND WHICH SUBSEQUENTLY BECA ME THE SUBJECT MATTER OF MOU BETWEEN FULLMOON HOUSING PVT. L TD. AND KAILASH WANI (41 ARES OUT OF PLOT A) WAS TILL THEN RIGHTFULLY OWNED BY THE KADAM FAMILY AND SHRI KAILASH WANI (WHO AS PER MOU DATED 1 2.10.2000, REFERRED TO IN PARA 7.4 SUPRA, ACQUIRED COLLATERAL R IGHTS ENJOYED BY SHRI PRADEEP DHORJE. AT NO POINT IN TIME, WAS THE APPELL ANT ALSO GIVEN POSSESSION OF THE PROPERTY IN PART PERFORMANCE OF ANY C ONTRACT AS PER SECTION 53A OF TRANSFER OF PROPERTY ACT, 1882. THE RE CEIPT OF RS.3 CRORES 9 BY WAY OF CONSIDERATION FROM FULLMOON HOUSING PVT. LT D. THEREFORE, CANNOT BE TREATED AS LONG TERM CAPITAL GAINS IN THE H ANDS OF THE APPELLANT AND HAS BEEN RIGHTLY TREATED AS COMMISSION AN D BROKERAGE BY THE ASSESSING OFFICER. IN THE RESULT, GROUNDS NO.1 TO 11 ARE DISMISSED. 8. IT MAY BE MENTIONED HERE THAT THE APPELLANT HAS R AISED THE ISSUE OF LACK OF OPPORTUNITY IN CONNECTION WITH THE SECTI ON 144A PROCEEDINGS. HOWEVER, IT IS SEEN THAT THE APPLICATION U/S.144A WAS SU O MOTO FILED BY THE APPELLANT AND HE WAS GIVEN AN OPPORTUNITY OF BEI NG HEARD. FURTHER, ONCE DIRECTIONS ARE RECEIVED U/S.144A, THIS IS NO GROUN D FOR THE ASSESSING OFFICER TO SEPARATELY RECORD HIS COMMENTS ON THE DIRECTIONS RECEIVED FROM HIS SUPERVISORY AUTHORITY. HENCE, I FIN D NO MERITS IN GROUNDS NO.4, 8, 10 AND 11 ON THE ISSUE RELATING TO DI RECTIONS PASSED U/S.144A AND LACK OF OPPORTUNITY, AS CLAIMED BY THE A PPELLANT. 8. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : ON FACTS AND IN LAW, 1 THE LEARNED CIT(A) ERRED IN HOLDING THAT THE LEA RNED A.O. WAS JUSTIFIED IN TAXING THE AMOUNT OF RS. 3 CRS. RECEIVED FROM M/S. FULL MOON HOUSING PVT. LTD. AS COMMISSION AND BROKERAGE AS AGAINST INCOME UNDER THE HEAD 'CAPITAL GAINS' OFFERED BY THE ASSESSEE. 2 THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDIT ION OF RS. 3 CRS. MADE ON ACCOUNT OF DISALLOWANCE OF EXEMPTION U/S 54F ON THE GROUND THAT THERE WAS NO TRANSFER OF ANY CAPITAL ASSET U/S 2(47) OF THE ACT AND THAT THE AMOUNT RECEIVED BY THE ASSESSEE WAS IN NATURE O F BROKERAGE AND COMMISSION AND NOT AGAINST THE TRANSFER OF A CAPITA L ASSET. 3 THE LEARNED CIT(A) ERRED IN HOLDING THAT THE AMO UNT OF RS. 3 CRS. RECEIVED BY THE ASSESSEE VIDE MOU DATED 16.05.2007 AGA INST TRANSFER OF DEVELOPMENT RIGHTS IN LAND AT S.NO. 5/1A WAS IN FACT IN THE NATURE OF BROKERAGE AND COMMISSION EARNED BY THE ASSESSEE IN RESPE CT OF THE SAID LAND. 4 THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASSESSE E DID NOT OWN ANY DEVELOPMENT RIGHTS IN RESPECT OF THE LAND AT S. NO. 5/ 1A BY STATING THE FOLLOWING REASONS A. THE OWNERSHIP OF THE SAID LAND WAS IN DISPUTE TILL 2007 AND THE POSSESSION OF THE SAME WAS WITH THE MEMBERS OF KADAM FAMILY WHO WERE THE LEGAL OWNERS TILL THEN AND HENCE , THE ASSESSEE COULD NOT HAVE OBTAINED THE DEVELOPMENT RIGHTS THEREIN FROM SHRI DHORJE. B. IN THE MOU DATED 16.07.2001, THERE WAS NO MENTION O F THE TRANSFER OF ANY DEVELOPMENT RIGHTS IN THE SAID LAND NO R WAS THERE ANY MENTION OF THE CONSIDERATION TO PAID BY TH E ASSESSEE IN RESPECT OF THE SAME. 4.1 THE LEARNED CIT(A) ERRED IN DOUBTING THE GENUI NENESS OF THE CLAIM OF THE ASSESSEE ON THE GROUND THAT ALL THE DOCUM ENTS FURNISHED BY THE ASSESSEE WERE UNREGISTERED DOCUMENTS WHICH WERE MEREL Y NOTORISED ON A STAMP PAPER OF RS. 20/- AND FURTHER ON THE GROUND THAT 10 THE SALE DEED DATED 03.11.2007 ENTERED BETWEEN SHRI KAILASH WANI AND M/S. FULL MOON HOUSING PVT. LTD. COULD NOT BE PRODUCED BY THE ASSESSEE. 4.2 THE LEARNED CIT(A) ERRED IN HOLDING THAT THE A MOUNT OF RS. 3 CRS. RECEIVED BY THE ASSESSEE WAS IN THE NATURE OF BROKERAGE AND COMMISSION WITHOUT BRINGING ON RECORD ANY EVIDENCE IN SUPPORT OF THE SAID CONCLUSION DRAWN BY HIM. 5 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THA T THE ASSESSEE HAD ACQUIRED THE DEVELOPMENT RIGHTS IN RESPECT OF THE LAND AT S.NO. 5/1A VIDE MOU DATED 16.07.2001 AND THE AMOUNT OF RS. 3 CR S. RECEIVED BY THE ASSESSEE VIDE MOU DATED 16.05.2007 WAS IN CONSIDERATION O F THE SURRENDER OF DEVELOPMENT RIGHTS ACQUIRED BY THE ASSESSEE THEREIN AND HENCE, THE AMOUNT OF RS. 3 CRS. WAS RIGHTLY OFFERED TO TAX AS CAPITAL GAIN. 6 THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THE CORRECT FACTS OF THE CASE AND HENCE, THE ADDITION SUSTAINED MAY KINDLY BE DELETED. 7 THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND O R DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 9. THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUND WHIC H READS AS UNDER : THE APPELLANT SUBMITS THAT THE AMOUNT OF RS.3 CRORES RECEIVED SHOULD BE CONSIDERED AS DAMAGES AND HENCE, THE SAID AMOUNT SHOU LD BE TREATED AS EXEMPT FROM TAX. 10. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDITION AL GROUND RAISED IS LEGAL IN NATURE AND ALL THE FACTS ARE ON R ECORD. THEREFORE, THE SAME MAY BE ADMITTED FOR ADJUDICATION. RE LYING ON VARIOUS DECISIONS HE SUBMITTED THAT SINCE NO NEW FACTS AR E REQUIRED TO BE INVESTIGATED AND THE ADDITIONAL GROUND IS LEGAL ONE T HE SAME SHOULD BE ADMITTED. FOR THE ABOVE PROPOSITION HE RELIED ON THE FOLLOWING DECISIONS : 1) NTPC LTD. 222 ITR 383 (SC) 2) JUTE CORPORATION OF INDIA LTD. 187 ITR 688 3) AHMEDABAD ELECTRICITY CO. 199 ITR 351 (BOMBAY) 11. AFTER HEARING BOTH THE SIDES, THE ADDITIONAL GROUND R AISED BY THE ASSESSEE BEING A LEGAL ONE IS ADMITTED FOR ADJUDICATION. 11 12. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PROPERTY AT SURVEY NO.5, BANER PUNE WAS OWNED BY SHRI KADAM WHO EXPIRED ON 04-02-1987. HIS LEGAL HEIRS ENTERED INTO AN AGREEMENT TO SALE THIS PROPERTY TO ONE SHRI PRADEEP KUMAR DHORJE. HOWEV ER, DURING CONTINUATION OF THIS AGREEMENT, THE LEGAL HEIRS SOLD A PART OF THIS PROPERTY TO SHRI KAILASH BABULAL WANI. SHRI PRADEEP KUMAR DHORJE FILED A COMPLAINT TO THE COURT AGAINST LEGAL HEIRS OF SHRI KAD AM AND SHRI KAILASH B. WANI CHALLENGING THE ABOVE SALE. 13. REFERRING TO PAGES 12 TO 19 OF THE PAPER BOOK THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT FOR THIS LEGAL MATTER SH RI PRADEEP KUMAR DHORJE GAVE POWER OF ATTORNEY TO SHRI SANJAY NE MICHAND LOHADE, I.E. THE ASSESSEE ON 16-07-2001. REFERRING TO PA GES 4 TO 11 OF THE PAPER BOOK HE SUBMITTED THAT A MOU WAS SIGNED BETWEEN SH RI PRADEEP KUMAR DHORJE, SHRI KAILASH B. WANI AND SHRI SANJA Y NEMICHAND LOHADE ON 16-07-2001 ACCORDING TO WHICH SHRI KAILASH B.WANI AGREED TO GRANT DEVELOPMENT RIGHT IN PART OF THE SAID PLOT TO THE ASSESSEE. REFERRING TO THE SAID MOU HE DREW THE ATTENTION OF THE BENCH TO CLAUSE 8 ACCORDING TO WHICH PARTY NO.2 AND HIS ASSOCIATES, I.E. SHRI KAILWASH WANI GRANTED DEVELOPMENT RIGHTS IN RESPE CT OF 40 ARES OF LAND OUT OF THE SAID PLOT B TO THE PARTY NO.3, I.E. S HRI SANJAY NEMICHAND LOHADE. THUS, THE ASSESSEE ACQUIRED RIGHTS IN THE SAID LAND. 14. REFERRING TO PAGES 20 TO 23 OF THE PAPER BOOK, WHIC H IS IN MARATI, AND ITS ENGLISH TRANSLATION AT PAGES 24 TO 27, THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENC H TO THE MOU DATED 16-05-2007 WHICH WAS ENTERED INTO BETWEEN S HRI KAILWASH WANI AND FULLMOON HOUSING AND FINANCE PVT. LTD. REFERRING TO PARA 3 OF THE SAID MOU HE SUBMITTED THAT IT WAS 12 DECIDED THAT SHRI KAILWASH WANI WOULD PAY THE AMOUNT TO SHRI SANJAY NEMICHAND LOHADE FOR RELEASING ALL HIS RIGHTS IN THE SAID PROPERTY AND IT WAS FURTHER STATED THAT SAID AMOUNT WO ULD BE RS. 3 CRRORES. THUS, AS PER THIS AGREEMENT, THE ASSESSEE HAS RECEIVED A SUM OF RS. 3 CRORES FOR RELEASING HIS RIGHTS IN THE SAID PRO PERTY. HE SUBMITTED THAT THE ASSESSEE CLAIMED THIS TRANSACTION RES ULTED INTO LONG TERM CAPITAL GAIN WHILE THE AO AND THE CIT(A) HELD THAT THIS AMOUNT IS BROKERAGE OR COMMISSION PAID TO THE ASSESSEE. ACCORDINGLY, THEY TAXED IT AS BUSINESS INCOME AS AGAINST LONG TERM CAPITAL GAIN SHOWN BY THE ASSESSEE. 15. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT BRO KERAGE OR COMMISSION IS TO BE PAID FOR THE SERVICES RENDERED IN CON NECTION WITH THE SALE TRANSACTION. IN THIS CASE FOR THE SALE OF LAN D TO FULLMOON HOUSING & FINANCE PVT. LTD. THE AO OR THE CIT(A) HAVE NOT PROVED THE NATURE OF SERVICES, IF ANY, RENDERED BY THE A SSESSEE. SECONDLY, THE BROKERAGE OR COMMISSION IN CONNECTION WITH THE LAND DEAL IS GENERALLY TO THE EXTENT OF 2 TO 3%. HOWEVER, IN TH E INSTANT CASE THE ASSESSEE HAS BEEN PAID RS. 3 CRORES OUT OF T HE TOTAL CONSIDERATION OF RS.9 CRORES BY THE DEVELOPER WHICH IS A LMOST 33% OF THE TOTAL CONSIDERATION. HENCE, SUCH A BIG AMOUNT IS UNLIKE LY TO BE BROKERAGE OR COMMISSION. THIRDLY, THE AGREEMENT CLEARLY STATES THAT THE AMOUNT IS BEING PAID TO THE ASSESSEE FOR SURRENDERIN G HIS RIGHTS IN THE LAND. THE AO AND THE CIT(A) INTERPRETED THE PAYM ENT AS BROKERAGE OR COMMISSION WHICH IS NOT JUSTIFIED. 16. REFERRING TO THE DECISION OF THE HONBLE SUPREME COU RT IN THE CASE OF CIT VS. KHETAN AND COMPANY REPORTED IN 45 ITR 170 AND THE DECISION IN THE CASE OF CIT VS. DELHI FLOUR MILLS CO. LT D. 13 REPORTED IN 35 ITR 15 HE SUBMITTED THAT THE DEPARTMEN T CANNOT RE- WRITE AN AGREEMENT. 17. REFERRING TO THE DECISION OF HONBLE BOMBAY HIGH COUR T IN THE CASE OF TATA SERVICES LTD. REPORTED IN 122 ITR 594 HE S UBMITTED THAT THE HONBLE HIGH COURT UNDER IDENTICAL FACTS AND CIRCUMST ANCES HAS HELD THE AMOUNT RECEIVED AS CAPITAL GAIN. IN THAT CASE T HE ASSESSEE HAD ENTERED INTO AN AGREEMENT FOR ACQUIRING THE PROPERT Y AND LATER IT SURRENDERED ITS RIGHT TO ACQUIRE THE PROPERTY AND REC EIVED COMPENSATION. THIS COMPENSATION WAS HELD BY THE HONBLE HIGH COURT AS CAPITAL GAIN. 18. THE HONBLE HIGH COURT IN THE SAID DECISION HAS HELD TH AT U/S.2(14) OF THE I.T. ACT, 1961, A CAPITAL ASSET MEANS PROP ERTY OF ANY KIND HELD BY AN ASSESSEE, WHETHER OR NOT CONNECTED WITH HIS BUSINESS OR PROFESSION. THE WORD PROPERTY USED IN SEC TION 2(14) OF THE ACT IS A WORD OF THE WIDEST AMPLITUDE AND THE DEFINITIO N HAS RE- EMPHASIZED THIS BY THE USE OF THE WORDS OF ANY KIND. ANY RIGHT WHICH CAN BE CALLED PROPERTY WILL BE INCLUDED IN THE DEFINITIO N OF CAPITAL ASSET. A CONTRACT FOR SALE OF LAND IS CAPABLE OF SPECIFIC PERFORMANCE. IT IS ALSO ASSIGNABLE. THEREFORE, A RIGHT TO O BTAIN CONVEYANCE OF IMMOVABLE PROPERTY IS CLEARLY PROPERTY AS CONTEMPLATED BY SECTION 2(14) OF THE ACT. 19. REFERRING TO THE ORDER OF CIT(A) THE LD. COUNSEL FOR TH E ASSESSEE DREW THE ATTENTION OF THE BENCH TO PARA 6.4 O F THE ORDER WHICH READS AS UNDER : 6.4 ON 16/7/2007 ARVIND JAIN AND SHRAVAN AGARWAL O N BEHALF OF FULLMOON HOUSING PVT. LTD. ENTERED INTO M.O.U. WITH WANI REGARDING 81R OF PLOT A. OUT OF THIS KADAM FAMILY IS OWNER OF 4 0R AND REGARDING 41R SANJAY LOHADE WAS HOLDING DEVELOPMENT RIGHTS. AC CORDING TO THIS M.O.U. FULLMOON HOUSING PVT. LTD. PAID RS. 3 CRS TO SA NJAY LOHADE, RS. 3.40 CRS TO KADAM FAMILY AND RS.2.11 CRS TO WANI. 14 HE SUBMITTED THAT FROM THE ABOVE IT IS CLEAR THAT SHRI S ANJAY NEMICHAND LOHADE WAS HOLDING DEVELOPMENT RIGHTS. THEREFO RE, HOW THE CIT(A) CAN SAY THAT THE ASSESSEE HAS RECEIVED BROK ERAGE OR COMMISSION FOR TRANSFER OF THE SAID LAND. HE SUBMITTED THAT AN AGREEMENT IS ENOUGH FOR GETTING RIGHT IN THE PROPERTY. 20. REFERRING TO THE DECISION OF THE PUNE BENCH OF THE TRIB UNAL IN THE CASE OF SHRI KAILASH B. WANI VIDE ITA NO.858/PN/2013 O RDER DATED 30-06-2015 FOR A.Y. 2008-09 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD THAT SHRI SANJAY NEMICHAND L OHADE HAD A RIGHT IN THE LAND AND IT IS FOR THAT PURPOSE, THE CO MPENSATION HAS BEEN PAID FOR RELEASING HIS RIGHTS IN THE LAND. HE SUB MITTED THAT THERE IS NO EVIDENCE FOUND DURING THE COURSE OF SURVEY O R THEREAFTER THAT THE ASSESSEE IS A BROKER OR MEDIATOR. 21. SO FAR AS THE ADDITIONAL GROUND IS CONCERNED THE LD. C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE COMPENSATION RECEIV ED BY THE ASSESSES CONSTITUTES DAMAGE FOR BREACH OF AGREEMENT IN HIS HANDS AND THEREFORE THE SAME IS NOT AT ALL TAXABLE IN HIS HANDS. FOR THE ABOVE PROPOSITION, THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE FOLLOWING DECISIONS : I. CIT VS. J. DALMIA REPORTED IN 149 ITR 215 (DELHI) II. BARODA CEMENT AND CHEMICALS LTD. VS. CIT REPORTE D IN 158 ITR 636 (GUJARAT) III. CIT VS. ABBASBHOY A. DEHGAMWALLA & OTHERS REPORTE D IN 195 ITR 28) 22. WITHOUT PREJUDICE TO THE ABOVE, THE LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT IF THE RECEIPT HAS RESULTED INTO LONG TERM CAPITAL GAIN THEN THE DEDUCTION U/S.54F SHOULD BE GRANTED . HE SUBMITTED THAT ALTHOUGH THE ASSESSEE IN HIS COMPUTATION HAS CLAIMED SUCH DEDUCTION U/S.54F, HOWEVER, THE LOWER AUTHORIT IES 15 HAVE NOT ADJUDICATED THE ISSUE. HE ACCORDINGLY SUBMITTE D THAT THE GROUND RAISED BY THE ASSESSEE SHOULD BE ALLOWED. 23. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE AO AND THE CIT(A). SO FAR AS PARA 6.4 OF THE ORDER OF THE CIT(A) IS CONCERNED ACCORDING TO W HICH SHRI SANJAY NEMICHAND LOHADE WAS HOLDING DEVELOPMENT RIGHTS T HE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE CIT(A) HA S WRONGLY WRITTEN THE SAME. HOWEVER, IN SUBSEQUENT PARAGRAPHS, TH E CIT(A) HAS TREATED THE AMOUNT RECEIVED AS BROKERAGE OR COMM ISSION. SO FAR AS THE DECISION OF THE TRIBUNAL IN THE CASE OF SHRI KAILASH B. WANI IS CONCERNED HE SUBMITTED THAT THE TRIBUNAL IN THE SAID OR DER HAS NOT HELD THAT IT IS FOR DEVELOPMENT RIGHT. 24. AS REGARDS THE ARGUMENT OF THE LD. COUNSEL FOR THE A SSESSEE THAT THE AMOUNT OF RS. 3 CRORES RECEIVED OUT OF TOTAL SA LE CONSIDERATION OF RS.9 CRORES CANNOT BE CONSIDERED AS BR OKERAGE OR COMMISSION BECAUSE OF THE HUGE PERCENTAGE, HE SUBMITTED THAT BROKERAGE/COMMISSION CAN ALSO BE PAID AT HIGHER RATE. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BE UPHELD. 25. THE LD. COUNSEL FOR THE ASSESSEE IN HIS REJOINDER SUB MITTED THAT THE CIT(A) IN HIS ORDER HAS HELD TWICE THAT THE ASSE SSEE WAS HOLDING THE DEVELOPMENT RIGHTS IN THE PROPERTY. THEREFORE , SHE CANNOT TAKE A CONTRARY VIEW. REFERRING TO THE DECISION O F HONBLE BOMBAY HIGH COURT IN THE CASE OF MESSRS. JERKISON TRIBHUVA NDAS, BOMBAY VS. CIT REPORTED IN 31 ITR 376 HE SUBMITTED THA T YOU CANNOT TAKE CONTRARY STANDS. HE SUBMITTED THAT THERE IS NO CONTRADICTION IN THE TWO MOUS. IN THE YEAR 2001 THE MO U WAS BETWEEN SHRI PRADEEP KUMAR DHORJE, SHRI KAILASH B. WANI AN D SHRI SANJAY NEMICHAND LOHADE WHEREAS MOU ON 16-05-2007 WA S 16 ENTERED INTO BETWEEN SHRI KAILASH B. WANI AND FULLMOON H OUSING AND FINANCE PVT. LTD. ALTHOUGH THE SAME WAS CLARIFIED DURIN G PROCEEDINGS U/S.144A BEFORE THE ADDL.CIT, HOWEVER, THE SAM E WAS NOT PROPERLY APPRECIATED BY THE ADDL.CIT. HE SUBMITTED THAT THE DECISION OF THE ITAT HAS GOT RELEVANCE BECAUSE IT HAD CAT EGORICALLY HELD IN THE ORDER THAT THE ASSESSEE HAD A RIGHT IN THE SAID PROPERTY. THEREFORE, IN VIEW OF THE DECISION OF THE HONBLE BOMBAY H IGH COURT THE SAME SHOULD HE HELD AS CAPITAL RECEIPT NOT EXIGIBLE TO TAX. HE ACCORDINGLY SUBMITTED THAT THE GROUND RAISED BY THE ASSESSEE SH OULD BE ALLOWED. 26. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. WE FIND IN THE INSTANT CASE A SU RVEY U/S.133A OF THE ACT WAS CONDUCTED IN THE PREMISES OF SHR I KAILASH BABULAL WANI DURING WHICH AN MOU DATED 16-05-2007 WAS IMPOUNDED. AS PER THE SAID MOU LAND ADMEASURING 41 ARES IS TO BE PURCHASED BY FULLMOON HOUSING PVT. LTD. FOR TOTAL CONS IDERATION OF RS.9,26,46,600/- FROM SHRI KAILASH BABULAL WANI. THE BIFURCATION OF PAYMENT OF RS.9,26,46,600/- IS AS UNDER: 1. RS.3,40,00,000/- TO KADAM SISTERS (ORIGINAL OWN ERS) 2. RS.25,00,000/- FOR EXPENSES SUCH AS STAMP D UTY ETC. 3. RS.50,00,000/- TO SHRI KAILASH B. WANI (AS MOBADLA) 4. RS.3,00,00,000/- TO SHRI SANJAY NEMICHAND LOHAD E (FOR SURRENDERING RIGHTS) 5. RS.2,11,46,600/- TO BE PAID TO THE ASSESSEE IN CASH ------------------------- TOTAL RS.9,26,46,600/- ------------------------- 27. THE ASSESSEE IN HIS COMPUTATION CONSIDERED THE SAME AMOUNT AS LONG TERM CAPITAL GAIN AND CLAIMED EXEMPTION U/S.54F. WE FIND THE AO REJECTING THE CONTENTION OF THE ASSESSEE THAT THE SAME IS A CAPITAL GAIN TREATED THE SAME AS BROKERAGE OR COMMISSION WHICH 17 HAS BEEN UPHELD BY THE CIT(A). IT IS THE CONTENTION OF TH E LD. COUNSEL FOR THE ASSESSEE THAT SINCE THE AMOUNT WAS REC EIVED FOR SURRENDER OF THE RIGHTS IN THE PROPERTY THE SAME IS LON G TERM CAPITAL GAIN. THEREFORE, THE DEDUCTION U/S.54F SHOULD BE ALLOWED. IT IS ALSO THE ALTERNATE CONTENTION OF THE LD. COUNSEL FOR THE ASSES SEE THAT IT IS A COMPENSATION RECEIVED BY THE ASSESSEE FOR SURRENDE RING HIS RIGHT WHICH CONSTITUTES DAMAGE FOR BREACH OF AGREEMENT IN HIS HANDS AND THEREFORE IT IS NOT TAXABLE. 28. WE FIND IN THE CASE OF SHRI KAILASH BABULAL WANI FROM WHOSE PREMISES THE MOU WAS FOUND, THE AO DISBELIEVED THE AMOUNT OF RS.3 CRORES PAID TO SHRI SANJAY NEMICHAND LOHADE FOR SUR RENDERING THE RIGHTS. ACCORDING TO THE AO OF SHRI. KAILASH WANI THE A MOUNT OF RS. 3 CRORES WAS PAID TO SHRI. SANJAY NEMICHAND LOHADE A T THE BEHEST OF SHRI. KAILASH WANI AND INFACT THIS MONEY BELONGS TO SHRI. KAILASH WANI. FURTHER, SHRI SANJAY NEMICHAND LOHADE HAD N O RIGHT IN THE SAID PROPERTY FOR WHICH HE ADDED RS. 3 CRORE S PAID TO SHRI SANJAY NEMICHAND LOHADE IN THE HANDS OF SHRI KAILASH WANI. THE CIT(A) ALLOWED THE CLAIM AND ON FURTHER APPEAL THE TRIB UNAL DISMISSED THE APPEAL FILED BY THE REVENUE. IN THE SAID ORD ER THE TRIBUNAL AFTER CONSIDERING VARIOUS CLAUSES OF THE MOU, THE STATEMENT OF THE DIRECTOR OF FULLMOON HOUSING PVT. LTD. AN D THE STATEMENT OF SHRI SANJAY NEMICHAND LOHADE HELD THAT SHR I SANJAY NEMICHAND LOHADE WAS GIVEN NOT ONLY THE POWER OF ATTOR NEY BUT WAS ALSO GIVEN THE RIGHT TO OBTAIN THE DEVELOPMENT AGREE MENT AND PURCHASE THE SAID LAND IN HIS NAME AND FOR THAT PURPOSE THE ENTIRE LITIGATION INVOLVED IN CIVIL SUIT NO.1006/1996 WAS ALSO REQUIRED TO BE ATTENDED BY HIM AT HIS OWN COST AND RESPONSIBILITY. IT HAS FURTHER BEEN HELD IN THE SAID DECISION THAT WHEN THE MOU WAS IMPOUNDED THE CONTENTS OF THE MOU HAS TO BE CONSIDERE D AND 18 ACCEPTED AS A WHOLE AND THE REVENUE CANNOT BE PERMITT ED TO USE A PART OF THE MOU AS CORRECT AND THE OTHER PART AS INCO RRECT. THE RELEVANT OBSERVATION OF THE TRIBUNAL FROM PARA 13 ONWARDS READ AS UNDER : 13. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A ) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE AL SO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND IN THE INSTA NT CASE A SURVEY ACTION U/S.133A OF THE I.T. ACT WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE DURING WHICH AN MOU DATED 16-05-2007 WA S IMPOUNDED. AS PER THE SAID MOU LAND ADMEASURING 41 AR ES IS TO BE PURCHASED BY M/S. FULL MOON HOUSING PVT. LTD. FOR A TO TAL CONSIDERATION OF RS.9,26,46,600/- FROM THE ASSESSEE. THE BIFURCATION OF PAYMENT OF RS.9,26,46,600/- IS AS UNDER : 1. RS.3,40,00,000/- TO KADAM SISTERS (ORIGINAL OWN ERS) 2. RS.25,00,000/- FOR EXPENSES SUCH AS STAMP D UTY ETC. 3. RS.50,00,000/- TO SHRI KAILASH B. WANI (AS MOBADLA) 4. RS.3,00,00,000/- TO SHRI SANJAY NEMICHAND LOHAD E (FOR SURRENDERING RIGHTS) 5. RS.2,11,46,600/- TO BE PAID TO THE ASSESSEE IN CASH ------------------------- TOTAL RS.9,26,46,600/- ------------------------- THE AMOUNT OF RS.2,11,46,600/- WHICH WAS RECEIVED BY THE ASSESSEE IN CASH WAS OFFERED AS ADDITIONAL INCOME IN THE STATEMENT OF THE ASSESSEE RECORDED DURING THE COURSE OF SURVEY. SO FAR AS THE O THER 4 ITEMS ARE CONCERNED THE AO ACCEPTED THE ITEMS 1, 2 AND 3 ABOVE AS GENUINE WHILE HE DOUBTED THE AMOUNT OF RS.3 CRORES PAID TO MR. SANJ AY NEMICHAND LOHADE FOR SURRENDERING HIS RIGHTS. WHILE DOING SO, TH E AO WAS OF THE OPINION THAT THE AMOUNT OF RS. 3 CRORES WAS PAID TO SH RI LOHADE AT THE BEHEST OF THE ASSESSEE AND IN FACT THIS MONEY BELONGS TO THE ASSESSEE. FURTHER ACCORDING TO THE AO MR. SANJAY NEMICHAND LO HADE DID NOT ENJOY OR HAD ANY RIGHT IN THE PROPERTY TRANSACTED WH ICH WAS EVENTUALLY SOLD TO M/S. FULL MOON HOUSING PVT. LTD. ACCORDING TO THE AO IN THE TRANSFER OF LAND THE ROLE OF MR. SANJAY N. LOHADE WA S LIMITED TO THE WITHDRAWAL OF THE CIVIL SUIT FROM THE COURT IN TERMS OF THE POWERS OF ATTORNEY. IT IS ALSO THE CONTENTION OF THE AO THAT M R. SANJAY N. LOHADE HAD NO LOCUS STANDI AND HE HAD NO EFFECTIVE CONTROL O VER THE ENTIRE LITIGATION AS WELL AS THE LAND. IN VIEW OF THE ABOVE AND IN VIEW OF THE REASONINGS GIVEN IN THE PRECEDING PARAGRAPHS THE AO AD DED THE AMOUNT OF RS.3 CRORES IN THE HANDS OF THE ASSESSEE. 13.1 WE FIND THE LD.CIT(A) DELETED THE ADDITION ON THE GROUND THAT THE AO HAD ERRONEOUSLY INTERPRETED THE MOU AS WELL AS THE STATEMENTS OF MR. ARVIND JAIN, DIRECTOR OF M/S. FULL MOON HOUSIN G PVT. LTD., I.E. THE PURCHASER AND THE STATEMENT GIVEN BY MR. SANJAY N. LO HADE. ACCORDING TO THE LD.CIT(A) WHEN THE AO HAS ACCEPTED THE OTHER CONTENTS OF THE MOU AS GENUINE HE SHOULD NOT HAVE DOUBTED THE PAYMENT MADE TO MR. SANJAY N. LOHADE AS FOR NON BUSINESS CONSIDERATION. FUR THER, THE CIT(A) ALSO OBSERVED THAT THE AMOUNT OF RS. 3 CRORES RECEIVED BY MR. SANJAY N. 19 LOHADE HAS BEEN TREATED AS TAXABLE BEING EARNING FROM COMMISSION AND BROKERAGE BY THE AO AS PER THE DIRECTION OF THE ADDL .CIT, AHMEDNAGAR RANGE WHICH HAS BEEN UPHELD BY THE CIT(A). IT IS ALSO THE OBSERVATION OF THE CIT(A) THAT THE DOCUMENT FOUND DURING SURVEY HAS TO BE CONSIDERED AS A WHOLE AND THOSE FACTS WHICH FAVOUR THE ASSESSEE CANNOT BE TOTALLY IGNORED. 13.2 WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF T HE CIT(A) DELETING THE ADDITION. AS MENTIONED EARLIER, THE MOU WAS FOUN D DURING THE COURSE OF SURVEY. OUT OF THE 5 ENTRIES TOTALLING TO R S.9,26,46,600/- THE AMOUNT OF RS.2,11,46,600/- RECEIVED BY THE ASSESSEE IN CASH WAS OFFERED BY HIM AS ADDITIONAL INCOME DURING THE COURSE OF SURVE Y. THE ASSESSEE HAS HONOURED THIS AND INCLUDED THE SAME IN HIS RETURN O F INCOME. THE IST 3 ITEMS ARE ACCEPTED BY THE AO AS GENUINE, THEREFO RE, WE FAIL TO UNDERSTAND AS TO HOW AND WHY THE AMOUNT OF RS. 3 CORES SHOULD NOT BE HELD AS GENUINE AS BUSINESS EXPENDITURE WHEN THE SAME WAS PAID TO MR. LOHADE FOR SURRENDERING HIS RIGHTS AS PER THE MOU. FURTHER, THE SAME AMOUNT HAS BEEN PAID BY ACCOUNT PAYEE CHEQUE AND THE AMOUNT HAS BEEN TAXED AS BROKERAGE/COMMISSION INCOME IN THE HANDS OF MR. SANJAY N. LOHADE AS PER THE DIRECTION OF THE ADDL.CIT AND U PHELD BY THE CIT(A). 13.3 WE FIND CLAUSE 9 OF THE MOU DATED 16-07-2001 RE ADS AS UNDER WHERE PARTY NO.3 IS MR. SANJAY N. LOHADE AND PARTY N O.2 IS THE ASSESSEE ,I.E. MR. KAILASH BABULAL WANI : 9. SIMILARLY, FURTHER NEGOTIATION TOOK PLACE BETWE EN THE PARTY NO.2 OF THE ONE PART, THE PARTY NO.3 OF THE SECOND PART A ND SAID KADAM OF THE THIRD PART AND ACCORDINGLY, THE PARTY NO.3 DECIDED TO OBTAIN DEVELOPMENT RIGHTS AND/OR PURCHASE THE SAID PLOT-A FRO M SAID KADAM, EITHER IN HIS NAME OR IN THE NAMES OF HIS NOMINEES, AT THE SOLE DISCRETION OF THE PARTY NO.3. 13.4 WE FURTHER FIND THAT MR. ARVIND JAIN, DIRECTOR OF M/S. FULL MOON HOUSING PVT. LTD. IN HIS STATEMENT RECORDED U/S.131 ON OATH ON 29-11- 2010 IN HIS REPLY TO QUESTION NO.25 RECORDED U/S.131 O N OATH ON 29-11- 2010 HAS ANSWERED AS UNDER : Q.25 I HOPE THAT WITH THE BREAK YOU MAY HAVE REMEM BERED THE FACTS. YOU ARE GIVEN A FURTHER OPPORTUNITY TO STATE THE DET AILS ABOUT THE DISCUSSIONS WITH SHRI LOHADE? ANS. SRI LOHADE WAS EXPECTING AN AMOUNT OF RS. 4 CRORE S AND WE WERE READY FOR A PAYMENT UPTO RS. 3 CRORES. 13.5 SIMILARLY, WE FIND MR. SANJAY N. LOHADE IN HIS REPLY TO QUESTION NOS. 16, 17, 22, 23, 24 AND 25 HAS REPLIED AS UNDER : Q.16 GIVE DETAILS OF SPL.CIVIL SUIT NO.1006/1996 BE FORE THE CIVIL JUDGE, SR. DIVISION, PUNE? ANS. THIS CASE WAS FILED BY SHRI PRADEEP DORJE AGAINST M RS. KADAM AND MR. DORJE HAD GIVEN RIGHTS TO ME TO CONTINUE OR WITH DRAW THE SUIT. Q.17 WHAT WAS THE CIVIL SUIT? ANS. MR. PRADEEP DORJE HAD MOU DULY SIGNED BY MRS. KAD AM AND OTHER OWNERS OF THE PROPERTY IN RESPECT OF THE PROPER TY MENTIONED AT Q.NO.7 AND THE OWNERS WERE NOT SIGNING THE DOCUMENTS R EQUIRED FOR TRANSFER OF SUCH PROPERTY TO MR. DORJE. ACCORDINGLY, MR. DORJE HAD FILED THE CIVIL SUIT AGAINST THE PROPERTY OWNERS. 20 Q.22 THE PROPERTY IN QUESTION FINALLY HAS BEEN PURCH ASED BY FOOLMOON HOUSING PVT. LTD. PLEASE STATE AS TO WHAT YOU HAVE RECEIVED FROM FOOLMOON HOUSING PVT. LTD. AND THE MODE OF RECE IPT OF MONEY BY YOU? ANS. RS.3 CRORES RECEIVED BY ACCOUNT PAYEE CROSSED CHE QUE. THE MONEY WAS RECEIVED FROM 2007 TO 2010. Q.23 FOR RECEIPT OF AFORESAID MONEY, WHAT DID YOU DO AS QUIT-PRO-QUO? ANS. I FILED AFFIDAVIT FOR WITHDRAWAL OF CIVIL SUIT W HICH WAS PENDING BEFORE THE CIVIL COURT. Q.24 HOW, THE MONEY RECEIVED OF RS.3 CRORES FROM FOOL MOON HAS BEEN ACCOUNTED FOR AND OFFER3ED TO TAX? DURING THE PROC EEDINGS OF SUMMONS A COMPUTATION SHEET HAS BEEN FILED WHICH IS SHOWING SALE CONSIDERATION OF RS.3 CRORES OF THE LAND IN QUESTION AND EXEMPTION O F U/S.54F HAS BEEN CLAIMED OF RS.3.25 CRORES. YOU MAY EXPLAIN WITH ANY SUPPORTING EVIDENCES, THAT AT THE FIRST PLACE WHEN THE PROPERTY WAS NOT BELONGING TO YOU, HOW THE MONEY RECEIVED IS SHOWN AS SALE CONSIDER ATION, IN WHICH YOU ONLY HAD WITHDRAWN CIVIL SUIT IN THE NAME OF SHRI DORJE? ALSO PROVIDE COPY OF THE AFFIDAVIT FILED BEFORE THE CIVI L COURT, WITHDRAWING THE CIVIL SUIT AND COPY OF ANY OTHER DOCUMENT, DEED WHICH YOU MAY HAVE SIGNED IN FAVOUR OF FOOLMOON HOUSING PVT. LTD.,? ANS. I HAVE NOT SHOWN THE AMOUNT OF RS.3 CRORES IN MY B OOKS OF ACCOUNTS. AS AND WHEN THE MONEY WAS RECEIVED OUT OF R S. 3 CRORES THE SAME WAS SHOWN AS ADVANCE IN MY BOOKS OF ACCOUNTS AND N O PORTION OF IT HAS BEEN OFFERED TO TAX TILL DATE. THE COMPUT ATION SHEET FILED IS MY INTENTION TO REVISE THE RETURN AND TO OFFER THE MONE Y TO TAX IN THE YEAR ENDED ON 31-03-2008. Q.25. HAVE YOU SIGNED ANY DEED/AGREEMENT/DOCUMENT ET C. IN FAVOUR OF SHRI KAILASH WANI AND IF YES WHEN AND PRODUCE COPY OF SUCH DOCUMENT? ANS. NO AND NEVER. 13.6 THE ABOVE REPLIES CLEARLY AND CATEGORICALLY PO INT ONE THING THAT THE LAND IN QUESTION WAS NOT FREE FROM LITIGATION AND CIVIL SUIT WAS PENDING. THEREFORE, WE FIND FORCE IN THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE PURCHASER M/S. FULL MOON HOUSING PVT . LTD. AFTER EVALUATING THE INTEREST IN THE LAND OF MR. SANJAY N. LOHADE AND AFTER NEGOTIATING FOR THE AMOUNT PAID THE AMOUNT OF RS.3 C RORES ON THEIR BEHALF AND NOT ON BEHALF OF THE ASSESSEE. IT WAS THE PURCHASE WHO ITSELF DECIDED THE TERMS OF PAYMENT INCLUDING THE AMOUNT TO BE PAID TO KADAM FAMILY, MR. SANJAY N. LOHADE AND TO THE RESPON DENT AND THEREFORE THE AOS OBSERVATION THAT THE SAID PURCHASER MADE THE PAYMENT TO MR. SANJAY N. LOHADE AT THE BEHEST OF THE RESPONDENT, IN OUR OPINION, IS INCORRECT. FURTHER, IN VIEW OF THE ABOV E FACTS, THE OBSERVATION OF THE AO THAT MR. SANJAY N. LOHADE HAD NO LOCUS STANDI IS ALSO INCORRECT SINCE MR. SANJAY N. LOHADE WAS GIVEN NO T ONLY POWER OF ATTORNEY BUT WAS ALSO GIVEN THE RIGHT TO OBTAIN THE DEVELOPMENT AGREEMENT AND PURCHASE THE SAID LAND IN HIS NAME AND F OR THAT PURPOSE THE ENTIRE LITIGATION INVOLVED IN CIVIL SUIT NO.100 6/1996 WAS ALSO REQUIRED TO BE ATTENDED BY HIM AT HIS OWN COST AND RE SPONSIBILITY. 13.7 IN CASE OF TRANSACTIONS IN IMMOVABLE PROPERTIES T HE PURCHASER WILL ALWAYS TRY TO BUY THE PROPERTY FREE OF LITIGATI ON. WHEN THE LAND IN QUESTION IS NOT FREE FROM LITIGATION AND A CIVIL SUIT IS PENDING, A FACT NOT DISPUTED BY THE AO HIMSELF, THEREFORE, THE PAYMENT TO MR. SANJAY N. LOHADE BY M/S. FULL MOON HOUSING PVT. LTD. EITHER AT THE INSTANCE OF THE ASSESSEE OR OTHERWISE HAS TO BE ALLOWED AS DEDUCTION FROM THE SALE PROCEEDS. 21 13.8 FURTHER, MR. SANJAY N. LOHADE VIDE HIS LETTER D ATED 20-10-2010 ADDRESSED TO THE ADDL.CIT RANGE-3, PUNE HAS STATED THAT HE HAS RECEIVED AN AMOUNT OF RS.3 CRORES ON VARIOUS DATES BY CHEQUE FO R RELEASING ALL RIGHTS AND FOR WITHDRAWING THE CIVIL SPECIAL COURT S UIT NO.1006/1996 FOR SY.NO.5, BANER. THE CONTENTS OF THE SAID LETTER READS AS UNDER : FROM SANJAY LOHADE UNIQUE CHAMBERS, F.C. ROAD, TUKARAM PADUKA CHOWK, PUNE 411005 DATE : 20 TH OCT, 2010 TO THE ADDITIONAL COMM. OF INCOME TAX, RANGE-3, PUNE RESPECTED SIR, I, THE UNDERSIGNED DO HEREBY STATE AND CONFIRM AS UNDE R : 1. THAT I HAVE RECEIVED RS.3,00,00,00.00 BY ACCOUNT PAYEE CHEQUE FROM M/S. FOOLMOON HOUSING PVT. LTD., DETAILS OF WHICH ARE UNDER : DATE CH.NO. AMOUNT 30 - 08 - 2007 523128 11,00,000/ - 01 - 11 - 2007 240271 50,00,000/ - 16 - 11 - 2007 240272 25,00,000/ - 12 - 12 - 2007 249704 25,00,000/ - 05 - 03 - 2008 240293 50,00,000/ - 05 - 03 - 2008 240292 50,00,000/ - 10 - 03 - 2008 249734 50,00,000/ - 11 - 10 - 2010 RTGS 39,00,000/ - 3,00,00,000/ - 2. THAT THE SAID AMOUNT IS RECEIVED BY ME FOR RELEASIN G ALL RIGHTS AND FOR WITHDRAWING THE CIVIL SPECIAL COURT SUIT N O.1006/1996 FOR S.NO.5 BANER. THANKING YOU, YOURS TRULY, SD/- SANJAY LOHADE 13.9 THE HONBLE BOMBAY HIGH COURT IN THE CASE OF C IT VS. SALES MAGNESITE PVT. LTD. HAS HELD THAT TO DECIDE WHETHER THE EXPENDITURE IS INCURRED FOR THE PURPOSE OF THE BUSINESS AND ALLOWABLE AS DEDUCTION U/S.37 OF THE I.T. ACT, IT IS NOT ESSENTIAL THAT IT SHOU LD BE NECESSARY, LEGALLY OR OTHERWISE, TO INCUR THE SAME OR THAT IT SHO ULD DIRECTLY AND IMMEDIATELY BENEFIT THE BUSINESS OF THE ASSESSEE. EVEN EX PENDITURE INCURRED VOLUNTARILY ON THE GROUND OF COMMERCIAL EX PEDIENCY AND IN ORDER INDIRECTLY TO FACILITATE THE CARRYING ON OF T HE BUSINESS WOULD BE DEDUCTIBLE U/S.37. THE QUESTION WHETHER IT WAS NECESSAR Y FOR 22 COMMERCIAL EXPEDIENCY OR NOT IS A QUESTION THAT HAS T O BE DECIDED FROM THE POINT OF VIEW OF THE BUSINESSMAN AND NOT BY THE SUB JECTIVE STANDARD OF REASONABLENESS OF THE REVENUE. THE QUESTION MUST BE VIEWED IN THE LARGER CONTEXT OF BUSINESS INTEREST OR COMMERCIAL EXPED IENCY. NO ABSTRACT OR PEDANTIC VIEW CAN BE TAKEN IN THE MATTER . IN THE INSTANT CASE, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN LAND AND PROPERTY DEVELOPMENT. NO BUYER WILL BUY ANY PROPER TY WHEN THE PROPERTY IN QUESTION IS DISPUTED. IT IS ALSO THE RESPONSI BILITY OF THE SELLER TO SELL THE PROPERTY FREE OF LITIGATION FROM A NY ENCUMBRANCE. THEREFORE, EVEN IF THE AMOUNT OF RS.3 CRORES WOULD HA VE BEEN PAID BY THE ASSESSEE TO MR. SANJAY N. LOHADE FOR GIVING FREE AN D PEACEFUL POSSESSION OF THE LAND TO M/S. FULL MOON HOUSING PVT. LT D. THE SAID AMOUNT WOULD HAVE BEEN ALLOWED AS DEDUCTION FROM THE HANDS OF SHRI KAILASH BABULAL WANI, I.E. THE ASSESSEE. THEREFORE, IN OUR OPINION, IT IS IMMATERIAL AS TO WHETHER THE AMOUNT HAS BEEN PAID TO MR. SANJAY N. LOHADE BY M/S. FULL MOON HOUSING PVT. LTD. AT THE INST ANCE OF THE ASSESSEE OR THE ASSESSEE HAS PAID DIRECTLY TO MR. SANJAY N. LOHADE FROM THE TOTAL CONSIDERATION. AS MENTIONED EARLIER IN THE PRECEDING PARAGRAPHS, THE MOU WAS IMPOUNDED, THEREFORE, THE CON TENTS OF THE MOU HAS TO BE CONSIDERED AND ACCEPTED AS A WHOLE. THE REVENUE CANNOT BE PERMITTED TO USE A PART OF THE MOU AS CORRE CT AND THE OTHER PART AS INCORRECT. SINCE THE DOCUMENT IMPOUNDED FROM THE PREMISES OF THE ASSESSEE SHOWS PAYMENT OF RS. 3 CORES TO MR. SANJAY N. LOHADE WHICH HAS BEEN ASSESSED IN HIS HANDS AS COMMISSION INCOME AN D WHICH HAS BEEN UPHELD BY THE CIT(A), THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) DELETING THE ADDITION OF RS.3 C RORES FROM THE HANDS OF THE ASSESSEE. IN THIS VIEW OF THE MATTER AND IN VI EW OF THE DETAILED REASONINGS GIVEN BY THE CIT(A) WHILE DELETING THE ADD ITION WE FIND NO INFIRMITY IN HIS ORDER AND THEREFORE, UPHOLD THE SAME . GROUNDS OF APPEAL NO. 1 TO 3 BY THE REVENUE ARE ACCORDINGLY DI SMISSED. (EMPHASIS SUPPLIED BY US). 29. IN VIEW OF THE ABOVE WE FIND FORCE IN THE SUBMISSION OF L D. COUNSEL FOR THE ASSESSEE THAT THE AMOUNT OF RS.3 CRORES RECEIVED BY THE ASSESSEE IS FOR RELEASING HIS RIGHTS IN THE PROPERTY CONCERNED. 30. WE FIND IN THE CASE OF TATA SERVICES LTD. (SUPRA) RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE, THE ASSESSEE HAD ENTE RED INTO AN AGREEMENT FOR ACQUIRING THE PROPERTY. THE PURCHASE WAS TO BE COMPLETED WITHIN SIX MONTHS. THE VENDOR WAS TO OBTAIN A T HIS COST THE NECESSARY PERMISSION FROM THE GOVERNMENT AUTHORITIES . LATER, THE VENDOR WANTED TO CANCEL THE AGREEMENT ON THE GRO UND THAT THE SUB DIVISION OF THE PLOT HAD NOT BEEN GRANTED BY THE MUN ICIPAL CORPORATION. ULTIMATELY UNDER TRIPARTITE AGREEMENT THE ASSESSEE TRANSFERRED AND ASSIGNED ALL ITS RIGHTS, TITLE AND INTEREST UNDER THE AGREEMENT IN FAVOUR OF ONE M/S. A&B AND RECEIVED A SUM OF 23 RS.5,90,000/- FROM A & B, RS. 5 LAKHS AS CONSIDERATION FOR THE TRANSFER AND ASSIGNING OF THE ASSESSEES RIGHT, TITLE AND IN TEREST UNDER THE AGREEMENT AND RS.90,000/- BEING THE EARNEST MONEY EARLIER DEPOSITED BY THE ASSESSEE. THE TRIBUNAL HELD THAT THIS WAS A CASE FOR LEVY OF TAX ON THE CAPITAL GAINS MADE BY THE A SSESSEE IN RESPECT OF THE TRANSACTION BUT IT TOOK THE VIEW THAT TH E ASSESSEE HAD SUFFERED A LOSS TO THE EXTENT OF RS.66/- PER SQUARE YARD AS A RESULT OF THE ASSIGNMENT IN FAVOUR OF A & B ON THE BASIS THAT TH E ASSESSEE WOULD HAVE SUFFERED THAT LOSS IF THE ASSESSEE HAD PURCHA SED THE LAND AND SOLD IT. ON A REFERENCE THE HONBLE HIGH COURT H AS HELD AS UNDER : WHAT IS A CAPITAL ASSET IS DEFINED IN S. 2(14) OF THE I .T. ACT, 1961. UNDER THAT PROVISION, A CAPITAL ASSET MEANS PROPERTY OF ANY K IND HELD BY AN ASSESSEE, WHETHER OR NOT CONNECTED WITH HIS BUSINESS OR PRO FESSION. THE OTHER SUB CLAUSES WHICH DEAL WITH WHAT PROPERTY IS NOT INCLUDED IN THE DEFINITION OF CAPITAL ASSET ARE NOT RELEVANT. UNDER S. 2(47), A TRANSFER IN RELATION TO A CAPITAL ASSET IS DEFINED AS INCLUDING TH E SALE, EXCHANGE OR RELINQUISHMENT OF THE ASSET OR THE EXTINGUISHMENT OF AN Y RIGHT THEREIN OR THE COMPULSORY ACQUISITION THEREOF UNDER ANY LAW. THE WORD ' PROPERTY ', USED IN S. 2(14) OF THE I.T. ACT, IS A WOR D OF THE WIDEST AMPLITUDE AND THE DEFINITION HAS RE EMPHASISED THIS BY USE OF THE WORDS ' OF ANY KIND '. THUS, ANY RIGHT WHICH CAN BE CALLED PROPERTY WILL BE INCLUDED IN THE DEFINITION OF ' CAPITAL ASSET '. A CO NTRACT FOR SALE OF LAND IS CAPABLE OF SPECIFIC PERFORMANCE. IT IS ALSO ASSIGNABLE. (SEE HOCHAT KIZHAKKE MADATHIL VENKATESWARA AIYAR V. KALLOR ILLAT H RAMAN NAMBUDHRI, AIR 1917 MAD 358). THEREFORE, IN OUR VIE W, A RIGHT TO OBTAIN CONVEYANCE OF IMMOVABLE PROPERTY, WAS CLEARLY ' PROPERTY ' AS CONTEMPLATED BY S. 2(14) OF THE I.T. ACT, 1961. 31. RESPECTFULLY FOLLOWING THE ABOVE DECISION, WE HOLD THAT SIN CE THE ASSESSEE HAD A RIGHT IN THE SAID PROPERTY WHICH HE RELEASED AND OBTAINED RS. 3 CRORES IN LIEU OF THE SAME, THEREFORE, THE GA IN THAT HAS ARISED IS CAPITAL GAIN. THE ASSESSEE IS THEREFORE ENT ITLED TO GET DEDUCTION U/S.54F FROM SUCH CAPITAL GAIN. HOWEVER, SINCE T HE LOWER AUTHORITIES HAVE NOT VERIFIED THE CLAIM OF ALLOWABILITY OF DEDUCTION U/S.54F FROM SUCH CAPITAL GAIN, THEREFORE, WE RES TORE THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO VERIFY THE C LAIM OF DEDUCTION MADE BY THE ASSESSEE AND UPON SATISFACTION ALLO W 24 APPROPRIATE RELIEF U/S.54F. THE GROUND RAISED BY THE ASSE SSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 32. SO FAR AS THE ADDITIONAL GROUND IS CONCERNED WE DO NO T FIND ANY MERIT IN THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSE SSEE THAT THE SAME BE CONSIDERED AS DAMAGE AND THEREFORE THE SA ME SHOULD BE EXEMPT FROM TAX BECAUSE THE AMOUNT WAS PAID AS PER THE MOU. THEREFORE, THE VARIOUS DECISIONS RELIED ON BY THE LD. COUNS EL FOR THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THE CASE. 33. IN VIEW OF THE ABOVE DISCUSSION, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18-01-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER IQ.KS PUNE ; DATED : 18 TH JANUARY, 2016 LRH'K ' (!* + / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. $ ( ) , / THE CIT(A)-I, PUNE 4. $ , / THE CIT-I, PUNE 5. ' **+ , + , IQ.KS / DR, ITAT, A PUNE 6. / / GUARD FILE. / BY ORDER , ' //TRUE COPY // 12 * + / SR. PRIVATE SECRETARY +, IQ.KS / ITAT, PUNE