TROKIA ESTATES P.LTD, MUMBAI V. ACIT RG 2(3), MUMBAI

ITA 5032/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4075 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 02-09-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 06-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K L KANAK
• Keywords: Capital asset; Business income; Cost of acquisition; Fair market value; Valuation report; Competent authority
• Section: 2(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.5032/M/2012 ASSESSMENT YEAR: 2006-07 M/S. TROIKA ESTATES PVT. LTD., 2 ND FLOOR, CITIMALL, ANDHERI LINK ROAD, ANDHERI (W), MUMBAI 400 053 PAN: AAACT 5759N VS. ASSISTANT COMMISSIONER OF INCOME TAX, RANGE 2(3), MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI NITESH JOSHI, A.R. REVENUE BY : SHRI K.L. KANAK, D.R. DATE OF HEARING : 28.09.2015 DATE OF PRONOUNCEMENT : 03.02.2016 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 08.06.2012 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2006-07. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) {CIT(A)} HAS ERRED IN NOT ACCEPTING THE APPELLANT'S CONTENTI ON THAT THERE IS NO TRANSFER OF THE PROPERTY AT ULHASHNAGAR (THE PRO PERTY) AS DEFINED U/S 2(47) OF THE INCOME TAX ACT; THERE BEING NO TRA NSFER OF THE PROPERTY, NO CAPITAL GAINS OUGHT TO BE COMPUTED. 2. WITHOUT PREJUDICE TO GROUND NO 1, LEARNED CIT(A) HAS ERRED IN HOLDING THAT FULL VALUE OF CONSIDERATION FOR THE PU RPOSE OF TRANSFER SHOULD BE TAKEN AT RS . 7,20,50,365/- . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) OUGHT TO HAVE ACCEPTED ALTERNA TIVE SUBMISSION OF THE APPELLANT THAT FULL VALUE OF CONSIDERATION ACCRUING OR ARISING AS A RESULT OF TRANSFER SHOULD BE TAKEN EITHER AT RS. 1,50,00,000/ - OR AT RS. 3,88,71,000/-. 3. WHILE ADOPTING THE FULL VALUE OF CONSIDERATION, LEARNED ITA NO.5032/M/2012 M/S. TROIKA ESTATES PVT. LTD. 2 CIT(A) HAS ERRED IN NOT CONSIDERING AND DEALING WITH THE O BJECTIONS OF THE APPELLANT TO THE VALUATION ADOPTED BY THE DISTR ICT VALUATION OFFICER (DVO) VIDE VALUATION REPORT DATED 20.07.2011 ON THE GROUND THAT NO APPEAL LIES ON THE VALUATION DONE BY THE DVO. ON TH E FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C IT(A) OUGHT TO HAVE CONSIDERED AND DEALT WITH THE OBJECTIONS FILED BY T HE APPELLANT TO THE VALUATION REPORT SUBMITTED BY THE DVO. 4. LEARNED CIT(A) HAS ERRED IN DIRECTING THE AO TO ADOPT THE VALUE OF THE PROPERTY AS ON 01.04.1981, FOR THE PURPOSE O F COMPUTATION OF COST OF ACQUISITION, AT RS. 82,51,700/- ON THE BASI S OF VALUE DETERMINED BY THE DVO VIDE VALUATION REPORT DATED 20.07.2011 A S AGAINST RS.1,03,28,050/- ADOPTED BY THE APPELLANT. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT: I) THE REFERENCE MADE BY LEARNED AO TO DVO IS WITHO UT JURISDICTION AND OUGHT TO BE IGNORED. II) COST OF ACQUISITION OF RS. 1,03,28,050/- ON THE BASIS OF MARKET VALUE OF THE PROPERTY AS AT 01.04.198 1 OUGHT TO BE ADOPTED. 5 . LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F AO IN DISALLOWING THE COST OF IMPROVEMENT OF RS.70,00,000 /- ON THE BASIS THAT THE EXPENSES, SO INCURRED, IS NEITHER TO BE TREATED AS THE COST OF IMPROVEMENT NOR EXPENDITURE IN CONNECTION WITH TRAN SFER. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, TH E SAID PAYMENT OUGHT TO BE ALLOWED AS COST OF IMPROVEMENT OR IN TH E ALTERNATIVE AS EXPENDITURE INCURRED IN CONNECTION WITH THE TRANSFE R. 6. THE APPELLANT CRAVES TO ADD, ALTER, AMEND AND/OR RE SCIND ANY GROUNDS OF APPEAL DURING THE COURSE OF THE HEARING. GROUND NO.1 3. THE ASSESSEE, VIDE GROUND NO.1, HAS CONTENDED TH AT THE CAPITAL GAINS ASSESSED BY THE ASSESSING OFFICER (HEREINAFTER REFE RRED TO AS THE AO) IN RELATION TO THE TRANSFER OF DEVELOPMENT RIGHTS IN LAND AT UL HASHNAGAR WERE NOT WARRANTED TO BE TAXED AS NO TRANSFER OF THE PROPERT Y HAD TAKEN PLACE AS PER THE PROVISIONS OF SECTION 2(14) OF THE INCOME TAX ACT. 4. DURING THE ASSESSMENT PROCEEDINGS THE AO OBSERVE D THAT THE ASSESSEE COMPANY HAD SHOWN LONG TERM CAPITAL LOSS OF RS.4,35 ,78,325/- ON SALE OF LAND AT ULHASHNAGAR. AS PER THE DETAILS, THE SALE CONSI DERATION OF THE PROPERTY WAS SHOWN AT RS.1,50,00,000/-. THE INDEXED COST OF ACQ UISITION HAD BEEN ITA NO.5032/M/2012 M/S. TROIKA ESTATES PVT. LTD. 3 COMPUTED AT RS.5,85,78,325/- AND THE RESULTANT CAPI TAL LOSS WAS ACCORDINGLY CLAIMED IN THE RETURN OF INCOME. WHEN ASKED TO EXP LAIN IN THIS RESPECT BY THE AO, THE ASSESSEE EXPLAINED TO THE AO THAT THE ASSES SEE HAD ENTERED INTO A SCHEME OF ARRANGEMENT U/S 391 AND 394 OF THE COMPAN IES ACT WITH M/S B.R. HERMAN AND MOHATTA (INDIA) PVT. LTD. (BRHM). AS PER THE SCHEME, THE ULHASNAGAR UNDERTAKING OF THE BRHM WITH CERTAIN ASS ETS AND LIABILITIES WERE TRANSFERRED FROM BRHM TO THE ASSESSEE. THE SCHEME W AS APPROVED BY THE HONBLE BOMBAY HIGH COURT ON 28.11.1997 IN A COMPAN Y PETITION. THE SCHEME WAS EFFECTIVE FROM 1.4.1996. PURSUANT TO THE SCHEME, THE ASSESSEE RECEIVED LAND SITUATED AT ULHASNAGAR BELONGING TO B RHM BEING PLOT NOS.6,7 AND 8 ADMEASURING 38,380 SQ MTRS. 5. PRIOR TO SUCH TRANSFER, BRHM HAD GIVEN THE SAID LAND TO M/S.DRM STEEL INDUSTRIES PVT. LTD. (DRM) ON CONDUCTING BASIS UNDE R THE AGREEMENT DATED 11.8.1979. DRM HAD TAKEN LOAN FROM STATE BANK OF BI KANER AND JAIPUR (SBBJ) AGAINST HYPOTHECATION OF PLANT & MACHINERIES. DUE T O LABOUR UNREST, MARKET SLOW DOWN AND OTHER PROBLEMS, DRM STOPPED PRODUCTIO N IN 1990. DRM RAN INTO FINANCIAL CRISIS LEADING TO DEFAULTS IN PAYMEN T OF DUES TO SBBJ. THE MATTER WENT UP TO DEBTS RECOVERY TRIBUNAL AND SBBJ'S DUES WERE SETTLED ON PAYMENT OF RS.2 CRORES BY DRM TO SBBJ. SINCE DRM WAS NOT IN A POSITION TO PAY THE ENTIRE SETTLEMENT AMOUNT, THE ASSESSEE PAID A SUM O F RS.70 LAKHS IN JANUARY 2005 TO OBTAIN PEACEFUL AND VACANT POSSESSION OF TH E LAND FOR THE PURPOSES OF DEVELOPMENT ACTIVITY BY THE ASSESSEE. DRM HAS BEEN UNDER LIQUIDATION. 6. ON RECEIVING POSSESSION OF THE LAND, THE ASSESSE E ENTERED INTO DEVELOPMENT AGREEMENT DATED 16.9.2005 (THE AGREEMEN T, WHICH WAS NOT REGISTERED WITH THE REGISTRAR OF PROPERTIES) WITH M /S. YOGI DEVELOPERS CORPORATION (THE DEVELOPER). AS PER THE TERMS OF TH E AGREEMENT, THE ASSESSEE HAD GIVEN DEVELOPMENT RIGHTS TO THE DEVELOPER TO US E THE FSI. THE DEVELOPER WAS TO PAY RS.1,50,00,000/- TO THE ASSESSEE PLUS 18 % OF THE CONSTRUCTED AREA ITA NO.5032/M/2012 M/S. TROIKA ESTATES PVT. LTD. 4 FREE OF COST AGAINST USE OF FSI. SUBSEQUENTLY, A S UPPLEMENT AGREEMENT WAS ENTERED INTO AS PER WHICH THE DEVELOPER AGREED TO D ISCHARGE CERTAIN LIABILITIES OF THE ASSESSEE AND ALSO AGREED TO GIVE 25% (IN PLA CE OF 18% AS PER THE ORIGINAL AGREEMENT) OF THE CONSTRUCTED SUPER BUILT UP AREA T O THE ASSESSEE. THE SUPPLEMENT AGREEMENT ALSO PROVIDED THAT THE DEVELOP ER WOULD BE ENTITLED TO DEDUCT FROM THE SAID 25% OF THE SUPER BUILT UP AREA , SUCH AREA PROPORTIONATE AND EQUIVALENT TO THE AMOUNT PAID BY THE DEVELOPER IN DISCHARGING THE LIABILITIES CALCULATED AT THE RATE OF RS. 1000/- PE R SQ FT. 7. SINCE THE DEVELOPMENT AGREEMENT WAS ENTERED INTO DURING THE YEAR, THE ASSESSEE HAD SHOWN SALE OF LAND DURING THE YEAR AND WORKED OUT LONG TERM CAPITAL LOSS AS UNDER - SALE CONSIDERATION 1,50,00,000 LESS: COST OF ACQUISITION ORIGINAL COST INDEXED COST COST OF LAND 1,03,28,050 (VALUE AS ON 1.4.81) 5,13,30,409 COST OF IMPROVEMENT 70,00,000 (PAID IN JAN 05) 72,47,9 17 TOTAL INDEXED COST 5,85,78,325 LONG TERM CAPITAL LOSS (4,35,78,325) 8. SINCE THERE WAS NO STAMP DUTY VALUATION AVAILAB LE ON THE DATE OF THE AGREEMENT, IT WAS REQUESTED BY THE AO TO THE THE AS SESSEE TO PRODUCE THE FAIR MARKET VALUE OF THE TRANSFER OF DEVELOPMENT RIGHTS (TDR) AS ON THE DATE OF AGREEMENT 16.09.2005 WITH THE DEVELOPER. HOWEVER, T HE ASSESSEE FAILED TO FILE THE REQUIRED DETAILS AND VIDE ITS SUBMISSIONS DATED 12-12-08 SUBMITTED TO THE AO THAT THE ASSESSEE WAS NOT IN A POSITION TO FURNI SH THE MARKET VALUE OF THE LAND IN QUESTION. HENCE, IN VIEW OF THE INABILITY S HOWN BY THE ASSESSEE TO FURNISH THE REQUIRED DETAILS, THE AO APPOINTED THE INSPECTOR IN CHARGE OF THE AREA TO OBTAIN THE STAMP DUTY VALUATION IN RESPECT OF THE SUBJECT PROPERTY. THE INSPECTOR IN HIS REPORT DATED 16.12.2008 REPORTED T HAT THE STAMP DULY VALUATION ITA NO.5032/M/2012 M/S. TROIKA ESTATES PVT. LTD. 5 AT RS.2000/- PER SQ MTR BASED ON THE RATES PREVAILI NG IN THE YEAR 2005. BASED ON THIS RATE, THE AO WORKED OUT THE VALUE OF THE PROPE RTY AT RS.7,67,60,000/- (I.E. 38380 SQ MTR X RS.2000). THE ASSESSEE WAS SHOW CAUS ED BY THE AO VIDE LETTER DATED 16-12-2008 AS TO WHY THIS VALUE SHOULD NOT BE TREATED AS SALE CONSIDERATION IN PLACE OF RS.1,50,00,000/-. FURTHER , THE ASSESSEE WAS ALSO ASKED TO EXPLAIN ON WHAT BASIS THE MARKET VALUE AS ON 1.4 .1981 HAD BEEN SUBSTITUTED FOR COST. 9. IN RESPONSE TO THE ABOVE, THE ASSESSEE SUBMITTED THAT TILL THAT DATE, NO CONSTRUCTION HAD BEEN CARRIED OUT. THE PLANS HAD NO T BEEN PASSED AND THE AREA WHICH THE ASSESSEE HAS TO RECEIVE WAS NOT DETERMINE D. THE POSSESSION OF THE PROPERTY HAD NOT BEEN GIVEN TO THE DEVELOPER IN PAR T PERFORMANCE OF THE AGREEMENT AS DEFINED IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT. THE LIABILITY IN RESPECT OF ARREARS PAYABLE TO MAHARASH TRA STATE ELECTRICITY BOARD (MSEB) VIDE SUIT NO.2006/96 WAS TO THE ACCOUNT OF T HE ASSESSEE AS PER THE SCHEME APPROVED BY THE BOMBAY HIGH COURT. THE LIABI LITY ON ACCOUNT OF ARREARS OF RS.5.55 CRORES PAYABLE TO MSEB WAS SUBSI STING AS ON THE DATE OF THE AGREEMENT. AS PER SUPPLEMENTARY AGREEMENT, THE DEVE LOPER HAD AGREED TO DISCHARGE THE LIABILITY OF THE ASSESSEE AND DEDUCT THE SAME FROM 25% OF THE AREA TO BE GIVEN TO THE ASSESSEE. IN VIEW OF THESE VARIOUS FACTORS, THE RIGHT TO THE CONSTRUCTED AREA WAS ONLY CONTINGENT. THE CONSI DERATION TOWARDS SUCH AREA WHICH WAS YET TO BE PROVIDED BY THE DEVELOPER COULD NOT BE ADDED TO THE FULL VALUE OF CONSIDERATION FOR THE PURPOSE OF WORKING O UT CAPITAL GAINS. THE ASSESSEE FURTHER SUBMITTED THAT EVEN IF ONE WER E TO ADD ANY AMOUNT TO THE CONSIDERATION, IT COULD BE ONLY THE COST OF CONSTRUCTION OF THE AREA WHICH THE ASSESSEE WAS SUPPOSED TO RECEIVE FROM THE DEVEL OPER. SINCE THERE WAS EXISTING LIABILITY OF RS. 5.55 CRORES AS STATED ABO VE, THE AREA AVAILABLE WITH THE ASSESSEE, WOULD BE 47,742 SQ. METER AS UNDER TOTAL AREA OF THE PLOT (SQ. MTS.) 38,380 FSI AVAILABLE (SQ. MTS.) 38,380 FSI IN SQ. FT. 412,968 ITA NO.5032/M/2012 M/S. TROIKA ESTATES PVT. LTD. 6 25% OF THE ABOVE SQ. FT. 103,242 AREA TO BE RETAINED IN DISCHARGE OF LIABILITY 55,500 BALANCE AREA AVAILABLE WITH THE ASSESSEE 47,742 THE ASSESSEE FURTHER SUBMITTED THAT THE COST OF CON STRUCTION OF THE PREMISES WAS RS.500 PER SQ. FT. THEREFORE THE ADDIT IONAL CONSIDERATION, IF APPLICABLE, WOULD BE ONLY RS.2,38,71,000 AND THE TO TAL CONSIDERATION WOULD BE RS.3,88,71,000 (I.E. RS.1,50,00,000 BEING SALE CONS IDERATION AS PER STATEMENT OF LONG TERM CAPITAL LOSS PLUS RS.2,38,71000 ADDITI ONAL CONSIDERATION AS ABOVE). BASED ON THIS, THERE WOULD STILL BE A LOSS AS UNDER: TOTAL CONSIDERATION AS ABOVE 3,58,71,000 LESS : INDEXED COST OF ACQUISITION AS 5,85 78,326 PER RETURN LONG TERM CAPITAL LOSS 1,97,07 326 10. AS REGARDS SUBSTITUTION OF MARKET VALUE AS ON 1.4.1981, IT WAS SUBMITTED BY THE ASSESSEE THAT THE LAND HAD BEEN AC QUIRED BY WAY OF DEVOLUTION AND OPERATION OF LAW IN AS MUCH AS THE SCHEME OF AR RANGEMENT U/S.391 AND 394 OF THE COMPANIES ACT, 1956 HAD BEEN APPROVED AN D SANCTIONED BY THE HONBLE BOMBAY HIGH COURT VIDE ORDER DATED 28.11.19 97. AS PER THE HONBLE CALCUTTA HIGH COURT'S DECISIONS IN 122 FTP 561 AND 139 FIR 215, THE TRANSFER OF ASSET UNDER COURT ORDER AND UNDER OPERATION OF L AW AMOUNTS TO DEVOLUTION. ACCORDINGLY, SINCE THE LAND WAS PURCHASED BY BRHM I N 1963 I.E. PRIOR TO 1.4.1981, THE ASSESSEE WAS ENTITLED TO SUBSTITUTE M ARKET VALUE AS ON 1.4.1981 IN PLACE OF COST TO THE PREVIOUS OWNER U/S.55(2)(B)(II ). 11. THE AO, HOWEVER, OBSERVED THAT THE INDEXED COST OF ACQUISITION ADOPTED BY THE ASSESSEE WAS NOT PROPER. THE ASSESSEE HAD A DOPTED THE MARKET VALUE BASED ON VALUER'S REPORT DATED 15.11.2006 OF RS.1,0 3,28,050/-. THIS VALUE WAS ITA NO.5032/M/2012 M/S. TROIKA ESTATES PVT. LTD. 7 ON HIGHER SIDE. AS PER THE DEED OF CONFIRMATION FIL ED BY THE ASSESSEE, THE STAMP DUTY VALUATION AT THE TIME OF TRANSFER IN 199 6 WAS RS.1,20,02,000/-. SINCE THE VALUE IN 1996, ITSELF, WAS ONLY RS.1.20 C RORE, THE VALUE AS ON 1.4.1981 COULD NOT BE RS.1.03 CRORE. THE AO REFERRED THE DE TERMINATION OF MARKET VALUE AS ON 1.4.1981 TO THE DISTRICT VALUATION OFFICER-II , MUMBAI (DVO) U/S 55A. HOWEVER THE VALUATION REPORT OF THE DVO WAS NOT REC EIVED AT THE TIME OF FRAMING OF THE ASSESSMENT ORDER. THE AO FURTHER OBSERVED THAT THE POSSESSION HAD BEE N GIVEN TO THE DEVELOPER BY MEANS OF THE SAID AGREEMENT AND BASED ON THE SAM E ONLY; THE ASSESSEE HAD CLAIMED THE LONG TERM CAPITAL LOSS AT RS.4.35 CRORE S IN THE RETURN OF INCOME. HENCE, THEREAFTER TO SAY THAT NO TRANSFER HAD TAKEN PLACE WOULD MEAN THAT THE LONG TERM CAPITOL LOSS CLAIMED BY THE ASSESSEE WHIL E FILING ITS RETURN OF INCOME WAS BOGUS. SECONDLY, THE LIABILITY OF RS.5.5 CRORES AS STATED ABOVE TOWARDS MAHARASHIRA STATE ELECTRICITY BOARD (MSEB) HAD NOT CRYSTALISED SO FAR AND HENCE, WAS UNASCERTAINED LIABILITY, WHICH COULD NOT BE ALLOWED TO THE ASSESSEE. HE FURTHER OBSERVED THAT THE ASSESSEE'S C ONTENTION THAT THE POSSESSION OF PROPERTY WAS NOT GIVEN TO THE DEVELOPER IN PART PERFORMANCE OF THE AGREEMENT AS DEFINED IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT WAS ALSO NOT ACCEPTABLE BASED ON THE RECORDS AND CLAIMS MADE BY THE ASSESSEE FOR THE LONG TERM CAPITAL LOSSES. THE AO THEREFORE VALUED T HE TRANSFER OF DEVELOPMENT RIGHTS AT RS.7,67,60,000/-, AS PER THE REPORT OF THE INSPECTOR AND PROOF GIVEN BY THE SUB REGISTRARS OFFICE. 12. FURTHER, THE AO OBSERVED THAT THE ASSESSEE COMP ANY HAD CLAIMED THE AMOUNT OF RS.70,00,000/TOWARDS COST OF IMPROVEMENT OF THE ABOVE SAID PROPERTY. THE AO, HOWEVER, OBSERVED THAT THE SAME W AS NOT ALLOWABLE AS THE ASSESSEE WAS NOT IN A POSITION TO PROVE THE NEXUS O F RS.70,00,000/- AS COST OF IMPROVEMENT. FURTHER, AS PER PROVISIONS OF SECTION 48, EXPENDITURE INCURRED ONLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER AN D COST OF IMPROVEMENT OF THE ASSET WAS DEDUCTIBLE. THE AO OBSERVED THAT THE AMOUNT OF RS.70,00,000/- ITA NO.5032/M/2012 M/S. TROIKA ESTATES PVT. LTD. 8 WAS SPENT NEITHER TOWARDS THE COST OF IMPROVEMENT N OR IN RELATION TO EXPENDITURE IN CONNECTION WITH TRANSFER OF THE ASSE T. HENCE, HE ADDED BACK THE AMOUNT OF RS.70,00,000/- TO THE INCOME OF THE ASSES SEE HOLDING THE SAME WAS NOT ALLOWABLE U/S.48 OF THE IT ACT. THE AO ACCORDINGLY COMPUTED THE TOTAL INCOME OF THE ASSESSEE AS UNDER: TOTAL BUSINESS INCOME AS PER COMPUTATION RS.16 ,08,720/- ADD: AS AT POINT 2 RS.70,00,000/- RS.86,08,720/- CAPITAL GAINS: LONG TERM CAPITA LOSS (-) RS.4,35,78,326/ - ADD: DISALLOWANCES AS DISCUSSED ABOVE RS.7,67,60 ,000/- RS.3,31,81,674/- TOTAL TAXABLE INCOME RS.4,17,90,394/ - ROUNDED OFF TO RS.4,17,90,3 90/ 13. BEING AGGRIEVED BY THE ORDER OF THE AO, THE ASS ESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). 14. THE LD. CIT(A), HOWEVER, OBSERVED THAT SINCE TH E ASSESSEE, ITSELF, HAD TREATED THE TRANSFER OF DEVELOPMENT RIGHT IN THE PR OPERTY AT ULHASHNAGAR AS TRANSFER OF CAPITAL ASSET AND HAD DECLARED CAPITAL GAINS/LOSS ON SUCH TRANSFER IN THE RETURN OF INCOME, THEREFORE THE SUBSEQUENT CHAN GE OF STAND THAT THERE WAS NO TRANSFER WAS NOT SUSTAINABLE. HE OBSERVED THAT MOREOVER THE TRANSFER WAS COMPLETE IN TERMS OF THE DEFINITION OF TRANSFER PRO VIDED UNDER SECTION 2(47) OF THE ACT AND EVEN THE INCOME HAD ACCRUED TO THE ASSE SSEE IN RELATION TO THE TRANSFER OF LAND IN QUESTION BY WAY OF DEVELOPMENT AGREEMENT. THE LD. CIT(A) FURTHER OBSERVED THAT THE REPORT OF THE DISTRICT VA LUATION OFFICER (DVO) WAS RECEIVED AND THE SAME WAS HANDED OVER TO THE ASSESS EE AND THAT THE ASSESSEES OBJECTIONS AGAINST THE SAID REPORT WERE NOT TENABLE . HE, THEREFORE, DIRECTED THE AO TO ADOPT THE VALUE GIVEN BY THE DVO IN HIS REPOR T REGARDING THE VALUATION OF THE LAND AS ON 01.04.1981 AND AS ON 16.09.15. T HE LD. CIT(A) ALSO DENIED THE CLAIM OF PAYMENT OF RS.70 LAKHS TOWARDS COST OF ITA NO.5032/M/2012 M/S. TROIKA ESTATES PVT. LTD. 9 IMPROVEMENT/DEVELOPMENT OF LAND OBSERVING THAT THE ASSESSEE COMPANY AND M/S. DRM HAD COMMON DIRECTOR SHRI RATAN MUNDRA. M/ S. DRM HAD TAKEN THE FACTORY AT ULHASHNAGAR ON CONDUCTING BASIS FROM M/S . BRHM IN 1979. THE ASSESSEE COMPANY HAD TAKEN OVER THE M/S. BRHM IN TH E YEAR 1996. THE M/S. DRM WAS ALREADY UNDER BFIR SINCE 1993. THE M/S. DR M HAD GIVEN THE ASSET AND MACHINERY ON MORTGAGE TO THE STATE BANK OF BIKA NER & JAIPUR AND IT WAS THE RESPONSIBILITY OF M/S. DRM TO PAY THE AMOUNT OF RS.70 LAKHS AND NOT THAT OF THE ASSESSEE COMPANY. THE LAND WAS NOT MORTGAGE D TO THE BANK BY THE ASSESSEE AND THAT THERE WAS NO ENCUMBRANCE ON THE L AND ITSELF. THE DIRECTORS OF THE M/S. DRM WERE SHRI S.R. MUNDRA AND SMT. SHREEKA NTA DEVI MUNDRA, BOTH RESIDENTS OF THE SAME APARTMENT I.E. LAXMI VIL LAS, 12 TH FLOOR, NEPOSEAN ROAD, MUMBAI. AT THE SAME TIME, THE DIRECTORS OF T HE ASSESSEE COMPANY WERE SHRI S.R. MUNDRA, SMT. KUSUM MUNDRA AND SMT. DHRUVA MUNDRA. THE DIRECTORS OF THE ASSESSEE COMPANY AND THE M/S. DRM WERE CLOSELY INTERLINKED AS THE AFFAIRS OF BOTH THE COMPANIES WERE MANAGED B Y THE SAME PERSON I.E. SHRI S.R. MUNDRA OR HIS FAMILY MEMBERS. THE AMOUNT OF R S.70 LAKHS PAID BY THE ASSESSEE COMPANY TO THE BANK WAS ACTUALLY A LOAN FR OM THE ASSESSEE COMPANY TO M/S. DRM. THE MACHINERY OF M/S. DRM WAS MORTGAGE D TO THE BANK. THE LD. CIT(A) ALSO ASKED THE ASSESSEE TO STATE AS TO A T WHAT CONSIDERATION THE MACHINERY WAS SOLD AND WHY THE LOAN OF RS.70 LAKHS WAS NOT RECEIVED FROM M/S. DRM, THOUGH BOTH THE COMPANIES WERE CONTROLLED BY THE SAME PERSONS OR THE PERSONS FROM THE SAME FAMILY. THE ASSESSEE, HOWEVER, EXPLAINED THAT M/S. DRM WAS UNDER LIQUIDATION AND WAS MANAGED BY THE PANEL LIQUIDATOR. THE REQUIRED INFORMATION WAS NOT AVAILABLE WITH THE ASSESSEE. THE LD. CIT(A), CONSIDERING THE ABOVE SUBMISSIONS, REJECTED THE CONTENTION OF THE ASSESSEE REGARDING INCURRING OF R S.70 LAKHS TOWARDS COST OF DEVELOPMENT/IMPROVEMENT OF LAND IN QUESTION. HE, T HEREFORE, DISMISSED THE APPEAL OF THE ASSESSEE WITH THE DIRECTION TO THE AO TO ADOPT THE VALUE GIVEN BY ITA NO.5032/M/2012 M/S. TROIKA ESTATES PVT. LTD. 10 THE DVO FOR COMPUTATION OF CAPITAL GAINS. BEING AG GRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE, THUS, HAS COME IN APPEAL BEFORE US. 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE AL SO GONE THROUGH THE RECORDS. THE DISPUTE BEFORE US IS IN RELATION TO COMPUTATION OF CAPITAL GAINS ON TRANSFER OF DEVELOPMENT RIGHTS IN THE P[LOT IN QUES TION. THE ASSESSEE, THOUGH IN THE RETURN OF INCOME HAD TREATED THE LAND IN QUESTI ON AS A CASE OF TRANSFER AND HAD OFFERED THE RESULTANT CAPITAL GAINS/LOSS IN THE RETURN OF INCOME. HOWEVER, WHEN THE AO ASKED THE ASSESSEE TO EXPLAIN THE COMPU TATION OF CAPITAL LOSS OFFERED IN THE RETURN OF INCOME, THE ASSESSEE THERE AFTER CLAIMED THAT THE CASE OF THE ASSESSEE COULD NOT BE CONSIDERED AS A CASE OF T RANSFER OF CAPITAL PROPERTY. THE LD. A.R. OF THE ASSESSEE HAS BROUGHT OUR ATTENT ION TO VARIOUS CLAUSES OF THE AGREEMENT TO CONTEND THAT IN FACT NO POSSESSION HAS BEEN HANDED OVER TO THE DEVELOPER, NO PLANS HAVE BEEN SANCTIONED AND THAT E VEN FULL CONSIDERATION IN QUESTION HAS NOT BEEN RECEIVED BY THE ASSESSEE TILL DATE AND FURTHER THAT THE COST OF BUILT UP AREA THAT IS TO BE HANDED OVER BY THE D EVELOPER TO THE ASSESSEE HAS NOT BEEN ASCERTAINED. HE HAS FURTHER SUBMITTED THA T THE AGREEMENT IN QUESTION HAS NOT BEEN REGISTERED TILL DATE AND NO DEVELOPMEN T ACTIVITY HAS HAPPENED, ONLY THE LICENSE WAS GIVEN TO THE DEVELOPER AND PHY SICAL POSSESSION HAS NOT BEEN HANDED OVER. HE HAS FURTHER SUBMITTED THAT SI NCE THE AGREEMENT WAS NOT REGISTERED, HENCE AS PER THE PROVISIONS OF SECTION 53A OF THE T.P. ACT, THE TRANSFER OF THE PROPERTY CANNOT BE SAID TO HAVE COM PLETED. HE HAS ALSO RELIED UPON CERTAIN CASE LAWS IN THIS RESPECT. 16. THE LD. D.R., ON THE OTHER HAND, HAS RELIED UPO N THE FINDINGS OF THE LOWER AUTHORITIES AND HAS CONTENDED THAT THE TRANSF ER IN FACT HAD TAKEN PLACE AND THAT EVEN THE ASSESSEE HIMSELF HAD OFFERED CAPI TAL GAINS/LOSS IN THE RETURN OF INCOME AND THAT THE ASSESSEE WAS NOW ESTOPPED FROM ITS OWN ACT AND CONDUCT TO TAKE A DIFFERENT STAND AT THIS STAGE. ITA NO.5032/M/2012 M/S. TROIKA ESTATES PVT. LTD. 11 17. WE HAVE CONSIDERED THE RIVAL CONTENTIONS IN THI S RESPECT. AFTER GOING THROUGH THE VARIOUS CLAUSES OF THE DEVELOPMENT AGRE EMENT AND READING THE DEVELOPMENT AGREEMENT AS A WHOLE, WE FIND THAT THE ASSESSEE HAD GIVEN DEVELOPMENT RIGHTS TO THE DEVELOPER, THE CONSIDERAT ION WAS AGREED UPON AND IN FACT THE CASH COMPONENT OF THE CONSIDERATION HAS AL READY BEEN RECEIVED BY THE ASSESSEE. FURTHER, THE DEVELOPER HAD AGREED TO HAN DOVER 25% OF THE SUPER BUILT UP AREA TO THE ASSESSEE, WHICH PART OF THE AGREEMEN T WAS TO BE PERFORMED AFTER THE DEVELOPMENT OF THE LAND. THE ASSESSEE ITSELF, AFTER CONSIDERING THE ABOVE TRANSACTION AS TRANSFER OF CAPITAL RIGHTS, HAD OFFE RED THE CAPITAL LOSS IN THE RETURN OF INCOME. IT WAS ONLY WHEN THE AO WAS NOT SATISFI ED WITH THE COMPUTATION OF CAPITAL LOSS BY THE ASSESSEE AND PUT UP THE RELEVAN T QUERIES, THEN, THE ASSESSEE CHANGED ITS STAND. AFTER HEARING THE LD. REPRESENT ATIVES OF BOTH THE PARTIES AND GOING THROUGH THE AGREEMENT AS A WHOLE, CONSIDE RING THE ACT AND CONDUCT OF THE ASSESSEE ITSELF, WE DO NOT FIND ANY MERIT IN THE CONTENTION OF THE ASSESSEE THAT THE TRANSFER OF THE PROPERTY HAD NOT TAKEN PLA CE. IN FACT, THE ASSESSEE HAD NOT ONLY GIVEN THE DEVELOPMENT RIGHTS TO THE DEVELO PER BUT ALSO THE RIGHT TO ENTER INTO THE PROPERTY, DEVELOP THE PROPERTY AND G ET THE NECESSARY PERMISSIONS AND SANCTIONS ETC. FROM THE COMPETENT AUTHORITY ETC . IT IS NOT A CASE WHERE THE ASSESSEE HAD ONLY GIVEN A LICENSE TO THE DEVELOPER AND HAD RETAINED THE ENTIRE CONTROL OVER THE PROPERTY RATHER IT IS A CASE WHERE THE ASSESSEE HAD GIVEN ALL THE RIGHTS TO THE DEVELOPER TO DEVELOP THE PROPERTY, SA LE THE FLATS CONSTRUCTED THEREUPON EXCEPT 25% OF THE BUILT UP AREA AS AGREED VIDE THE DEED OF DEVELOPMENT. THERE WAS NOTHING LEFT THAT THE ASSES SEE WAS REQUIRED TO PERFORM TOWARDS ITS PART OF CONTRACT IN RELATION TO ABOVE S TATED TRANSACTION OF TRANSFER IN QUESTION. THE TRANSFER THUS HAS TAKEN PLACE AS PER THE PROVISIONS OF SECTION 2(47) OF THE I.T. ACT FOR THE PURPOSE OF TAXABILITY OF THE CAPITAL GAINS. MOREOVER THE ASSESSEE NOW IS ESTOPPED FROM ITS OWN ACT AND C ONDUCT TO AGITATE THAT THE TRANSFER HAS NOT TAKEN PLACE WHEN THE ASSESSEE ITSE LF HAS OFFERED CAPITAL GAINS/LOSS IN THE RETURN OF INCOME. THE CASE LAW TH AT IS STRONGLY RELIED UPON BY THE LD. A.R. IS OF THE HONBLE BOMBAY HIGH COURT (G OA BENCH) IN THE CASE OF ITA NO.5032/M/2012 M/S. TROIKA ESTATES PVT. LTD. 12 CIT VS. SADIA SHEIKH TAX APPEAL NO. 11 & 12 DECIDE D VIDE ORDER DATED 2.12.2013, WHEREIN, AFTER APPRECIATING THE FACTS O F THAT CASE, THE TRIBUNAL HAD HELD THAT THE PROPERTY OR THE RIGHTS WERE NOT TRANS FERRED TO THE DEVELOPER AND THAT THE ASSESSEE WAS HAVING FULL CONTROL OVER THE PROPERTY AND THAT IT WAS NOT A CASE OF TRANSFER AS PER THE PROVISIONS OF SECTION 2 (47) OF THE ACT WHICH FINDING WAS AFFIRMED BY THE HONBLE HIGH COURT. HOWEVER, A S DISCUSSED ABOVE, THE FACTS OF THE PRESENT CASE ARE QUITE DISTINGUISHABLE . AS WE HAVE HELD THAT THE ASSESSEE IN THIS CASE HAS NOT ONLY TRANSFERRED THE ABOVE RIGHTS BUT HAS ALSO OFFERED THE RESULTANT CAPITAL GAINS/LOSS IN THE RET URN OF INCOME. HENCE, THE SAID DECISION IS NOT APPLICABLE TO THE CASE OF THE ASSES SEE. WE THEREFORE DECIDE THE GROUND NO.1 AGAINST THE ASSESSEE. 18. THE NEXT ISSUE RAISED BEFORE US IS RELATING TO THE VALUE OF THE CONSIDERATION RECEIVED/RECEIVABLE BY THE ASSESSEE O N TRANSFER OF DEVELOPMENT RIGHTS. THE CONTENTION OF THE ASSESSEE HAS BEEN TH AT THE SALE VALUE SHOULD BE TAKEN EITHER AT RS.1,50,00,000/- WHICH HAS BEEN ACT UALLY RECEIVED BY THE ASSESSEE OR AT RS.3,88,71,000/- AS COMPUTED BY THE ASSESSEE AS DISCUSSED AND REPRODUCED IN THE CHART IN THE PARAS ABOVE. THE LD . A.R., IN THIS RESPECT, HAS RELIED UPON CERTAIN CASE LAWS E.G. (I) CIT VS. PUJA PRINTS 360 ITR 697 WHEREIN IT HAS BEEN HELD THAT IN VIEW OF THE SPECIF IC PROVISIONS OF SECTION 55A(A), AS WERE EXISTENT AND APPLICABLE FOR THE ASS ESSMENT YEAR IN QUESTION, A REFERENCE COULD BE MADE TO THE DEPARTMENTAL VALUATI ON OFFICER ONLY WHEN THE VALUE ADOPTED BY THE ASSESSEE WAS LESS THAN THE FAI R MARKET VALUE. IT HAS ALSO BEEN HELD THAT THE SUBSEQUENT AMENDMENT TO THE RELE VANT SECTION WHERE THE RELEVANT WORDS IS LESS THAN THE FAIR MARKET VALUE HAVE BEEN SUBSTITUTED BY THE WORDS IS AT VARIANCE WITH ITS FAIR MARKET VALUE I S PROSPECTIVE AND NOT APPLICABLE RETROSPECTIVELY. IT HAS ALSO BEEN HELD THAT EVEN THE REFERENCE TO THE DVO UNDER SECTION 55A(A)(II) WAS NOT ACCEPTABLE FOR THE REASON THAT SECTION 55A(B) OF THE ACT VERY CLEARLY STATES THAT IT WOULD APPLY IN ANY OTHER CASE I.E. A CASE NOT COVERED BY SECTION 55A(A) OF THE ACT. THE REFORE, RESORT CANNOT BE HAD ITA NO.5032/M/2012 M/S. TROIKA ESTATES PVT. LTD. 13 TO THE RESIDUARY CLAUSE PROVIDED IN SECTION 55A(B)( II) AND THAT THE CBDT CIRCULAR DATED 25.11.72 HAS NO APPLICATION IN VIEW OF ABOVE STATED POSITION OF LAW. THE LD. A.R., THUS, HAS SUBMITTED THAT THE VA LUE AS ON 01.04.1981, AS PER THE REPORT OF THE REGISTRED VALUATION OFFICER WHICH HAS BEEN PLACED AND RELIED UPON BY THE ASSESSEE IS TO BE CONSIDERED. HE, THER EFORE, HAS SUBMITTED THAT THE ACTION OF THE AO FOR REFERENCE TO THE DVO WAS WRONG AND ILLEGAL IN VIEW OF THE LAW LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF M/S. PUJA PRINTS (SUPRA). HE HAS FURTHER CONTENDED THAT THE S ALE VALUE OF THE PROPERTY SHOULD BE TAKEN AS CALCULATED BY THE ASSESSEE AS RE PRODUCED AND DISCUSSED IN PARAS ABOVE OF THIS ORDER. 19. WE HAVE CONSIDERED THE RIVAL CONTENTIONS IN THI S RESPECT ALSO. FIRST OF ALL, WE FIND THAT THE PROPERTY/LAND IN QUESTION HAD COME TO THE ASSESSEE BY WAY OF SCHEME OF ARRANGEMENT AS APPROVED BY THE HONBLE BOMBAY HIGH COURT IN THE COMPANY PETITION VIDE WHICH CERTAIN ASSETS AND LIABILITIES OF THE M/S. BRHM WERE TRANSFERRED TO THE ASSESSEE. THE AO HAS NOT GONE INTO THE QUESTION AS TO THE SAME WAS A CASE OF TRANSFER OR D EVOLUTION OF INTEREST. HOWEVER, SINCE THIS ISSUE HAS NEITHER BEEN RAISED B EFORE US NOR GONE INTO BY THE AO, HENCE WE RESTRAIN OURSELVES FROM FURTHER DISCUS SION ON THIS ISSUE AND ASSUME THAT THE ASSESSEE WAS ENTITLED TO CLAIM THE COST OF ACQUISITION AS ON 01.04.1981. IN VIEW OF THE LAW LAID DOWN BY THE HO NBLE BOMBAY HIGH COURT IN THE CASE OF M/S. PUJA PRINTS (SUPRA), WHERE THE VALUATION OF THE PROPERTY AS PER THE REGISTERED VALUER REPORT WAS MORE THAN THE FAIR MARKET VALUE IN THE OPINION OF THE AO, THE REFERENCE CANNOT BE MADE TO THE DVO AS THE SAME, AS PER THE RELEVANT PROVISIONS, COULD BE MADE ONLY IF THE SAME IS LESS THAN THE FAIR MARKET VALUE IN THE OPINION OF THE AO. THE LAW LAI D DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IS BINDING ON THIS TRIBUN AL. RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT THE ACTION OF THE AO IN REFE RRING THE ESTIMATION OF THE VALUE OF THE PROPERTY AS ON 01.04.1981 WAS NOT IN A CCORDANCE WITH LAW AND HENCE THE VALUE ASSESSED BY THE DVO OF THE LAND IN QUESTION AS ON 01.04.1981 ITA NO.5032/M/2012 M/S. TROIKA ESTATES PVT. LTD. 14 CANNOT BE ADOPTED. THE ONLY EVIDENCE LEFT IN THIS RESPECT WHICH IS AVAILABLE ON FILE IS THE REPORT OF REGD. VALUER, WE ACCORDINGLY DIRECT THE AO TO ADOPT THE REPORT OF THE REGISTERED VALUER FOR ARRIVING OUT AT THE VALUE OF THE PROPERTY AS ON 1.4.1981. 20. SO FAR AS THE SALE VALUE OF THE PROPERTY AS ON THE DATE OF AGREEMENT IS CONCERNED, WE DO NOT AGREE WITH THE CALCULATION OFF ERED BY THE ASSESSEE. WE, EVEN DO NOT FIND IT JUSTIFIED TO ADOPT THE VALUE OF THE DVO REGARDING THE LAND IN QUESTION. FROM THE RECORD, WE FIND THAT THE ASSESS EE HAS TO RECEIVE RS.1,50,00,000/- AS CASH COMPONENT AND FURTHER 25% OF THE CONSTRUCTED SUPER BUILT UP AREA. THE DEVELOPER HAD AGREED TO OWE AND PAY CERTAIN LIABILITIES OF THE ASSESSEE FOR WHICH THE DEVELOPER WAS ENTITLED T O DEDUCT FROM THE SAID 25% OF SUPER BUILT UP AREA, SUCH PROPORTIONATE AND EQUI VALENT COST CALCULATED AT THE RATE OF RS.1000/- PER SQR. FEET. FURTHER, A PERUSA L OF THE VARIOUS CLAUSES OF THE AGREEMENT REVEALS THAT IN THIS CASE THE DEVELOPER H AD TO OFFER 25% OF THE SUPER BUILT UP AREA OUT OF THE FSI ALREADY AVAILABLE ON T HE LAND IN QUESTION. THE DEVELOPER WAS UNDER NO LIABILITY IN RELATION TO ANY OTHER CONSTRUCTED AREA UPON THE FSI OBTAINED BY THE DEVELOPER FROM THE MARKET O R IN LIEU OF FSI AVAILABLE ON ANY OTHER LAND. THE ABOVE CLAUSES CLEARLY DEPIC T THAT THE RIGHT TO CONSTRUCT AS PER THE FSI ALREADY AVAILABLE ON THE LAND WAS AV AILABLE WITH THE ASSESSEE ITSELF. THE ASSESSEE WAS NOT ENTITLED TO RECEIVE A NY SHARE OF BUILT UP AREA IN RELATION TO ANY FURTHER FSI RECEIVED OR RECEIVABLE BY THE DEVELOPER UPON THE LAND IN QUESTION. UNDER SUCH CIRCUMSTANCES, IT CAN BE SAFELY ASSUMED THAT THE ASSESSEE HAD TRANSFERRED THE DEVELOPMENT RIGHTS IN RELATION TO 75% OF THE TOTAL FSI AVAILABLE AND THE ASSESSEE HAD RETAINED THE 25% OF THE FSI ALREADY AVAILABLE AND WHAT THE ASSESSEE GOT IN LIEU OF THE 75% TRANSFER OF THE DEVELOPMENT RIGHTS/FSI ON THE LAND WAS THE COST OF CONSTRUCTION IN RELATION TO 25% OF THE SUPER BUILT UP AREA OF THE LAND IN QUEST ION PLUS RS. 1,50,00,000/-. THE COST OF CONSTRUCTION OF THE SAID SUPER BUILT UP AREA HAS ALREADY BEEN QUANTIFIED AND ASCERTAINED IN THE SUPPLEMENTARY DE VELOPMENT AGREEMENT, ITA NO.5032/M/2012 M/S. TROIKA ESTATES PVT. LTD. 15 ITSELF, WHICH IS AT THE RATE OF RS.1000/- PER SQR. FEET. THE AVAILABLE FSI ON THE LAND AS DISCUSSED ABOVE HAS ALREADY BEEN MENTIONED BY THE ASSESSEE ITSELF AS 38380 SQ. MTRS WHICH IS EQUAL TO 412968 SQ. FT. HE NCE, THE TOTAL SALE CONSIDERATION RECEIVED/RECEIVABLE BY THE ASSESSEE I S RS.1,50,00,000/- PLUS COST OF 25% OF THE SUPER BUILT UP AREA AS ATTRIBUTABLE T O THE AVAILABLE FSI ON THE PLOT CALCULATED AT RS. 1000/- PER SQ. FEET. THE DEVELOPE R HAS BEEN GIVEN THE LIBERTY TO DEDUCT THE AMOUNT PAID TOWARDS LIABILITIES OF TH E ASSESSEE OUT OF THE SAID AMOUNT, WHICH DOES NOT, IN ANY MANNER, EFFECT THE Q UANTUM/ PRICE OF THE SALE CONSIDERATION SETTLED BETWEEN THE PARTIES. THE AO I S, THEREFORE, DIRECTED TO COMPUTE CAPITAL GAINS/LOSS BY TAKING THE VALUE AS O N 01.04.1981 AS PROVIDED BY THE REGISTERED VALUER AND THE SALE VALUE AS MAY BE ARRIVED AS DISCUSSED ABOVE. 18. AT THIS STAGE, WE WOULD LIKE TO REFER THE CASE LAW STRONGLY RELIED UPON BY THE LD. A.R. IN THE CASE OF CIT VS. M/S. CHEMOSYN LTD., MUMBAI ITA NO.361 OF 2013 DECIDED ON 11.02.15 (BOMBAY HIGH COU RT). WE FIND THAT THE FACTS AND CIRCUMSTANCES OF THE ABOVE STATED DECISIO N ARE NOT APPLICABLE TO THE CASE OF THE ASSESSEE. IN THE SAID CASE, THE ORIGIN AL AGREEMENT WAS REPLACED BY ANOTHER AGREEMENT. IN THE ORIGINAL AGREEMENT, THE DEVELOPER HAD AGREED TO HANDOVER CERTAIN BUILT UP AREA. HOWEVER, VIDE SUBS TITUTED AGREEMENT, THE SAID CONDITION WAS DROPPED AND IN THE SUBSTITUTED TRIPAR TITE AGREEMENT, THE PLOTS IN QUESTION WERE TRANSFERRED TO THE NEW BUYER FOR A CA SH CONSIDERATION AND THE CONDITION OF HANDING OVER OF BUILT UP AREA WAS DROP PED. UNDER SUCH CIRCUMSTANCES, THE HONBLE BOMBAY HIGH COURT HELD T HAT THE CONSIDERATION WITH RESPECT TO THE BUILT UP AREA HAD NOT ACCRUED T O THE ASSESSEE. THE FACTS OF THE SAID CASE, THUS, ARE NOT APPLICABLE TO THE CASE OF THE ASSESSEE. 21. NOW COMING TO THE ISSUE RELATING TO THE EXPENDI TURE OF RS.70 LAKHS CLAIMED TO HAVE BEEN INCURRED TOWARDS THE COST OF I MPROVEMENT/DEVELOPMENT OF THE LAND IN QUESTION, WE FIND THAT THERE IS NO M ERIT IN THE CONTENTIONS RAISED BY THE ASSESSEE. FROM THE RECORD/ASSESSMENT ORDER, WHAT WE FIND IS THAT THE M/S. DRM HAD OBTAINED LOAN BY WAY OF MORTGAGING THE MACHINERY AND OTHER ITA NO.5032/M/2012 M/S. TROIKA ESTATES PVT. LTD. 16 ASSETS ON THE LAND. THE LAND, IN FACT, WAS OWNED B Y M/S. BRHM WHICH WAS NEITHER MORTGAGED BY THE M/S. DRM NOR THE M/S. DRM HAD GOT ANY RIGHT OR AUTHORITY TO DO SO. HENCE, THERE WAS NO ENCUMBRANC E ON THE LAND ITSELF. THE BANK HAD GOT RIGHT TO RECOVER THE LOAN AMOUNTS FROM M/S. DRM BY WAY OF AUCTIONING AND SALE OF THE MACHINERY WHICH WAS MORT GAGED WITH IT. THERE WAS NO LIABILITY OF THE ASSESSEE TO PAY THE LOAN AMOUNT OF M/S. DRM NOR THE SAME WAS REQUIRED TO BE PAID FOR RELEASE OF LAND OR IMPR OVEMENT OR DEVELOPMENT OF LAND IN QUESTION. MOREOVER, THE LD. CIT(A) HAS POI NTED OUT THAT THE DIRECTORS OF THE M/S. DRM AND THE ASSESSEE WAS CLOSELY RELATE D AND THE AFFAIRS OF BOTH THE COMPANIES WERE ACTUALLY MANAGED BY ONE PERSON I .E. SHRI S.R. MUNDRA AND THAT IT WAS JUST A LOAN TRANSACTION BETWEEN M/S. DR M AND THE ASSESSEE. WHATSOEVER MAY BE NATURE OF TRANSACTION, WE FIND TH AT THE INCURRING OF THE EXPENDITURE NEITHER WAS FOR THE DEVELOPMENT OF THE LAND NOR WAS FOR THE IMPROVEMENT OF THE COST OF LAND NOR THE SAME WAS IN ANY WAY LIABILITY OF THE ASSESSEE. THIS CLAIM OF THE ASSESSEE IS THEREFORE R EJECTED. 22. IN VIEW OF OUR FINDINGS GIVEN ABOVE, GROUND NOS .1 & 5 OF THE ASSESSEES APPEAL ARE DISMISSED WHEREAS GROUND NO. 2, 3 & 4 AR E DECIDED AS PER THE OBSERVATIONS AND DIRECTIONS GIVEN ABOVE. 23. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HE REBY TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03.02.2016. SD/- SD/- (N.K. BILLAIYA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 03.02.2016. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT ITA NO.5032/M/2012 M/S. TROIKA ESTATES PVT. LTD. 17 THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.