ITO, Ward 3(1), Pune V. Kailash B Wani, Pune

ITA 858/PUN/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93831 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 15-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASEEM SHARMA
• Keywords: Capital asset; Business income; Business expenditure; Corroborative evidences; Commercial expediency
• Section: 133A; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO. 858/PN/2013 (ASSESSMENT YEAR : 2008-09) ITO, WARD-3(1), PUNE .. APPELLANT VS. KAILASH B. WANI, 925/A, TRIKAYA HOUSE, DINDAYAL HOSPITAL LANE, F.C. ROAD, PUNE 411 005 .. RESPONDENT PAN NO.ACPW9291M APPELLANT BY : SHRI NIKHIL PATHAK & SHRI SUHAS P. BORA DEPARTMENT BY : SHRI ASEEM SHARMA DATE OF HEARING : 26-05-2015 DATE OF PRONOUNCEMENT : 30-06-2015 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 27-11-2012 OF THE CIT(A)-II, PUNE RELATING TO ASSESSMENT YEAR 2008-09. 2. GROUNDS OF APPEAL NO. 1 TO 3 BY THE REVENUE READ AS UNDER : (1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN DELETING THE RECEIPT OF RS.3 CRORES THROUGH SHRI.SANJ AY NEMICHAND LOHADE WITHOUT APPRECIATING THE FACT THAT OUT OF LA ND OF 41 ARES, 9 ARES LAND BELONGED TO THE ASSESSEE AND FOR THE BALANCE 3 2 ARES THE ASSESSEE HAD ENTERED INTO MEMORANDUM OF UNDERSTANDING (M OU) WITH SHRI.PRADEEP DORJE IN THE YEAR 2000 AND THE MO U FOR THE ENTIRE 41 ARES HAS BEEN SIGNED BY THE ASSESSEE AS CONSENTING PARTY, THE SELLERS BEING THE KADAM FAMILY MEMBERS AND THE PUR CHASER BEING M/S.FULLMOON HOUSING PVT. LTD. (2) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN FAILING TO APPRECIATE THE FACT THAT THE PAYMENT OF RS.3 CRORES HAS BEEN MADE TO SHRI.SANJAY NEMICHAND LOHADE ON BEHALF OR AT THE INSTANCE OF THE ASSESSEE AS IT IS THE ASSESSEE WHO HAS ENTERED INTO MOU DATED 16.05.2007 WITH FULLMOON HOUSING PVT. LTD. AND 2 SHRI.SANJAY NEMICHAND LOHADE WAS ONLY THE CONSTITUTED ATTORNEY ON BEHALF OF SHRI.DORJE FOR WITHDRAWING THE CIVIL SU IT. (3) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN FAILING TO APPRECIATE THAT EXCEPT THE PAYMENT MADE TO THE MEMBERS OF KADAM FAMILY AS LAND OWNERS, THE REMAINING PAYMENT OUGHT TO HAVE COME IN THE HANDS OF THE ASSESSEE AND NOT ANY OTHER PERSON AND AS SUCH, OUT OF TOTAL CONSIDERATION OF MOU OF RS.9, 26,46,600/- AFTER DEDUCTING RS.3,40,00,000/- PAID TO THE LAND OW NERS, THE REMAINING AMOUNT HAS BEEN RECEIVED BY ASSESSEE EITHER O N BEHALF OF OR AT THE INSTANCE OF THE ASSESSEE. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND ENGAGED IN THE BUSINESS OF TRADING IN LAND AND PROPERTY DEVELOPMENT. HE FILED HIS RETURN OF INCOME ON 25- 09- 2008 DECLARING TOTAL INCOME OF RS.3,14,36,020/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NO TED THAT A SURVEY ACTION U/S.133A OF THE I.T. ACT WAS CONDU CTED ON 12-03-2008 ON THE ASSESSEE AND HIS STATEMENT ON OATH WAS ALSO RECORDED. DURING THE COURSE OF SURVEY AN MOU WAS IMPOU NDED ALONG WITH A LOOSE PAPER U/S.133A(3) (IA) OF THE I.T. ACT. AS PER THE MOU AND BASED ON THE STATEMENT RECORDED THE ASS ESSEE HAD OFFERED AN ADDITIONAL INCOME OF RS.2,11,46,600/- AND AS PER ON E PAPER IMPOUNDED AS PER BUNDLE NO.6, ADDITIONAL AMOUNT OF RS.39 LAKHS WAS ALSO DISCLOSED. FURTHER, FOR OMISSION OR ERR OR AN AMOUNT OF RS.42,214/- WAS ALSO OFFERED FOR TAX IN THE STATEMENT RECORDED OF THE ASSESSEE ON 12-03-2008. TH US, THE TOTAL DISCLOSURE OF RS.2,58,88,814/- WAS MADE BY THE ASSESSEE IN THE STATEMENT RECORDED. THE ASSESSEE WHILE HONOURING T HE DISCLOSURE OF SUCH AMOUNT OF RS.2,11,46,600/- AND RS.39,00,000/-, HOWEVER, DID NOT OFFER THE AMOUNT OF RS.42,214/- WHICH WAS ON ACCOUNT OF ANY OMISSION OR ERROR . THE AO MADE ADDITION OF THIS AMOUNT WHICH WAS ACCEPTED B Y THE ASSESSEE BEFORE CIT(A) AND THEREFORE WE ARE NOT CONCER NED WITH THE ABOVE ADDITION. 3 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED FROM THE MOU, WHICH WAS IMPOUNDE D DURING THE COURSE OF SURVEY ON 12-03-2008, THAT THE S AME IS DATED 16-05-2007 AND IT IS BETWEEN M/S. FULL MOON HOUSING PVT. LTD. THROUGH THEIR DIRECTORS SHRI ARVIND PREMCHAND J AIN AND SHRI SHRAWAN DEVAKINANDAN AGARWAL ON ONE SIDE AS PURCHASER AND THE ASSESSEE AS THE PARTY OF 2 ND PART AS THE SELLER. AS PER THE MOU LAND ADMEASURING 41 ARES IS TO BE PURCH ASED BY M/S. FULL MOON HOUSING PVT. LTD. FOR A TOTAL CONSIDERATION OF RS.9,26,46,600/-. AS PER THE MOU, THE AMOUNT OF RS. 9,26,46,600/- IS TO BE GIVEN TO THE ASSESSEE WHICH IS INCLUS IVE OF THE FOLLOWING : 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 AO THEREFORE ASKED THE ASSESSEE TO EXPLAIN WITH SU PPORTING EVIDENCES ABOUT THE PAYMENTS MADE TO OTHERS BY ASSES SEE OR ELSE TO EXPLAIN WHY THE ENTIRE AMOUNT SHOULD NOT BE ADDED TO THE INCOME OF THE ASSESSEE. 4.1 THE ASSESSEE SUBMITTED THAT SMT. SULABHA SATAM HAD ASSIGNED HER RIGHTS IN THE PROPERTY ADMEASURING 09 ARES TO ASSESSEE FOR A CONSIDERATION OF RS.31,50,000/-. THE MONEY HAS BEEN PAID TO THE VARIOUS PARTIES AS PER THE MOU AND HE HAS CORRECTLY OFFERED TO TAX THE CASH RECEIVED BY HIM OF AN AMOUNT OF RS.2,11,46,600/- WHICH WAS DECLARED BY HIM DURING THE COURS E OF SURVEY. 4 5. HOWEVER, THE AO WAS NOT SATISFIED WITH THE ABOVE EXPLANATION OF THE ASSESSEE. HE OBSERVED THAT THE MOU DATED 16-05-2007 EXECUTED BETWEEN M/S. FULL MOON HOUSING PVT. LTD, THE PURCHASER AND THE ASSESSEE AS THE SELLER WHEREBY THE PURCHASER AGREED TO PURCHASE 41 ARES OF LAND AT S.NO 5 /1-A FOR A TOTAL CONSIDERATION OF RS. 9,26,46,600/- IN THE FOLLOWING MANNER: SL.NO. AMOUNT PARTICULARS 1 RS. 3,40,00,000/- TO KADAM SISTERS (ORIGINAL OWNERS OF THE LAND) 2 RS. 25,00,000/- FOR EXPENSES AS STAMP DUTY ETC. 3 RS. 50,00,000/- TO SHRI. KAILASH B WANI, THE APPELLANT/ AS COMPENSATION) 4 RS. 3,00,00,000/- TO SHRI. SANJAY N LOHADE (FOR SURRENDERING RIGHTS) 5 RS. 2,11,46.600/- TO BE PAID TO THE ASSESSEE IN CASH RS. 9,26,46,600/- TOTAL 5.1 THE ASSESSING OFFICER FURTHER NOTED THAT DURING THE ASSESSMENT PROCEEDINGS IN ORDER TO EXAMINE THE VERACITY OF THE MOU DATED 16-05-2007 THE STATEMENT OF THE PERSONS M ENTIONED IN THE SAID MOU INCLUDING SHRI SANJAY N. LOHADE, WHO WAS SHOWN TO HAVE BEEN PAID RS. 3 CRORES BY THE PURCHASER WERE RECORDED. WHILE THE GENUINENESS AND PROPRIETY OF THE PAY MENTS TO VARIOUS PERSONS WERE ACCEPTABLE, THE AO NOTED THAT THE PAYMENT MADE TO MR. SANJAY N LOHADE OF RS. 3 CRORES W AS DOUBTFUL. THE ASSESSING OFFICER HELD THAT THE MONEY OF RS. 3 CRORES PAID TO MR. LOHADE BELONG TO THE ASSESSEE AND THE PURCHASER M/S. FULL MOON HOUSING PVT. LTD PAID THE AMOUN T ON BEHALF OF THE ASSESSEE. THE ASSESSING OFFICER ALSO NOTED THA T THE ASSESSEE HELD ALL THE RIGHTS IN RESPECT OF THE LAND SOLD A S PER MOU DATED 16-05-2007 TO M/S FULL MOON HOUSING PVT. LTD AND 5 THAT SHRI. LOHADE HAD NOT CONTRIBUTED IN ANY WAY IN THE NEGOTIATION OF THE DEAL EXCEPT FOR WITHDRAWING THE COURT S UIT NO. 1006/1996. THE ASSESSING OFFICER WHILE DISALLOWING THE PAYMEN T OF RS.3,00,00,000/- TO MR. LOHADE ASSIGNED THE FOLLOWING REASONS AS PER PARA 7.6 TO 7.8 OF THE ASSESSMENT ORDER WHICH HAS BEEN SUMMARIZED BY CIT(A) AT PAGE 17 OF THE APPEAL ORDER AS UNDER : '1) THE ASSESSEE BY MOU DATED 16/05/2007 AGREED TO TRANSFER S. NO. 5/1A ADMEASURING 41 ARES TO M/S. FULL MOON HOUSING PVT. LTD FOR AGGREGATE CONSIDERATION OF RS. 9,26,43,600/-. 2) THERE WAS SPECIAL POWER OF ATTORNEY EXECUTED B Y PRADEEP DHORJE ON 16/07/2001 IN FAVOUR OF SHRI. SANJAY LOHA DE CONSTITUTING HIM AS HIS ATTORNEY FOR CIVIL SUIT NO. 1006/1996. AS PER ASSESSING OFFICER HIS APPOINTMENT WAS MADE A T THE BEHEST OF THE ASSESSEE. 3) THE MOU SIGNED BY THE ASSESSEE, SHRI. PRADEEP D HORJE, SHRI SANJAY N LOHADE ON 16/07/2001 DID NOT MENTION ANY A MOUNT TO BE PAID TO SHRI. SANJAY LOHADE EITHER BY PRADEEP DH ORJE OR THE ASSESSEE. 4) AS PER THE STATEMENT RECORDED U/S. 131 ON 18/1 1/2010 SHRI. SANJAY N LOHADE HAS STATED THAT HE WAS TO RECEIVE R S. 5 LACS FROM THE ASSESSEE FOR SOME KIND OF SERVICES DONE BY HIM, RELATING TO REQUIREMENT OF PMC. ALBEIT, MENTION OF THIS IS NOT FOUND ANYWHERE IN ANY DOCUMENT 5) THE ASSESSEE BROUGHT SHRI. SANJAY LOHADE INTO THE PICTURE TO DEAL WITH THE CIVIL SUIT BEARING 1006/96 FILED BY S HRI. PRADEEP DHORJE AGAINST THE LAND OWNERS. 6) THE SAID SANJAY LOHADE ONLY FILED DOCUMENTS, A PPLICATIONS FOR WITHDRAWING THE SAID CIVIL SUITS FROM THE COURT. 7) SHRI. SANJAY LOHADE STATED THAT IN THE ENTIRE D EAL OF TRANSFER OF LAND TO M/S. FULL MOON HOUSING PVT. LTD. HE HAS NO T SIGNED ANY OF THE DOCUMENTS. 8) IN THE YEAR 2001 WHEN SHRI PRADEEP DHORJE SIGNED THE POWER OF ATTORNEY IN FAVOUR OF SANJAY LOHADE THERE WAS NO RIGHT CREATED IN FAVOUR OF SHRI. SANJAY LOHADE. NEITHE R THERE IS ANY MENTION ABOUT THE CONSIDERATION TO BE PAID TO HIM. 9) EVEN IN THE TRANSFER OF LAND, HIS ROLE IS ONLY L IMITED TO WITHDRAWING THE CIVIL SUIT FROM THE COURT IN TERMS OF SPECIAL POWERS OF ATTORNEY AND EXCEPT THAT SAID LOHADE HAS DONE NOTHING.' 6. BEFORE THE CIT(A) THE ASSESSEE SUBMITTED THAT MR. PRA DEEP KUMAR DHORJE HAD INITIALLY I.E. VIDE AGREEMENT ON 1-10-1995 AGREED TO PURCHASE THE ENTIRE LAND OF 81 ARES AT S.NO 5 /1A AS 6 WELL AS LAND MEASURING 80 AREA AT S.NO.5/1B TOTALLING TO 16 1 ARES FROM THE ORIGINAL LAND OWNERS NAMELY KADAM SISTERS/FAMILY. HOWEVER, DESPITE THE EXISTING AGREEMENT, TH E KADAM SISTERS/FAMILY SOLD 80 ARES OF LAND OF BOTH THE AFOR ESAID SURVEY NOS. TO 8 DIFFERENT BUYERS EACH ONE BUYING 10 AR ES. IT WAS SUBMITTED THAT MR. PRADEEP DHORJE HELD THE DEAL TO BE ILLEGAL BECAUSE OF THE EXISTING MOU DATED 01-10-1995, BEING IN HIS FAVOUR AND SINCE KADAM FAMILY COULD NOT HAVE EXECUTED TH E SALE DEED ON 08-12-1995, THEREFORE, MR. DHORJE FILED THE SUIT NO 1006/1996 AGAINST THE KADAM FAMILY AND THE EIGHT BUYERS . IT WAS FURTHER SUBMITTED THAT ON 18-08-1999 A SETTLEMENT WAS ARRIVED AT BETWEEN MR. DHORJE AND THE EIGHT BUYERS WH O TOGETHER PURCHASED LAND AT S.NO 5/1-B TOTALING TO 80 ARES BY WHIC H DHORJE GAVE HIS RIGHT OF SPECIFIC PERFORMANCE WITH RESPECT TO THE 80 ARES OF LAND. HOWEVER, THE CIVIL SUIT WITH RESPECT TO TH E REMAINING LAND AT S.NO 5/1A-81 ARES CONTINUED. DURING THE PENDENCY OF THE SPECIAL SUIT, MR. DHORJE AGREED TO SELL 32 ARES OF LAND AT S.NO 5/1A TO THE ASSESSEE ON 11-10-2000 FOR RS . 6,00,000/- AND IN THE SAME MOU ALSO TRANSFERRED THE RIGHT IN RESPECT OF THE SPECIAL SUIT. THEREAFTER, ON 16-07-2001, MR . DHORJE EXECUTED MOU WITH THE ASSESSEE AND MR.SANJAY LOHADE AND THE POWER OF ATTORNEY IN FAVOUR OF MR.SANJAY LOHAD E BY WHICH MENTION TO THE EFFECT THAT MR.SANJAY LOHADE AGREE D TO OBTAIN DEVELOPMENT RIGHTS AND TO PURCHASE THE SAID LAND AT SR. NO 5/1A FROM THE KADAM FAMILY EITHER IN HIS OWN NAME OR IN THE NAMES OF THE NOMINEES AND THE ASSESSEE ALSO AGREED FOR THE TRANSACTION TO BE ENTERED INTO BY THE SAID KADAM FAMILY WITH MR.SANJAY N. LOHADE FOR THE SAID LAND AND MR. LOHADE WAS ALSO GIVEN SPECIFIC POWER OF ATTORNEY ON 16-07-2001 ITSELF. THU S, THE ASSESSEE AFTER PURCHASING 32 ARES FROM MR. DHORJE ON 11 -10- 7 2000 PURCHASED 9 ARES OUT OF THE 81 ARES OF S.NO.51/1A FROM SMT.SATAM SULBHA ON 11-08-2005 FOR TOTAL CONSIDERATION O F RS.31,50,000/- AND ALSO EXECUTED DEVELOPMENT AGREEMENT. THUS, THE ENTIRE LAND OF 41 ARES WAS THE SUBJECT MATTER OF CIVIL SUIT NO 1006/1996 AND WITHOUT ITS SETTLEMENT THE ASSESS EE COULD NOT HAVE SOLD THE LAND AND THE KADAM FAMILY WERE SERIOUSLY CONTESTING THE CIVIL SUIT. THE ASSESSEE AS WELL AS MR. DHORJE FOUND THEMSELVES INCAPABLE TO CONTINUE WITH THE LEG AL BATTLE WHICH WAS CONSUMING BOTH TIME AND MONEY AND THUS OUT OF BUSINESS PRUDENCE MR. SANJAY LOHADE WAS BROUGHT INTO THE MATTER WHO ASSURED TO DO EVERYTHING NECESSARY INCLUDIN G ATTENDING THE COMPLICATED LITIGATION AND ALSO OBTAINED THE DEVELOPMENT RIGHTS IN RESPECT OF THE LAND UNDER SUIT. IT WAS IN SUCH A SITUATION THAT THE ASSESSEE AND MR. PRADEEP DHO RJE EXECUTED THE POWER OF ATTORNEY AS WELL AS MOU DATED 1 6-07- 2001 BY WHICH MR. LOHADE ACQUIRED CONTROL OVER THE CIVIL SUIT AS WELL AS THE LAND INVOLVED IN THE SUIT. THE ASSESSEE SUBMITT ED THAT IN DUE COURSE AFTER A PERIOD OF 6 YEARS DUE TO MR. LOHADE'S PERSISTENT EFFORTS HE COULD BRING THE KADAM FAMILY TO AMICA BLE SETTLEMENT IN THE YEAR 2007 AND THE ASSESSEE AGREED T O ENTER INTO THE MOU DATED 16-05-2007 AND ACCORDINGLY MR. LOH ADE AGREED TO GIVE UP HIS RIGHT OF OBTAINING THE DEVELOPMENT AGREEMENT. IT WAS SUBMITTED THAT IN VIEW OF THE AFORESAID FACT AND CIRCUMSTANCES THAT THE PURCHASER M/S. FULL MOON HOU SING PVT. LTD AGREED TO PAY THE NECESSARY COMPENSATION OF R S. 3 CRORES TO MR. SANJAY LOHADE AND, THEREFORE, THE ASSESS ING OFFICER'S OBSERVATION THAT THE PAYMENT BEING MADE TO MR. LOHADE AT THE BEHEST OF THE ASSESSEE IS FACTUALLY NOT CORRECT. IT WAS FURTHER CONTENDED THAT THE ASSESSING OFFICER'S NOTING THA T MR. SANJAY LOHADE DID NOT ENJOY OR HAD ANY RIGHT IN THE PR OPERTY 8 TRANSACTED AND EVENTUALLY SOLD THE SAME TO M/S. FULL MOO N HOUSING PVT. LTD. IS NOT CORRECT. IT WAS EXPLAINED THAT AS SESSING OFFICER'S OBSERVATION THAT MR. LOHADE HAD NO LOCUS STAND! IS EQUALLY INCORRECT AND WRONG AS MR. LOHADE WAS GIVEN NOT ONLY THE POWER OF ATTORNEY BUT ALSO THE RIGHT TO OBTAIN THE DEVELOPMENT AGREEMENT AND PURCHASE THE LAND IN HIS NAME . IT WAS SUBMITTED THAT MR. LOHADE BESIDES HAVING THE RIGHT IN THE PROPERTY THOUGH NOT IN PRESENTEE BUT ON ATTAINING AND GETTING THE CIVIL SUIT CONCLUDED WHICH TOOK SIX YEARS TO SETTLE TH E ISSUE AND IT WAS THIS CONTRIBUTION OF MR. LOHADE WHICH WAS EVALUA TED BY THE PURCHASER WHO INDEPENDENTLY ON ITS OWN AGREED TO PAY RS. 3 CRORES AT ITS OWN BEHEST APART FROM THE AMOUNT O F RS.3,40,00,000/- TO THE KADAM FAMILY AND THE BALANCE TO T HE ASSESSEE. IT WAS SUBMITTED THAT IN THE STATEMENT RECOR DED U/S 131 BY THE ASSESSING OFFICER, MR. LOHADE HAD SPONTANEOUS LY ADMITTED TO HAVE RECEIVED RS. 3 CRORES FROM THE PURCHAS ER AND THAT THE SAME HAD BEEN SHOWN AS ADVANCE IN HIS BOOKS OF ACCOUNT. IT WAS EMPHASIZED THAT THE ASSESSING OFFICER HAD ERRONEOUSLY INTERPRETED THE ANSWER GIVEN BY THE DIRECT OR OF FULL MOON HOUSING PVT. LTD, MR. ARVIND JAIN TO SUGGEST THAT W HATEVER THE PAYMENTS MADE BY HIM WAS AT THE INSTANCE OF THE A SSESSEE. IN FACT THE CORRECT INTERPRETATION SHOULD HAVE BEEN THA T THE ASSESSEE BEING THE VENDOR HAD TO SELL THE LAND WHICH WAS IN FACT NOT REGISTERED IN HIS NAME AS TITLE HOLDER AND THE ASSESS EE WAS ALSO FULLY AWARE OF THE INTEREST OF THE KADAM FAMILY AS WELL AS MR.LOHADE AND, THEREFORE, THE ASSESSEE HAD TO AGREE FOR PAYMENT OF SUCH PURCHASE CONSIDERATION TO THE ORIGINAL LAND OWNERS I.E. THE KADAM FAMILY AND TO MR. LOHADE WHO HAD VESTED INTE REST IN THE PROPERTY BECAUSE OF THE CIRCUMSTANCES OF THE CASE. IT WAS CONTENDED THAT THE ASSESSING OFFICER HAS ACCEPTED THE P AYMENT 9 OF RS. 3,40,00,000/- MADE TO THE KADAM FAMILY WHO WAS ALSO STATED TO HAVE BEEN GIVEN AT THE BEHEST OF THE ASSESS EE AND THE SAME ANSWER GIVEN IN THE CASE OF PAYMENT TO MR. LOHADE HAS BEEN ERRONEOUSLY INTERPRETED BY THE ASSESSING OFFICER. TH E ASSESSEE DREW THE ATTENTION OF CIT(A) TO THE MOU BETWE EN THE ASSESSEE AND FULL MOON HOUSING PVT. LTD WHICH WAS FOUND DURING THE COURSE OF SURVEY WHICH ALSO INCLUDED PAYMENT OF RS.2,11,46,600/- WHICH WAS NOT REFLECTED IN THE FINAL SALE AGREEMENT, WHICH THE ASSESSING OFFICER HAS TAXED IN THE HA NDS OF THE ASSESSEE ON THE BASIS OF THE AFORESAID MOU AND CONSIDERED THE SAME AS TRUE AND GENUINE. THE ASSESSEE DREW ATTENTION OF LD.CIT(A) TO PARA 2 OF THE MOU WHICH INDICATED THAT THE ASSESSEE AND MR. DHORJE HAD ASSIGNED ALL THEIR RIGHTS , TITLE AND INTEREST TO MR.SANJAY LOHADE VIDE THE MOU DATED 1 6-07- 2001 ALONG WITH THE RIGHTS AND POWERS OF CIVIL SUIT NO. 1066/1996. IT WAS ACCORDINGLY CONTENDED THAT MR. LOHAD E HAS THUS SOME RIGHT IN THE PROPERTY WHICH GOT ULTIMATELY TRA NSFERRED TO THE PURCHASER FULL MOON HOUSING PVT. LTD AND AS PER CLAUSE 3 OF THE MOU, IT IS CLEARLY MENTIONED THAT THE ASSESSEE W OULD BE RESPONSIBLE TO PAY THE AMOUNT TO MR. LOHADE FOR WITHDRA WING THE CIVIL SUIT ALONG WITH HIS RIGHTS, TITLE IN THE PROPERTY AN D ACCORDINGLY OUT OF THE TOTAL CONSIDERATION OF RS. 9,26,46,600 /- IT WAS AGREED THAT RS. 3 CRORES WOULD BE PAID TO MR. LOHA DE. ACCORDINGLY THE PURCHASER PAID THE AFORESAID AMOUNT DIRE CTLY TO MR. LOHADE. THE ASSESSEE ACCORDINGLY REQUESTED THE CIT(A) TO DELETE THE ADDITION. 7. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER : 10 5.2 THE FACTS BROUGHT ON RECORD INDICATE THAT A SURVEY ACTION U/S 133A WAS CARRIED OUT ON THE APPELLANT ON 12-3-2 008 WHEREIN THE MEMORANDUM OF UNDERSTANDING OR THE MOU DATED 16-05-2007 WAS FOUND AND IMPOUNDED. THE SAID MOU WA S EXECUTED BETWEEN FULL MOON HOUSING PVT LTD (FMHPL) AND THE APPELLANT, AND THE PURCHASER AND THE APPELLANT AS T HE SELLER OF 41 ARES OF LAND AT S.NO 5/1A FOR A TOTAL CONSIDERAT ION OF RS. 9,26,46,600/-, THE DETAILS OF WHICH ARE AS UNDER: 1. RS. 3,40,00,000/- TO KADAM SISTERS (ORIGINAL O WNERS) 2. RS. 25,00,000/- FOR EXPENSES AS STAMP DUTY 3. RS. 50,00,000/- TO SHRI. KAILASH B WANI ( A S MOBADLA) 4. RS. 3,00,00,000/- TO SHRI. SANJAY N LOHADE (FO R SURRENDERING RIGHTS) 5. RS. 2,11,46,600/- TO BE PAID TO THE ASSESSEE IN CASH RS. 9,26,46,600/- THE APPELLANT ON THE BASIS OF THE NOTINGS MADE IN T HE MOU WHICH INCLUDED PAYMENT IN CASH OFFERED AN ADDITIONA L INCOME OF RS. 2,11,46,600/- DURING THE SURVEY ACTION ALONG WI TH RS. 39 LACS BASED ON A LOOSE PAPER NO. 6. THE ASSESSING OF FICER HAS EXAMINED SHRI. SANJAY LOHADE TO WHOM PAYMENT OF RS. 3 CRORES WERE MADE AND SHRI. ARVIND JAIN, DIRECTOR OF FMHPL UNDER OATH U/S 131 RECORDED THEIR STATEMENTS. THE ASSESSING OF FICER ALSO EXAMINED THE KADAM SISTERS WHO WERE ALSO PAID AN AM OUNT OF RS.3,40,00,000/-. THE ASSESSING OFFICER HAS NOT QUE STIONED THE GENUINENESS OF THE PAYMENTS MADE TO THE PERSONS AGA INST WHOM THE AFORESAID AMOUNT HAD BEEN MENTIONED EXCEPT THAT OF SHRI. SANJAY N. LOHADE WHO WAS PAID RS. 3 CRORES BY THE P URCHASERS. THE ASSESSING OFFICER HELD THE AFORESAID PAYMENT LA WFULLY BELONGED TO THE APPELLANT AND THAT THE PURCHASERS H AD MADE THE PAYMENT ON BEHALF OF THE APPELLANT. THE ASSESSING OFFICER AFTER EXAMINING THE MOUS FOR THE SAID PROPERTY AND OTHER RELATED DOCUMENTS INFERRED THAT IN THE TRANSFER OF LAND, TH E ROLE OF SHRI LOHADE WAS LIMITED TO THE WITHDRAWAL OF THE CIVIL S UIT FROM THE COURT IN TERMS OF THE POWER OF ATTORNEY. THE FACT B ROUGHT ON RECORD DO INDICATE THE EXISTENCE OF LITIGATION FOR THE SAID PROPERTY AND WHICH HAS CONTINUED FOR A PRETTY LONG TIME OF N EARLY 12 YEARS DURING WHICH SEVERAL NEGOTIATIONS AND MOU'S WERE EX ECUTED BY SHRI. PRADEEP DHORJE AND THE APPELLANT, THROUGH WHI CH SANJAY N LOHADE WAS GIVEN THE POWER OF ATTORNEY AND ALSO THE DEVELOPMENT RIGHT BY SHRI. DHORJE AND THE APPELLANT . THE APPELLANT, IT APPEARS HAD AGREED TO THE INCLUSION O F SHRI. LOHADE SO AS TO SOLVE THE COMPLICATED LITIGATION ONGOING S INCE A FEW YEARS WITH KADAM FAMILY, THE OWNERS OF LAND. THE MOU DATE D 16-07- 2001 CLEARLY INDICATES THE IMPORTANCE OF THE ROLE O F SHRI. LOHADE SO AS TO BRING THE MATTER TO AN AMICABLE SETTLEMENT WHICH FINALLY TOOK PLACE IN 2007 WHEREIN THE MOU DATED 16-5-2007 WAS DRAWN AND WHICH WAS SUBSEQUENTLY IMPOUNDED DURING THE COU RSE OF THE SURVEY ACTION ON 12-03-2008. THE ASSESSING OFFICER IN ARRIVING AT THE CONCLUSION OF THE ROLE OF SHRI. LOHADE HAS RELI ED HEAVILY ON THE STATEMENTS RECORDED U/S 131 DURING THE ASSESSME NT PROCEEDINGS ON 19.11.2010 & 29.11.2010 OF SHRI. LOH ADE AND SHRI. ARVIND JAIN, THE DIRECTOR OF THE COMPANY FULL MOON HOUSING PVT. LTD THE PURCHASER. THE RESPONSIBILITIE S FIXED UPON SHRI. LOHADE COULD NOT BE TOTALLY DISREGARDED IN TH E GIVEN FACTS OF THE CASE. THE MOU DATED 16-7-2001 HAS NOT BEEN CONS IDERED BY THE ASSESSING OFFICER AND HAS NOT EXAMINED THE SAME DURING THE ASSESSMENT PROCEEDINGS AS SHRI. LOHADE HAD BEEN GIV EN THE RIGHT TO OBTAIN THE DEVELOPMENT AGREEMENT AND PURCHASE OF THE SAID LAND IN HIS NAME APART FROM ATTENDING THE LITIGATIO N INVOLVED IN CIVIL SUIT NO. 1006/1996 AT HIS OWN COST AND RESPON SIBILITY, THUS THE OBSERVATION OF THE ASSESSING OFFICER THAT SHRI. LOHADE HAD NO 11 LOCUS STANDI IS FACTUALLY NOT CORRECT. THE PURCHASER I.E. FULL M OON HOUSING PVT. LTD WAS ALSO FULLY AWARE OF THE FACTS OF THE CASE BEFORE THE MOU DATED 16-05-2007 WAS EXECUTED. IN TH E STATEMENT RECORDED U/S 131 OF SHRI. ARVIND JAIN, TH E DIRECTOR OF THE PURCHASER COMPANY BEFORE THE ASSESSING OFFICER, IT HAS NEVER DENIED REGARDING THE PAYMENT TO SHRI. SANJAY N LOHA DE RATHER REFERENCE TO THE NEGOTIATION FOR THE SETTLEMENT OF THE AMOUNT TO BE PAID TO SHRI.LOHADE HAS BEEN MENTIONED AS SHRI. LOHADE WAS EXPECTING AN AMOUNT OF RS.4 CRORES AND THE SAME WAS SETTLED AT RS. 3 CRORES. THE REFERENCE OF Q. NO. 26 OF THE STA TEMENT OF ARVIND JAIN, THE DIRECTOR OF FMHPL, THE PURCHASERS SUGGESTS THAT THE PAYMENT MADE BY THEM WERE AT THE INSTANCE OF THE APPELLANT WHICH HAS ERRONEOUSLY BEEN INTERPRETED BY THE ASSESSING OFFICER TO BE MADE ON BEHALF OR THE APPEL LANT. THE OTHER ANSWERS GIVEN BY SHRI. JAIN CLEARLY INDICATES THE INVOLVEMENT OF THE APPELLANT IN THE SAID TRANSACTIO N AND ALSO THE ROLE OF THE OTHER PERSONS HAVE BEEN HIGHLIGHTED BY THE PURCHASER. THIS IS NOT A CASE WHERE THE PURCHASER WAS NOT AWAR E OF THE ROLE OF DIFFERENT PERSONS CONNECTED WITH THE LAND SUCH A S THE INTEREST OF THE KADAM FAMILY AND ALSO THAT OF SANJAY LOHADE. THUS THE INFERENCE DRAWN BY THE ASSESSING OFFICER THAT THE P AYMENT TO SHRI. LOHADE WAS MADE AT THE BEHEST OF THE APPELLAN T IS APPARENTLY NOT CORRECT. THE AFORESAID LAND WHICH IS THE SUBJECT MATTER OF THE ISSUE INVOLVED HAD A HISTORY WHICH HA S NOT BEEN LOOKED INTO AND CONSIDERED BY THE ASSESSING OFFICER WHILE DRAWING THE INFERENCE REGARDING SHRI LOHADE. THE FA CT ON RECORD DO INDICATE THAT SHRI. LOHADE HAD INTEREST IN THE P ROPERTY AND IN CLAUSE 3 OF THE MOU DATED 16-7-2001 IT IS CLEARLY M ENTIONED THAT THE APPELLANT COULD BE RESPONSIBLE TO PAY TO SHRI. LOHADE FOR WITHDRAWAL OF THE CIVIL SUIT AND THE RIGHTS / TITLE IN THE SAID PROPERTY. IT IS ALSO RELEVANT TO POINT OUT THE FACT THAT THE MOU DATED 16-5-2007 FOUND DURING THE COURSE OF SURVEY A CTION U/S 133A HAS FORMED THE BASIS OF THE DECLARATION OF ADD ITIONAL INCOME BY THE APPELLANT, THE RECEIPT OF WHICH WAS N OT RECORDED IN THE FINAL SALE AGREEMENT. THE PURCHASER M/S FMHPL H AS MADE THE PAYMENT TO SHRI. LOHADE BY WAY OF CHEQUE ON DIF FERENT DATES AND WHICH HAD ALSO BEEN CONFIRMED BY SHRI. LOHADE D URING THE ASSESSMENT PROCEEDINGS. MOREOVER, THE ASSESSING OFF ICER HAS ALSO ACCEPTED THE CONTENTS OF THE MOU AS TRUE AND C ORRECT FOR MAKING THE ADDITION AND ALSO THE PAYMENT TO OTHER R ELATED PERSONS TO THE TRANSACTION EXCEPT THE PAYMENT MADE TO SHRI. LOHADE HELD AS FOR NON-BUSINESS CONSIDERATION IS AP PARENTLY' NOT CORRECT IN VIEW OF THE FACT AND CIRCUMSTANCES OF TH E CASE. 5.3 DURING THE ASSESSMENT PROCEEDINGS OF SHRI. SANJ AY LOHADE, THE ASSESSING OFFICER IN VIEW OF THE DIRECT ION OF THE ADDL. CIT, AHMEDNAGAR RANGE U/S 144A HELD THE AFORE SAID AMOUNT OF RS. 3 CRORES TO BE TAXABLE AS BROKERAGE O R COMMISSION IN THE HANDS OF SHRI. LOHADE AND THUS, T HE ROLE OF SHRI. LOHADE INTHE TRANSACTION HAS NOT BEEN DENIED. IN THE APPEAL PREFERRED BY SHRI. LOHADE BEFORE THE CIT(A)- I PUNE, IN ITS APPELLATE ORDER DATED 02-11-2012, THE LD. CIT HAS U PHELD THE ADDITION .MADE BY THE ASSESSING OFFICER TREATING TH E RECEIPTS OF THE AMOUNT OF RS. 3 CRORES AS TAXABLE AND TREATED A S EARNINGS FROM COMMISSION AND BROKERAGE BY THE ASSESSING OFFI CER. THUS, THE CONTENTION OF THE APPELLANT HAS CONSIDERABLE FO RCE THAT THE FACTUAL POINTS STATED IN THE MOU FOUND DURING SURVE Y, THE A.O. HAS ACCEPTED THE CONTENTS AS TRUE AND CORRECT FOR M AKING THE ADDITION OF RS. 2,11,46,600/- AND WHEN THE MOU IS C ONSIDERED TO BE TRUE AND GENUINE, TO HOLD THE PAYMENT OF SHRI LOHADE TO BE FOR NON-BUSINESS CONSIDERATION IS TOTALLY INCORR ECT. THE DOCUMENT FOUND DURING SURVEY HAS TO BE CONSIDERED A S A WHOLE AND THOSE FACTS WHICH FAVOUR THE APPELLANT CANNOT B E TOTALLY IGNORED AND THE NOTINGS ON THE DOCUMENT CANNOT BE O VERLOOKED. 12 THE FACTS BROUGHT ON RECORD DO INDICATE THAT THE PU RCHASER, FMHPL AFTER EVALUATING THE INTEREST IN THE LANDS OF SHRI LOHADE AND AFTER NEGOTIATING FOR THE AMOUNT, PAID THE AMOU NT ON THEIR OWN BEHEST AS AGAINST THE SAME HELD TO BE PAID ON B EHALF OF THE APPELLANT. IN ANY CASE THE ENTIRE AMOUNT HAS BEEN T AXED IN THE CASE OF SHRI LOHADE AS DISCUSSED ABOVE. 5.4 IN VIEW OF THE ABOVE FACTS THE ADDITION MADE BY THE ASSESSING OFFICER IS DIRECTED TO BE DELETED AND GRO UND OF APPEAL NO. 3 IS LIABLE TO BE ALLOWED. 8. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 9. THE LD. DEPARTMENTAL REPRESENTATIVE HEAVILY RELIED ON THE ORDER OF THE AO. 10. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND WHILE HEAVILY RELYING ON THE ORDER OF CIT(A) SUBMITTED THAT TH E KADAM FAMILY, THE ORIGINAL LAND OWNERS WERE THE OWNERS OF 161 AR ES OF LAND. THEY ENTERED INTO AN MOU WITH MR.PRADEEP DHORJE ON 01- 10-1995 WHO AGREED TO PURCHASE THE ENTIRE LAND OF 81 A RES SITUATED AT SURVEY NO.5/1 AS WELL AS ENTIRE LAND OF 80 ARE S SITUATED AT SURVEY NO.5/1B ARES TOTALING TO 161 ARES FRO M THE KADAM FAMILY. INSPITE OF THIS EXISTING AGREEMENT THE MEMBE RS OF THE KADAM FAMILY SOLD 80 ARES OF LAND ON SURVEY NO.5-1/ B ON 08-12-2005 TO 8 DIFFERENT BUYERS EACH ONE BUYING 10 ARE S. MR.PRADEEP DHORJE FILED A CIVIL SUIT BEARING NO.1006/1996 AGAINST THE KADAM FAMILY AS WELL AS THOSE 8 BUYERS FOR S PECIFIC PERFORMANCE ON THE BASIS OF MOU DATED 01-10-1995 AS ACCORDING TO HIM THE DEAL WAS ILLEGAL IN VIEW OF THE MOU DAT ED 01-10-95 AND THE KADAM FAMILY COULD NOT HAVE EXECUTED THE SALE DEEDS ON 08-01-1995. THEREAFTER ON 18-08-1999 ON THE BASIS OF MOU A SETTLEMENT WAS ARRIVED BETWEEN PRADEEP DHORJE AND 8 BUYERS WHO TOGETHER HAD PURCHASED THE LAND AT SURVEY NO.5/1B TOTALING TO 80 AREA BY WHICH MR.PRADEEP DHORJE GAVE 13 UP HIS RIGHT OF SPECIFIC PERFORMANCE IN RESPECT OF SAID LAND IN SURVEY NO. 5/1B ADMEASURING 80 ARES. THE CIVIL SUIT HOWE VER CONTINUED WITH RESPECT TO THE REMAINING LAND AT SURVEY NO. 5/1A, I.E. 81 ARES. IN THE EXISTENCE OF THIS SPECIAL SUIT MR . PRADEEP DHORJE AGREED TO SELL 32 ARES OF THE SAID LAND IN SURVEY NO5/1A TO THE RESPONDENT ON 11-10-2000 FOR RS. 6 LAKHS AND IN THE SAME MOU HE ALSO TRANSFERRED HIS RIGHT IN RESPECT OF THE CIVIL SUIT 1006/1996 IN FAVOUR OF THE RESPONDENT. IN DUE COU RSE ON 16-07-2001 MR. PRADEEP DHORJE EXECUTED MOU WITH THE RESPONDENT AND MR. SANJAY LOHADE AND ALSO THE POWER OF ATTORNEY IN FAVOUR OF SANJAY LOHADE. AS PER MOU AT PAR A 9 ON PAGE 4 THERE IS A MENTION TO THE EFFECT THAT THE RESPON DENT AND SANJAY LOHADE AS WELL AS KADAM FAMILY HAD MADE THE NEGOTIATIONS UNDER WHICH SANJAY LOHADE AGREED TO OBTAIN THE DEVELOPMENT RIGHTS AND/OR TO PURCHASE THE SAID LAND AT SURVEY NO.5/1A FROM THE KADAM FAILY EITHER IN HIS OWN NAME OR IN T HE NAME OF HIS NOMINEES. MR. PRADEEP DHORJE ACCORDED HIS CONSENT AND AGREED TO EXECUTE THE REQUIRED DEEDS AND DOCUMENTS AS MAY BE NECESSARY FOR MR.SANJAY LOHADE IN RESPECT OF SAID LAND AT SURVEY NO.5/1A. THE RESPONDENT ALSO AGREED FOR THE TRANSACTIONS TO BE ENTERED INTO BY THE SAID KADAM FAMILY WITH MR.SANJAY N. LOHADE FOR THE SAID LAND. IN ADDITIO N TO THIS MOU, MR. SANJAY LOHADE HAS ALSO BEEN GIVEN THE SPE CIFIC POWER OF ATTORNEY ON 16/07/2001 I.E. ON THE SAME DATE. IN DUE COURSE SAID MR. SANJAY LOHADE DID EVERYTHING NECES SARY IN THE MATTER IN NEGOTIATING THE LAND DEAL AS WELL AS AGREED TO WITHDRAW THE SAID SPECIAL CIVIL SUIT NO. 1006/1996 WITHOUT WHICH FURTHER FINALIZATION OF DEAL WOULD NOT HAVE NOT BEEN POSSIBLE. THE RESPONDENT HAD PURCHASED 9 ARES OUT OF 8 1 ARES OF S. NO. 5/1A FROM SMT. SATAM SULBHA ON 11/8/2005 AND 14 ALSO EXECUTED DEVELOPMENT AGREEMENT WITH THE SAID SMT. SULBHA SATAM ON 08/05/2006, FOR THE AGREED CONSIDERATION OF RS.31,50,000/-. THE RESPONDENT ALSO PURCHASED 32 ARES FR OM MR. PRADEEP DHORJE ON 11/10/2000 AS STATED EARLIER. I T IS THIS ENTIRE LAND OF 41 ARES WHICH WAS THE SUBJECT MATTER OF C IVIL SUIT NO. 1006/1996. IN ORDER TO SELL THIS LAND OF 41 ARES IT WAS NECESSARY TO HAVE THE SETTLEMENT OF THE SAID CIVIL SUIT NO . 1006/1996. THE ORIGINAL LAND OWNERS I.E. KADAM FAMILIES WERE THE MAIN HURDLE OR OBSTACLE WHO WERE HOSTILE AND SERIOUSL Y CONTESTING THE CIVIL SUIT. 11. MR. PRADEEP DHORJE AND THE RESPONDENT FOUND THEMS ELVES INCAPABLE TO CONTINUE WITH THIS LEGAL BATTLE ALMOST ENDLESSLY FOR A LONG TIME AND FROM THE VIEW POINT OF THE ASSESSEE HE HAD TO PAY A LOT OF TOLL BOTH IN MONETARY TERMS AND LOSS OF BUSINESS. IT WAS THEREFORE PURELY OUT OF BUSINESS PRUDENCY THE RESPONDE NT AND MR. PRADEEP DHORJE HAD TO BRING IN MR. SANJAY LOHADE W HO ASSURED TO DO EVERYTHING NECESSARY FOR ATTENDING THE C OMPLICATED LITIGATION I.E. CIVIL SUIT NO. 1006/1996 INCLUDING TO DEAL WITH T HE ORIGINAL LAND OWNERS I.E. KADAM FAMILY. MR. SANJAY LOHADE HAD ALSO AGREED TO OBTAIN THE DEVELOPMENT RIGHT IN RESPECT OF THE LAND UNDER SUIT. THE RESPONDENT AND MR. PRADEEP DHORJE AC CORDINGLY EXECUTED POWER OF ATTORNEY AS WELL AS MOU ON 16/07/200 1 BY WHICH MR. SANJAY LOHADE VIRTUALLY ACQUIRED IRREVOCABLE CO NTROL OVER THE SAID CIVIL SUIT AS WELL AS THE LAND INVOLVED IN THE S AID SUIT. IN DUE COURSE, I.E. AFTER A PERIOD OF 6 YEARS MR. SA NJAY LOHADE COULD BRING THE KADAM FAMILY TO AMICABLE SETTLEMENT IN THE YEAR 2007 AND SIMULTANEOUSLY RESPONDENT AGREED TO ENTER INTO MOU DATED 16/05/2007. MR. SANJAY LOHADE ACCORDING LY WITHDREW THE SAID CIVIL SUIT NO. 1006/1996. MR. SANJAY LOHA DE 15 ALSO AGREED TO GIVE UP HIS RIGHT OF OBTAINING DEVELOPMENT AGREEMENT IN HIS FAVOUR AS AGREED BY THE RESPONDENT AN D MR. PRADEEP DHORJE AS PER MOU DATED 16/07/2001. 12. THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTIO N OF THE BENCH TO THE MOU DATED 16-05-2007 WHICH WAS FOUND DUR ING THE COURSE OF SURVEY ON 12-03-2008 WHICH SHOWS THE BIFU RCATION OF THE AMOUNT OF RS.9,26,46,600/-. AS PER THE BIFURCATION AN AMOUNT OF RS.3,40,00,000/- TO BE PAID TO KADAM SISTERS AND AN AMOUNT OF RS.25 LAKHS TOWARDS EXPENSES SUCH AS STAMP D UTY, RS.50 LAKHS TO MR.KAILASH N. WANI, I.E. THE ASSESSEE TOWAR DS COMPENSATION, RS. 3 CRORES TO MR. SANJAY NEMICHAND LOH ADE FOR SURRENDERING RIGHT AND AN AMOUNT OF RS.2,11,46,600/- TO TH E ASSESSEE IN SHAPE OF CASH. HE SUBMITTED THAT THE ASSE SSEE HAS OFFERED THE CASH COMPONENT OF RS.2,11,46,600/-. THE FIRST 3 ITEMS ARE ACCEPTED BY THE AO. THE ONLY DISPUTE IS REGA RDING THE AMOUNT OF RS.3 CRORES PAID TO MR. SANJAY NEMICHAND LOH ADE FOR SURRENDERING HIS RIGHTS. HE SUBMITTED THAT THE ASSES SEE SOLD THE LAND TO M/S. FULL MOON HOUSING PVT. LTD. WHO WANTED TO PURCHASE THE PLOT FREE OF ANY DEFECT. THEREFORE, IT WAS THE PURCHASER WHO ITSELF HAS DECIDED THE TERMS OF PAYMENT INCLUDING THE AMOUNT TO BE PAID TO KADAM FAMILY, MR.SANJAY LOHADE AND TO THE ASSESSEE. HE SUBMITTED THAT THE OB SERVATION OF THE AO THAT MR.SANJAY LOHADE HAD NO LOCUS STANDI IS COMPLETELY WRONG BECAUSE HE WAS GIVEN NOT ONLY THE PO WER OF ATTORNEY BUT WAS ALSO GIVEN THE RIGHT TO OBTAIN THE DEV ELOPMENT AGREEMENT AND PURCHASE THE SAID LAND IN HIS NAME. THE A O COMPLETELY IGNORED THE CIVIL SUIT PENDING VIDE CIVIL SUIT NO.1006/1996. SINCE SANJAY LOHADE HAS EFFECTIVE CONTROL O VER THE ENTIRE LITIGATION AS WELL AS THE LAND AND SINCE THE RESP ONDENT 16 COULD NOT HAVE ENTERED INTO MOU WITH M/S. FULL MOON HOUSIN G PVT. LTD. AND SINCE ALL THOSE COMPLICATED ISSUES INVOLVED IN T HE CIVIL SUIT INCLUDING BRINGING THE KADAM FAMILY TO THE SETTLEMEN T TERMS ARE FINALLY SET AT REST, THEREFORE, IT IS INCORRECT T O SAY THAT THE AMOUNT OF RS.3 CRORES PAID TO SANJAY LOHADE WAS A T THE INSTANCE OF THE ASSESSEE. 12.1 HE SUBMITTED THAT EVEN IF THE INCOME IS TREATED AS BUSINESS INCOME, THEN ALSO EXPENDITURE OF RS.3 CRORES WILL B E ALLOWED AS EXPENDITURE U/S.37(1) OF THE I.T. ACT TOWARDS FURTHERANCE OF BUSINESS. 12.2 REFERRING TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SALES MAGNESITE PVT. LTD. RE PORTED IN 214 ITR 1 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HELD THAT THE PAYMENT OF COMPENSATION B Y THE ASSESSEE TO ITS ERSTWHILE SOLE SELLING AGENT FOR LOSS OF THE SOLE SELLING AGENCY WAS AN ALLOWABLE DEDUCTION U/S.37 OF THE I.T. ACT. HE SUBMITTED THAT THE AO HAS ACCEPTED THE CONTENTS O F THE MOU FOUND DURING THE COURSE OF SURVEY AS TRUE AND CORRECT FOR MAKING THE ADDITION AND ALSO ALLOWED THE PAYMENT TO OTHER RELATED PERSONS TO THE TRANSACTION EXCEPT PAYMENT MAD E TO SANJAY LOHADE. HE SUBMITTED THAT THE AMOUNT OF RS.3 CR ORES HAS BEEN TAXED IN THE HANDS OF SANJAY LOHADE AS PER T HE DIRECTION OF THE ADDL.CIT, AHMEDNAGAR U/S.144. THE SAME HA S BEEN UPHELD BY THE CIT(A) VIDE APPEAL ORDER DATED 02-11- 2012. HE SUBMITTED THAT THE DOCUMENT FOUND DURING THE COURSE OF SURVEY HAS TO BE CONSIDERED AS A WHOLE AND THOSE POINT S WHICH FAVOUR THE ASSESSEE CANNOT BE TOTALLY IGNORED AND THE NOTINGS ON THE DOCUMENT CANNOT BE OVERLOOKED. FOR THE ABOVE PR OPOSITION HE RELIED ON THE DECISION OF THE PUNE BENCH OF THE TRIBUNA L IN 17 THE CASE OF CHANDER MOHAN MEHTA VS. ACIT REPORTED IN 7 1 ITD 245 WHERE IT HAS BEEN HELD THAT THE STATEMENT HAD TO BE CONSIDERED AND ACCEPTED AS A WHOLE AND REVENUE COULD N OT BE PERMITTED TO USE THAT PART OF STATEMENT WHICH WAS BENE FICIAL TO IT AND REJECT THE OTHER PART OF STATEMENT WHICH WAS DE TRIMENTAL TO IT. THE LD. COUNSEL FOR THE ASSESSEE ALSO RELIED ON TH E FOLLOWING DECISIONS : I. AHMED G.H. ARIFF VS. CWT (1970) REPORTED IN 76 IT R 471 (SC) II. PANDIT LAKSHMI-KANT JHA VS. CWT REPORTED IN (1973 ) 90 ITR 97 (SC) III. CIT VS. TATA SERVICES LTD. REPORTED IN (1980) 12 2 ITR 594 (BOM.) IV. CIT VS. STERLING INVESTMENT CORPORATION LTD. REPO RTED IN (1980) 123 ITR 441 ( BOM.) V. CWT VS. ASHOKKUMAR RAMANLAL REPORTED IN (1967) 63 ITR 133 (GUJ.) HE ACCORDINGLY SUBMITTED THAT THE ORDER OF LD.CIT(A) BEING IN ACCORDANCE WITH LAW HAS TO BE UPHELD AND THE GROUNDS B Y THE REVENUE SHOULD BE DISMISSED. 13. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND T HE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HA VE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND IN THE INSTANT CASE A SURVEY ACTION U/S.133A OF THE I.T. ACT WA S CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE DURIN G WHICH AN MOU DATED 16-05-2007 WAS IMPOUNDED. AS PER T HE SAID MOU LAND ADMEASURING 41 ARES IS TO BE PURCHASED BY M/S. FULL MOON HOUSING PVT. LTD. FOR A TOTAL CONSIDERATION OF RS.9,26,46,600/- FROM THE ASSESSEE. THE BIFURCATION OF PAYME NT OF RS.9,26,46,600/- IS AS UNDER : 18 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 OTHER 4 ITEMS ARE CONCERNED THE AO ACCE PTED THE ITEMS 1, 2 AND 3 ABOVE AS GENUINE WHILE HE DOUBTED THE A MOUNT OF RS.3 CRORES PAID TO MR. SANJAY NEMICHAND LOHADE FOR SURRENDERING HIS RIGHTS. WHILE DOING SO, THE AO WAS OF THE OPINION THAT THE AMOUNT OF RS. 3 CRORES WAS PAID TO SHRI LOHADE AT THE BEHEST OF THE ASSESSEE AND IN FACT THIS MONEY BE LONGS TO THE ASSESSEE. FURTHER ACCORDING TO THE AO MR. SANJAY NEMICHAND LOHADE DID NOT ENJOY OR HAD ANY RIGHT IN THE PROPERTY TRANSACTED WHICH WAS EVENTUALLY SOLD TO M/S. FULL MOON HOUSING PVT. LTD. ACCORDING TO THE AO IN THE TRAN SFER OF LAND THE ROLE OF MR. SANJAY N. LOHADE WAS 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 MR. SANJAY N. LOHADE HAD NO LOCUS STANDI AND HE HAD NO EFFECTIVE C ONTROL OVER THE ENTIRE LITIGATION AS WELL AS THE LAND. IN VIEW OF TH E ABOVE AND IN VIEW OF THE REASONINGS GIVEN IN THE PRECEDING PARAG RAPHS THE AO ADDED THE AMOUNT OF RS.3 CRORES IN THE HANDS OF THE ASSESSEE. 19 13.1 WE FIND THE LD.CIT(A) DELETED THE ADDITION ON THE GRO UND THAT THE AO HAD ERRONEOUSLY INTERPRETED THE MOU AS W ELL AS THE STATEMENTS OF MR. ARVIND JAIN, DIRECTOR OF M/S. FULL MOON HOUSING PVT. LTD., I.E. THE PURCHASER AND THE STATEMENT G IVEN BY MR. SANJAY N. LOHADE. 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. SANJA Y N. LOHADE AS FOR NON BUSINESS CONSIDERATION. FURTHER, THE C IT(A) ALSO OBSERVED THAT THE AMOUNT OF RS. 3 CRORES RECEIVED BY MR. SANJAY N. 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 D OCUMENT 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 THE CIT(A) DELETING THE ADDITION. AS MENTIONED EARLIER, THE MOU WAS FOU ND DURING THE COURSE OF SURVEY. OUT OF THE 5 ENTRIES TOTALLIN G TO RS.9,26,46,600/- THE AMOUNT OF RS.2,11,46,600/- RECEIVED BY THE ASSESSEE IN CASH WAS OFFERED BY HIM AS ADDITIONAL INCO ME DURING THE COURSE OF SURVEY. THE ASSESSEE HAS HONOURE D THIS AND INCLUDED THE SAME IN HIS RETURN OF INCOME. THE IST 3 ITEMS ARE ACCEPTED BY THE AO AS GENUINE, THEREFORE, WE FAIL TO UNDERSTAND AS TO HOW AND WHY THE AMOUNT OF RS. 3 CORE S 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 ACCOUN T PAYEE CHEQUE AND THE AMOUNT HAS BEEN TAXED AS BROKERAGE/COMMISSION INCOME IN THE HANDS OF MR. SANJAY N. 20 LOHADE AS PER THE DIRECTION OF THE ADDL.CIT AND UPHELD B Y THE CIT(A). 13.3 WE FIND CLAUSE 9 OF THE MOU DATED 16-07-2001 READS AS UNDER WHERE PARTY NO.3 IS MR. SANJAY N. LOHADE AND PART Y NO.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 S ECOND PART AND SAID KADAM OF THE THIRD PART AND ACCORDINGLY, T HE PARTY NO.3 DECIDED TO OBTAIN DEVELOPMENT RIGHTS AND/OR PU RCHASE THE SAID PLOT-A FROM SAID KADAM, EITHER IN HIS NAME OR IN THE NAMES OF HIS NOMINEES, AT THE SOLE DISCRETION OF TH E PARTY NO.3. 13.4 WE FURTHER FIND THAT MR. ARVIND JAIN, DIRECTOR OF M/S. FU LL MOON HOUSING PVT. LTD. IN HIS STATEMENT RECORDED U/S.131 ON OATH ON 29-11-2010 IN HIS REPLY TO QUESTION NO.25 RECOR DED U/S.131 ON 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 DETAILS 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 WITHDRAW 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 DOCUMEN TS REQUIRED FOR TRANSFER OF SUCH PROPERTY TO MR. DORJE. ACCORDIN GLY, MR. DORJE HAD FILED THE CIVIL SUIT AGAINST THE PROPERTY OWNERS. Q.22 THE PROPERTY IN QUESTION FINALLY HAS BEEN PURCHA SED BY FOOLMOON HOUSING PVT. LTD. PLEASE STATE AS TO WHAT YOU HAVE RECEIVED FROM FOOLMOON HOUSING PVT. LTD. AND THE MOD E OF RECEIPT OF MONEY BY YOU? 21 ANS. RS.3 CRORES RECEIVED BY ACCOUNT PAYEE CROSSED CHEQU E. 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 PROCEEDINGS OF SUMMONS A COMPUTATION SHEET HAS BEEN FILED WHICH IS SHOWI NG SALE CONSIDERATION OF RS.3 CRORES OF THE LAND IN QUESTION AN D EXEMPTION OF U/S.54F HAS BEEN CLAIMED OF RS.3.25 CRORES. YOU MA Y EXPLAIN WITH ANY SUPPORTING EVIDENCES, THAT AT THE FIRST PLACE WHEN THE PROPERTY WAS NOT BELONGING TO YOU, HOW THE MONEY REC EIVED IS SHOWN AS SALE CONSIDERATION, IN WHICH YOU ONLY HAD WIT HDRAWN CIVIL SUIT IN THE NAME OF SHRI DORJE? ALSO PROVIDE COPY OF THE AFFIDAVIT FILED BEFORE THE CIVIL COURT, WITHDRAWING THE CIVIL SUIT AND COPY OF ANY OTHER DOCUMENT, DEED WHICH YOU MAY HAVE SIGNED I N 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 NO PORTION OF IT HAS BEEN OFFERED TO TAX TILL DATE. TH E COMPUTATION SHEET FILED IS MY INTENTION TO REVISE THE RETURN AND T O OFFER THE MONEY 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 PRODU CE COPY OF SUCH DOCUMENT? ANS. NO AND NEVER. 13.6 THE ABOVE REPLIES CLEARLY AND CATEGORICALLY POINT ON E THING THAT THE LAND IN QUESTION WAS NOT FREE FROM LITIGATION AND C IVIL 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 AMOU NT PAID THE AMOUNT OF RS.3 CRORES ON THEIR BEHALF AND NOT O N BEHALF OF THE ASSESSEE. IT WAS THE PURCHASE WHO ITSELF DECIDED THE TERMS OF PAYMENT INCLUDING THE AMOUNT TO BE PAID TO KAD AM FAMILY, MR. SANJAY N. LOHADE AND TO THE RESPONDENT AND THEREFORE THE AOS OBSERVATION THAT THE SAID PURCHASER MADE THE PAYMENT TO MR. SANJAY N. LOHADE AT THE BEHEST OF THE 22 RESPONDENT, IN OUR OPINION, IS INCORRECT. FURTHER, IN VIEW OF THE ABOVE FACTS, THE OBSERVATION OF THE AO THAT MR. SANJAY N . LOHADE HAD NO LOCUS STANDI IS ALSO INCORRECT SINCE MR. SANJAY N. L OHADE WAS GIVEN NOT ONLY POWER OF ATTORNEY BUT WAS ALSO GIVEN THE RIGHT TO OBTAIN THE DEVELOPMENT AGREEMENT AND PURCHASE THE SAID LAND IN HIS NAME AND FOR THAT PURPOSE THE ENTIRE LITIGATION INVOLV ED IN CIVIL SUIT NO.1006/1996 WAS ALSO REQUIRED TO BE ATTENDED B Y HIM AT HIS OWN COST AND RESPONSIBILITY. 13.7 IN CASE OF TRANSACTIONS IN IMMOVABLE PROPERTIES THE PURCHASER WILL ALWAYS TRY TO BUY THE PROPERTY FREE OF LITIG ATION. WHEN THE LAND IN QUESTION IS NOT FREE FROM LITIGATION AND A C IVIL SUIT IS PENDING, A FACT NOT DISPUTED BY THE AO HIMSELF, THERE FORE, 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. 13.8 FURTHER, MR. SANJAY N. LOHADE VIDE HIS LETTER DATED 2 0-10- 2010 ADDRESSED TO THE ADDL.CIT RANGE-3, PUNE HAS STATE D THAT HE HAS RECEIVED AN AMOUNT OF RS.3 CRORES ON VARIOUS DAT ES BY CHEQUE FOR RELEASING ALL RIGHTS AND FOR WITHDRAWING THE CIVIL SPECIAL COURT SUIT 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 : 23 1. THAT I HAVE RECEIVED RS.3,00,00,00.00 BY ACCOUNT PAYEE CHEQUE FROM M/S. FOOLMOON HOUSING PVT. LTD., DETAILS O F 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 NO.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 CIT VS . SALES MAGNESITE PVT. LTD. HAS HELD THAT TO DECIDE WHETHER THE EXPENDITURE IS INCURRED FOR THE PURPOSE OF THE BUSINESS A ND ALLOWABLE AS DEDUCTION U/S.37 OF THE I.T. ACT, IT IS NOT ESS ENTIAL THAT IT SHOULD BE NECESSARY, LEGALLY OR OTHERWISE, TO INCUR THE SAME OR THAT IT SHOULD DIRECTLY AND IMMEDIATELY BENEFIT T HE BUSINESS OF THE ASSESSEE. EVEN EXPENDITURE INCURRED VOLU NTARILY ON THE GROUND OF COMMERCIAL EXPEDIENCY AND IN ORDER INDIRE CTLY TO FACILITATE THE CARRYING ON OF THE BUSINESS WOULD BE DEDU CTIBLE U/S.37. THE QUESTION WHETHER IT WAS NECESSARY FOR COMME RCIAL EXPEDIENCY OR NOT IS A QUESTION THAT HAS TO BE DECIDED FROM THE POINT OF VIEW OF THE BUSINESSMAN AND NOT BY THE SUBJECT IVE STANDARD OF REASONABLENESS OF THE REVENUE. THE QUESTION MUST BE VIEWED IN THE LARGER CONTEXT OF BUSINESS INTEREST OR COMMERCIAL EXPEDIENCY. NO ABSTRACT OR PEDANTIC VIEW CAN BE TAKEN IN THE MATTER. IN THE INSTANT CASE, THE ASSESSEE IS ENGAGED 24 IN THE BUSINESS OF TRADING IN LAND AND PROPERTY DEVELOPMEN T. NO BUYER WILL BUY ANY PROPERTY WHEN THE PROPERTY IN QUESTIO N IS DISPUTED. IT IS ALSO THE RESPONSIBILITY OF THE SELLER TO SELL THE PROPERTY FREE OF LITIGATION FROM ANY ENCUMBRANCE. THEREFOR E, EVEN IF THE AMOUNT OF RS.3 CRORES WOULD HAVE BEEN PAID B Y THE ASSESSEE TO MR. SANJAY N. LOHADE FOR GIVING FREE AND PEAC EFUL POSSESSION OF THE LAND TO M/S. FULL MOON HOUSING PVT. LTD. T HE 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. F ULL MOON HOUSING PVT. LTD. AT THE INSTANCE OF THE ASSESSEE O R THE ASSESSEE HAS PAID DIRECTLY TO MR. SANJAY N. LOHADE FROM T HE TOTAL CONSIDERATION. AS MENTIONED EARLIER IN THE PRECEDING PARAGRAPHS, THE MOU WAS IMPOUNDED, THEREFORE, THE CONTEN TS 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 CORRECT AND THE OTHER PART AS INCORRECT. SINCE THE DOCUMENT IM POUNDED FROM THE PREMISES OF THE ASSESSEE SHOWS PAYMENT OF RS. 3 CORES TO MR. SANJAY N. LOHADE WHICH HAS BEEN ASSESSED IN HIS H ANDS AS COMMISSION INCOME AND 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 CRORES FROM THE HANDS OF THE ASSESSEE. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAILED REASONINGS GIVEN BY THE CIT(A) WHILE DELETING THE ADDITION WE FIND NO INFIRMITY IN HIS ORDER AND THEREFORE, UPHOLD THE SAME. GROUNDS OF APPEAL NO. 1 TO 3 BY THE REVENUE ARE ACCORD INGLY DISMISSED. 25 14. GROUND OF APPEAL NO.4 BY THE REVENUE READS AS UNDER : (4) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN DELETING RS.4,90,000/- THOUGH THE ASSESSEE COULD EXPLAIN THE EXPENSES OF RS.20,10,000/- OUT OF TOTAL EXPENSES OF RS.25 LACS IN THE COURSE OF ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS. 15. FACTS OF THE CASE, IN BRIEF, ARE THAT DURING THE ASS ESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT THE PURCHAS ER M/S.FMHPL HAD PAID RS. 25 LAKHS TO THE ASSESSEE FOR INCU RRING THE EXPENDITURE FOR REGISTRATION, STAMP ETC. THE ASSESSING OFFICER SOUGHT THE DETAILS OF THE EXPENSES INCURRED WITH SUPPORT ING EVIDENCE. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSES SEE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE'S DOCUMENT S OF REGISTRATION OF LAND AS PER INDEX II SHOWED AN AMOUNT O F REGISTRATION FEE TO THE TUNE OF 17 LAKHS AND RS. 2.5 LAKHS AND REGISTRATION CHARGES OF RS. 30,000/- FOR TWO REGISTRATIONS, WHICH TOTALLED TO RS. 20,10,000/-. FOR BALANCE AMOUNT OF RS.4,90,000/ - THE ASSESSEE DID NOT OFFER ANY EXPLANATION . THE ASSESSING OFFICER THEREFORE HELD THE SAME TO BE UNSPENT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 16. BEFORE CIT(A) THE ASSESSEE SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS VIDE LETTER DATED 28-10-2010 TH E DETAILS OF THE EXPENDITURE INCURRED ON STAMPS, REGISTRATION ETC., WERE SUBMITTED THE DETAILS OF WHICH ARE AS UNDER : PARTICULARS AMOUNT (IN RS.) SIDDHARTH RAAJAGADIA DOCUMENT FRANKING 2,50,010 SIDDHARTH RAAJAGADIA'S DOCUMENT REGISTRATION 30,000 MOHIT ASTEKAR'S DOCUMENT FRANKING 5,40,628 SUDHIR YEOLE'S DOCUMENT REGISTRATION 5,94,691 SUNIL WANI'S DOCUMENT REGISTRATION FRANKING 5,94,691 ABOVE THREE DOCUMENT REGISTRATION DD 30,000 FHPL'S DOCUMENT REGISTRATION FRANKING 4,15,010 FHPL'S DOCUMENT REGISTRATION DD 30,000 OTHER EXP. (LEGAL FEES) 14,970 26 TOTAL EXPENSES OF REGISTRATION 25,00,000 THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER ON TH E BASIS OF SOME INFORMATION WHICH IS UNKNOWN TO THE ASSESSEE HELD THAT THE ASSESSEE HAD INCURRED EXPENDITURE OF RS.20,10,000/- ONLY AND ADDED THE BALANCE AMOUNT OF RS. 4,10,000/- TO THE TO TAL INCOME. 17. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE , THE LD.CIT(A) DELETED THE ADDITION. WHILE DOING SO HE OBSERVED T HAT THE ASSESSING OFFICER DID NOT EXAMINE THE DETAILS DURING THE ASSESSMENT PROCEEDINGS WHICH WERE FILED BY THE ASSESSEE NOR CARRIED OUT ANY ENQUIRY BEFORE MAKING THE AFORESAID ADDITIO N. THE DETAILS WHICH WERE SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER CLEARLY INDICATE THE NATURE OF EXPENSES AND ALSO PROVES THE INCURRENCE OF EXPENDITURE. 18. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 19. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES. FROM PAGE 35 OF THE PAPER BOOK WE FIND THE ASSES SEE HAS GIVEN THE DETAILS OF EXPENDITURE OF RS.25,00,000/- THE DETAILS OF WHICH ARE ALREADY GIVEN ABOVE AT PARA 16. IT IS NOT K NOWN FROM WHERE THE ASSESSING OFFICER HAD TAKEN THE FIGURE OF RS.4,10,000/-. WE FIND EXCEPT THE OTHER EXPENSES/LEGAL FEES OF RS.14,970/- THE BALANCE EXPENSES ARE RELATED TO DOCUME NT FRANKING AND DOCUMENT REGISTRATION DEMAND DRAFT. THE LEGA L EXPENSES OF RS.14,970/- IS VERY NOMINAL CONSIDERING THE TRANSACTIONS IN QUESTION. WE THEREFORE, DO NOT FIND ANY INFIR MITY 27 IN THE ORDER OF THE CIT(A) DELETING THE ADDITION OF RS.4,10,000 /-. THE GROUND RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 20. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 30-06-2015. SD/- SD/- (VIKAS AWASTHY) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE DATED: 30 TH JUNE, 2015 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-II, PUNE 4. CIT-II, PUNE 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE