Ambalal Sarabhai Enterprises Ltd., Baroda V. The Dy. Commissioner of Income Tax-1(1)(1), Baroda

ITA 953/AHD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8485 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 15-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset; Cost of acquisition; Fair market value
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. ITA NOS. 953 & 1314/AHD/2016 (ASSESSMENT YEAR : 2010-2011) AMBALAL SARABHAI ENTERPRISES LTD., WADI WADI, BARODA 390023 APPELLANT VS. DY. COMMISSIONER OF INCOME-TAX, CIRCLE 1(1)(1), VADODARA RESPONDENT/CROS S APPELLANT PAN: AABCA6893K /BY ASSESSEE : SHRI S. N. SOPARKAR & SHRI PARIN SHAH, A.R. /BY REVENUE : SHRI SANJAY AGARWAL, CIT. DR. /DATE OF HEARING : 12.09.2017 /DATE OF PRONOUNCEMENT : 13.09.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THE ASSESSEE AND REVENUE HAVE INSTITUTED THE INSTAN T CROSS APPEALS FOR ASSESSMENT YEAR 2010-11 AGAINST THE CIT(A)-1, V ADODARAS ORDER DATED 29.02.2016, IN CASE NO. CAB-1/59/14-15, IN PROCEED INGS U/S143(3) OF THE INCOME TAX ACT, 1961, IN SHORT THE ACT. ITA NOS. 953 & 1314/AHD/2016 (AMBALAL SARABHAI ENT ERPRISES LTD. VS. DCIT) A.Y. 2010-11 - 2 - 2. WE COME TO RIVAL PLEADINGS. THE ASSESSEE RAISES FOUR SUBSTANTIVE GROUNDS IN ITS APPEAL INTER ALIA AVERRING THAT THE CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN DISALLOWING RS.1,20,097/- @ 5% OF TOTAL EXPENDITURE CLAIM OF RS.29,46,561/-, IN REJECTING APPROVED GOVE RNMENT VALUERS REPORT ADOPTING FAIR MARKET VALUE OF THE CAPITAL ASSET SOL D AS ON 01.04.1981 THEREBY RESTRICTING THE SAID VALUATION FROM RS.2200 /- PER SQ.MTR. TO RS.550/- PER SQ.MTR. IN LOWER APPELLATE PROCEEDINGS AS WELL AS IN NOT ALLOWING ITS CLAIM OF HAVING PAID RETENTION MONEY/REFUND AMOUNT OF RS.2,33,98,605/- BACK TO THE VENDEE IN QUESTION AS EXPENDITURE U/S.4 8 OF THE ACT, IN UPHOLDING DISALLOWANCE OF SALARY AND WAGES PERTAINI NG TO EMPLOYEES OF PACKART PRESS UNIT AND IN HOLDING THAT SECTION 14A DISALLOWANCE OF RS.49,03,488/- IS TO BE ADDED FOR THE PURPOSE OF CO MPUTING BOOKS PROFITS; RESPECTIVELY. 3. THE REVENUES GRIEVANCE ALSO APPEARS TO HAVE BEE N PLEADED IN EQUAL NUMBER OF GROUNDS. IT CHALLENGES CORRECTNESS OF TH E LOWER APPELLATE ORDER INTER ALIA DELETING DISALLOWANCES/ADDITION OF EXPEN SES AGGREGATING TO RS.6,84,716/-, CAPITAL EXPENSES OF RS.4,91,318/- RE LATING TO REPLACEMENT OR MAJOR RENOVATION WORK, IN DIRECTING THE ASSESSING A UTHORITY TO ADOPT FMV OF ASSESSEES CAPITAL ASSET AS ON 01.04.1981 TO BE @ RS.550/- PER SQ.MTR. INSTEAD OF RS.250/- AND IN DELETING SECTION 14A R.W . RULE 8D DISALLOWANCE OF RS.49,03,488/-; AS MADE IN ASSESSMENT ORDER DATE D 28.03.2013. A COMBINED PERUSAL OF THE ABOVE PLEADINGS MAKES IT CLEAR THAT SOME OF THE ISSUES RAISED IN THE INSTANT CROSS APPEALS A RE COMMON. WE THEREFORE PROCEED TO DECIDE SUCH CORRESPONDING GROUNDS TOGETH ER IN SUCCEEDING PARAGRAPHS. 4. MR. SOPARKAR STATES AT THE OUTSET IN ASSESSEES APPEAL ITA NO.953/AHD/2016 THAT IT NO MORE WISHES TO PRESS FOR ITS FIRST SUBSTANTIVE ITA NOS. 953 & 1314/AHD/2016 (AMBALAL SARABHAI ENT ERPRISES LTD. VS. DCIT) A.Y. 2010-11 - 3 - GROUND SEEKING TO DELETE DISALLOWANCE OF RS.1,20,09 7/- @ 5% OF THE TOTAL OTHER EXPENSES (SUPRA). THE REVENUES CORRESPONDIN G SUBSTANTIVE GROUND ALSO RAISES THE VERY ISSUE SINCE SEEKING TO REVIVE THE ENTIRE DISALLOWANCE SUM OF RS.8,04,813/- INCLUDING TELEPHONE AND VEHICL E EXPENSES OF RS.6,84,716/-. THE CIT(A) ADMITTEDLY HAS FOLLOWED HIS PREDECESSORS ORDER IN ASSESSMENT YEAR 1998-99 IN RESTRICTING THE IMPUG NED DISALLOWANCE TO THAT @5%. THE REVENUE FAILS TO INDICATE ANY DISTINCTION ON FACTS IN THE TWO ASSESSMENT YEARS. WE THEREFORE UPHOLD THE CIT(A)S ORDER. BOTH PARTIES FAIL IN THEIR FIRST SUBSTANTIVE GROUND. 5. THE ASSESSEES SECOND SUBSTANTIVE GROUND AND REV ENUES THIRD SUBSTANTIVE GROUND RAISE FIRST COMPONENT OF FAIR MA RKET VALUE ISSUE AS ON 01.04.1981 QUA THE IMPUGNED CAPITAL ASSET SOLD IN T HE RELEVANT PREVIOUS YEAR. 6. THERE IS NO DISPUTE BETWEEN THE PARTIES THAT THE ASSESSEE SOLD A PART OF ITS FACTORY LAND ADMEASURING 7600SQ.MTR. OR 8180 0 SQ.FT. SITUATED AT WADIWADI, BARODA AS COMPRISED IN CITY SURVEY NO. 38 5/PART, RS NO.54/B. IT EXECUTED A REGISTERED CONVEYANCE DEED ON 12.04.2 009 FOR RS.33,53,80,000/-. ITS REGISTERED VALUER ADOPTED C OST OF ACQUISITION AS ON 01.04.1981 @ 2250 PER SQ.MTR. FOR 7600MTRS. THE AS SESSING OFFICER OBSERVED IN ASSESSMENT ORDER THAT THE VERY ISSUE HA D ARISEN BETWEEN THE PARTIES IN PROCEEDING ASSESSMENT YEAR(S) AS WELL WH EREIN HE HAD ADOPTED COST OF ACQUISITION TO BE RS.250/- PER SQ. MTR. FOR THE PURPOSE OF COMPUTING CONSEQUENTIAL CAPITAL GAINS. HE THEREFORE RECOMPUT ED ASSESSEES CAPITAL GAINS. THE CIT(A) GRANTS PART RELIEF TO ASSESSEE I N ENHANCING THE SAID COST OF ACQUISITION FROM RS.250/- PER SQ.MTR. TO RS.550/ - PER SQ.MTR. AS ON 01.04.1981. THIS LEAVES BOTH THE PARTIES AGGRIEVED TO THE EXTANT INDICATED HEREINABOVE. ITA NOS. 953 & 1314/AHD/2016 (AMBALAL SARABHAI ENT ERPRISES LTD. VS. DCIT) A.Y. 2010-11 - 4 - 7. WE HAVE HEARD BOTH SIDES. RELEVANT FINDINGS PER USED. THERE IS HARDLY ANY QUARREL THAT BOTH THE LOWER AUTHORITIES HAVE MADE IT CLEAR IN THEIR RESPECTIVE ORDERS THAT THE VERY ISSUE HAD ARISEN IN PRECEDING ASSESSMENT YEARS (SUPRA). MR. SOPARKAR AT THIS STAGE REFERS T O THIS TRIBUNALS ORDER IN ASSESSMENT YEAR 2008-09 AND 2009-10 PERTAINING TO A SSESSEES APPEAL ITSELF HAS DECIDED ON 11.04.2016 ADOPTING THE SAID COST OF ACQUISITION AS ON 01.04.1981 HAS TO BE RS.980/- PER SQ.MTR. BOTH PAR TIES FAIL TO INDICATE ANY DISTINGUISHING FACTS IN THE IMPUGNED ASSESSMENT YEA R. WE THEREFORE DIRECT THE ASSESSING OFFICER TO ADOPT COST OF ACQUISITION ON ASSESSEES CAPITAL ASSET AS ON 01.04.1981 @ RS.980/- PER SQ.MTR. TO BE FOLLO WED BY RE-COMPUTATION OF CAPITAL GAINS. THE ASSESSEE PARTLY SUCCEEDS IN ITS GRIEVANCE WHEREAS REVENUES CORRESPONDING SUBSTANTIVE GROUND IS DECLI NED. 8. NEXT COMPONENT IN ASSESSEES INSTANT SUBSTANTIVE GROUND PLEADS THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN DISALLOWIN G ITS REFUND MONEY OF RS.2,33,98,605/- PAID BACK TO ITS VENDEE ON 4/4/09 I.E. WITHIN TWO DAYS FROM BOTH SALE DEED AND MOU AS EXPENDITURE U/S.48 ( I) &(II) OF THE ACT. ITS CASE IS THAT IT HAD TO PAY THE SUM IN QUESTION BACK TO THE VENDEE AS PER TERMS OF AN MOU BETWEEN THEM DATED 02.04.2009. THE ASSESSEE PLEADED BEFORE ASSESSING OFFICER THAT THE SAID MOUS CONDIT IONS STIPULATED PAYMENT OF THE IMPUGNED SUM IN CASE THE LAND IN QUE STION WOULD NOT BE CONVERTED FROM INDUSTRIAL TO COMMERCIAL USE WITHIN A PERIOD OF 180 DAYS FROM THE DATE OF CONVEYANCE DEED EXECUTED ON 02.04. 2009. THE ASSESSEE THEREFORE CLAIMED TO HAVE PAID THE SUM IN QUESTION BACK TO THE PURCHASER. IT THEN ADOPTED THE BALANCE SALE PRICE OF RS.31,19,81, 395/- FOR THE PURPOSE OF COMPUTING CONSEQUENTIAL CAPITAL GAINS. IT FURTHER RAISED AN ALTERNATIVE CLAIM OF EXPENDITURE QUA THE IMPUGNED SUM IN CASE I TS EARLIER PLEA OF REDUCED SALE PRICE WAS NOT ACCEPTED. ITA NOS. 953 & 1314/AHD/2016 (AMBALAL SARABHAI ENT ERPRISES LTD. VS. DCIT) A.Y. 2010-11 - 5 - 9. THE ASSESSING OFFICER REJECTED THE ASSESSEES AB OVE CLAIM IN ASSESSMENT ORDER DATED 28.03.2013. HE OBSERVED THA T SALE PRICE OF RS.33,53,80,000/- WAS EXPRESSLY STATED IN THE REGIS TERED SALE DEED. THE REDUCED SALE PRICE PLEA TO THE ABOVE EFFECT WAS THE REFORE HOLD AS NOT ALLOWABLE. THE ASSESSING OFFICER FURTHER OBSERVED THAT NO SUCH CONVERSION OBLIGATION WAS THERE TO BE DISCHARGED ON ASSESSEES PART. HE QUOTED SECTION 48 OF THE ACT TO THE EFFECT THAT THE IMPUGN ED AMOUNT WAS NOT INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH THE CONVEYANCE DEED IN QUESTION. 10. THE CIT(A) AFFIRMS ASSESSING OFFICERS FINDINGS AS UNDER: 4.4.2. I HAVE CONSIDERED THE AO'S OBSERVATIONS, A PPELLANT'S SUBMISSIONS, THE AGREEMENT OF SALE DATED 28.07.2008, THE REGISTE R DEED FOR CONVEYANCE OF THE LAND DATED 02.04.2009 AND THE MOU REFERRED TO BY TH E APPELLANT DATED 02.04.2009. A PERUSAL OF THE AGREEMENT TO SALE SHOW S THAT THIS SAID LAND WAS SUBJECT MATTER OF THE COMPANY PETITION NO. 161 AND 184 OF 2007 BEFORE THE COMPANY LEW BOARD, PRINCIPAL BENCH, NEW DELHI. CO NSIDERING THE NEEDS OF THE COMPANY, THE COMPANY LAW BOARD PASSED AN ORDER ON 26,03.2008 ORDERING THE APPELLANT TO CONSTITUTE THE LAND SALE COMMITTEE FOR FORMULATING THE TENDER PROCEDURE AND INVITE OFFER FOR PARTIES FOR SALE OF SAID LAND. ACCORDINGLY, THE SALE COMMITTEE OF 5 PERSONS WAS FORMED TO FLOAT TH E TENDER AND VIDE TENDER DATED 16.05.2008, THE PURCHASER OF THE LAND QUOTED PRICE OF RS.33,53,80,000/-. THE APPELLANT COMPANY AGREED TO SELL THE LAND AT T HIS PRICE TO THE PURCHASER AFTER OBTAINING THE APPROVAL OF THE HON'BLE BOARD FOR THIS PURPOSE. SUBSEQUENTLY THE AGREEMENT TO SALE DATED 28.7 .2008 WAS SIGNED. CLAUSE NO. 9 OF THE AGREEMENT OF SALE STATES AS FOLLOWS: 'THE SAID LAND HAS BEEN AGREED TO BE SOLD FOR THE Z ONE FOR WHICH IT IS CLASSIFIED AS AT PRESENT. AY PROPOSED CHANGE USE BY THE PURCHASER FROM 'INDUSTRIAL' TO 'COMMERCIAL' OR ANY OTHER SHALL BE LIABILITY AND RESPONSIBILITY, OF THE PURCHASER, AND ANY PERMISSIO N FOR THE SALE TO BE OBTAINED FROM THE APPROPRIATE AUTHORITIES SHALL BE OBTAINED BY THE PURCHASER ONLY, AND ALL CAUSE, CHARGES AND EXPENSES IN CONNECTION THERE WITH SHALL BE BORNE AND PAID BY THE PURCHASER.' THUS, THE AGREEMENT TO SALE CLEARLY STATES THAT FOR THE CHANGE OF THE LAND FROM INDUSTRIAL TO COMMERCIAL, ENTIRE LIABILITY WAS ON THE PURCHASER AND THE APPELLANT WAS NOT AT ALL CONCERNED WITH THE SAME. 4.4.2.1. FURTHER TO THIS, THE DEED OF CONVEYANCE WA S EXECUTED ON 02.04.2009. THE DEED CLEARLY MENTIONS THAT THIS BEI NG EXECUTED FOR THE SALE CONSIDERATION OF RS.33,53,80,000/-. CLAUSE B OF THE SALE DEED ALSO STATES THAT THE ITA NOS. 953 & 1314/AHD/2016 (AMBALAL SARABHAI ENT ERPRISES LTD. VS. DCIT) A.Y. 2010-11 - 6 - REPRESENTATIONS MADE UNDER THE SAID AGREEMENT TO SA LE DATED 28.07.2008 ARE VALID& TRUE AND CORRECT AND ARE DEEMED TO BE REPEAT ED HEREIN. THUS, THE CONDITION INCORPORATED IN THE AGREEMENT TO SALE THA T ANY CHANGE FOR THE LAND USE HAS TO BE MADE BY THE PURCHASER ON ITS OWN COST HAS BEEN INCORPORATED IN THE CONVEYANCE DEED FOR SALE ALSO. THE CONVEYANCE DEED ALSO STATES THE SALE CONSIDERATION IS RS.33,53,80,000/-. THE DEED OF SAL E NOWHERE MENTIONS THAT A PART OF SUCH SALE CONSIDERATION WILL BE REFUNDED BY THE APPELLANT UNDER ANY CONDITION. THUS, THE SALE CONSIDERATION IN THIS CAS E IS RS.33,53,80,000/- ON WHICH CAPITAL GAIN IS REQUIRED TO BE COMPUTED. THE DEED OF CONVEYANCE ALSO SHOWS THAT THE ENTIRE CONSIDERATION HAS BEEN PAID B Y THE VENDEE TO THE VENDOR AND THE VENDOR HAS ALSO ACKNOWLEDGE FULL RECEIPTS A ND REALIZATION OF THE SAME IN THE MANNER AS NARRATED ON PAGE NO. 7 & 8 OF THE DEE D OF CONVEYANCE. THUS, THE ENTIRE AMOUNT HAD BEEN RECEIVED BY THE APPELLANT ON THE DATE OF EXECUTION OF SALE DEED ITSELF. 4.4.2.2. NOW, THE APPELLANT HAS CLAIMED THAT ANOTHE R MOU WAS EXECUTED ON 02.04.2009 AS PER WHICH THE APPELLANT COMPANY AG REED TO REFUND BACK CERTAIN PART OF THE SALE CONSIDERATION. THIS MOU ST ATES THAT THE PURCHASERS CAN MAKE APPLICATION FOR A REVISED NA AND IF IT IS NOT OBTAINED, IMMEDIATELY AN AMOUNT OF RS. 129992.25 SHALL BE REFUNDED BACK BY T HE APPELLANT TO BE COMPUTED PER DAY FOR THE DELAY IN OBTAINING REVISED NA PERMI SSION. IF THE REVISED NA PERMISSION IS DELAYED BEYOND 180 DAYS, THE ENTIRE R ETENTION AMOUNT OF RS. 2,33,98,605/- WOULD BE REFUNDED BACK. BUT, AGAIN TH E MOD ALSO STATES THAT THE ENTIRE RESPONSIBILITY TO OBTAIN REVISED PERMISSION OR APPLICATION OR OTHERWISE SHALL BE ON THE VENDEE. THUS, THIS MOU IS IN DIRE CT CONTRAVENTION TO THE AGREEMENT TO SALE ENTERED ON 28.07.2008 W HICH HAS BEEN FULLY INCORPORATED IN THE DEED OF CONVEYANCE MADE ON 02.0 4.2009. AS PER THESE LEGALLY EXECUTED DOCUMENTS, THE APPELLANT: WAS NOT AT ALL REQUIRED TO MAKE ANY EFFORT FOR REVISED LAND USE OF THE LAND AND THE ENTIRE RESPONSIBILITY WAS ON THE PURCHASER. THUS, BY ENTERING INTO THIS MOU, THE APP ELLANT HAS TAKEN OVER THE LIABILITY OF THE PURCHASER VOLUNTARILY. SUCH ACTI ON OF THE APPELLANT IS NOT AT ALL RELATED WITH THE SALE OF LAND AND IT HAS NOT BEEN I NCURRED IN RELATION TO THE TRANSFER OF THE' LAND TO THE PURCHASER. SUCH PAYMEN T MADE BY THE APPELLANT IS GRATUITOUS IN NATURE AND IS IN THE NATURE OF APPLIC ATION OF ITS INCOME. THIS IS ALSO ON ACCOUNT OF THE FACT THAT THE MOU STATES THAT THE APPELLANT COMPANY SHALL PAY TO AND DEPOSIT WITH THE VENDEE AN AMOUNT OF RS. 2,3 3,98,605 IN TRUST. SINCE THE MOU HAS BEEN SIGNED AFTER THE LAND HAS BEEN CONVEYE D TO THE PURCHASER, HENCE THIS AMOUNT IS NOT ON ACCOUNT OF DIVERSION OF INCOM E AT SOURCE. THE INCOME OF THE APPELLANT ACCRUED AS PER THE NARRATION MADE IN THE AGREEMENT TO SALE AND DEED OF CONVEYANCE. SUCH INCOME IS LIABLE FOR INCO ME TAX AND ANY .PAYMENT MADE BY THE APPELLANT AFTER RECEIPT OF THE INCOME A ND THAT TOO VOLUNTARILY AND AS A GRATUITOUS ACT CANNOT BE ALLOWED AS A DEDUCTION I N COMPUTATION OF INCOME OF THE APPELLANT. THE APPELLANT WAS UNDER NO OBLIGATI ON TO REFUND SUCH AMOUNT TO THE PURCHASER AS THE SALE CONSIDERATION HAD BEEN FIXED BY THE APPROVAL OF THE COMPANY LAW BOARD AND THE PURCHASER HAD ALSO AGREED TO SUCH SALE CONSIDERATION AS PER THE AGREEMENT TO SALE EXECUTED ON 28.07.2008 ITSELF, THE PURCHASER HAD ALSO PAID SUCH AMOUNT BEFORE THE EXEC UTION OF THE DEED OF CONVEYANCE AND THE DEED OF CONVEYANCE DID NOT HAVE ANY SUCH CONDITION FOR SALE. ITA NOS. 953 & 1314/AHD/2016 (AMBALAL SARABHAI ENT ERPRISES LTD. VS. DCIT) A.Y. 2010-11 - 7 - 4.4.2.3. THE SALE CONSIDERATION ACCRUING TO THE APP ELLANT IS BEING COMPUTED ON THE BASIS OF THE DEED OF CONVEYANCE AND ANY PAYMENT MADE BY THE APPELLANT FOR LIABILITY OF SOME OTHER PERSON IS NOT DEDUCTIBLE IN COMPUTATION OF ITS INCOME. FOR THIS RELIANCE IS PLACED UPON THE DECISION IN THE CASE OF 226 ITR 680(MAD), KUMUDAM PRINTERS PVT. LTD., IN WHICH HON'BLE MADRAS HIGH COURT HAS HELD AS FOLLOWS: 'THE LIABILITY TO PAY RS. 1.75 LAKHS WAS NOT THAT O F THE ASSESSEE- COMPANY AND THE ASSESSEE-COMPANY DID NOT HAVE ANYTH ING TO DO WITH THE SAID LIABILITY OF THE VENDOR. THE PAYMENT OF THE AM OUNT BY THE ASSESSEE- COMPANY WAS ONLY A VOLUNTARY AND GRATUITOUS PAYMENT OF THE LIABILITY O F A THIRD PARTY, VIZ., THE VENDOR IN THIS CASE. FURTHER, IN VIEW OF THE ASSESSEE-COMPANY HAVING BECOME THE, OWNER OF THE PR OPERTY ON THE REGISTRATION OF THE SALE DEED, ITS TITLE WAS COMPLE TE AND PERFECT. IN SUCH CIRCUMSTANCES, THE QUESTION OF TREATING THE PAYMENT OF THE LIABILITY OF A THIRD PARTY AS AN EXPENDITURE OF THE ASSESSEE-COMPA NY, MUCH LESS FOR THE PURPOSE OF ITS BUSINESS, COULD NOT ARISE. THE AMOUN T WAS NOT DEDUCTIBLE AS BUSINESS EXPENSE.' 4.4.2.4. HENCE, IT IS HELD THAT THE AO HAS RIGHTLY CONSIDERED THE SALE CONSIDERATION MENTIONED IN THE DEED OF CONVEYANCE F OR THE PURPOSES OF COMPUTATION OF CAPITAL GAIN IN THIS CASE. BESIDES T HE PAYMENT MADE BY THE APPELLANT TO THE PURCHASER SUBSEQUENT TO THE REGIST RATION OF THE LAND IS NOT DEDUCTIBLE AS AN EXPENSE AS THE SAME HAS NOT BEEN I NCURRED FOR THE PURPOSES OF TRANSFER OF LAND, SINCE THE SAME HAS BEEN PAID AS A GRATUITOUS PAYMENT FOR LIABILITY OF ANOTHER PARTY AND IS NOT A PAYMENT MAD E FOR THE PURPOSES OF TRANSFER OF THIS LAND. HENCE THIS CONTENTION OF THE APPELLAN T IS REJECTED. 11. WE HAVE HEARD BOTH THE PARTIES REITERATING THEI R RESPECTIVE PLEADINGS AGAINST AND IN SUPPORT OF CIT(A) ABOVE EXTRACTED DE TAILED FINDINGS INTER ALIA DISCUSSING IT ALONGWITH NECESSARY BACKDROP OF FACTS THAT THE ASSESSEES LAND SOLD FORMED SUBJECT MATTER OF A LIS BEFORE THE COMPANY LAW BOARD, THE SAID BOARD ORDERED IT TO FORMULATE A TENDER P ROCESS AFTER CONSTITUTING A SALE COMMITTEE OF FIVE PERSONS UNDER THE CHAIRMAN SHIP OF HONBLE MR. JUSTICE B. J. DIWAN (RETIRED) AND FOUR OTHER MEMBER S, THIS COMMITTEE INVITED SALE TENDERS, THE VENDEE HEREIN OFFERED PUR CHASE PRICE OF RS.33,53,80,000/-, THE SALE COMMITTEE PLACED THE SA ME BEFORE THE ABOVE BOARD WHO GRANTED NECESSARY APPROVAL IN ITS ORDER DATED 27.05.2008 IN ASSESSEES APPLICATION; RESPECTIVELY. IT EMERGES F ROM ASSESSEES REGISTERED AGREEMENT TO SALE DATED 28.07.2008 AT PAGE 102 CONT AINING CLAUSE 9 THAT THE ITA NOS. 953 & 1314/AHD/2016 (AMBALAL SARABHAI ENT ERPRISES LTD. VS. DCIT) A.Y. 2010-11 - 8 - VENDEE HAD AGREED TO PURCHASE THE LAND IN THE SAME ZONE I.E. INDUSTRIAL THAN COMMERCIAL ON AS IT IS BASIS. THE SAID VENDEE FURT HER UNDERTOOK TO BEAR ALL LIABILITIES/RESPONSIBILITIES OF COSTS AND EXPENSES ETC. FOR THE PURPOSE GETTING APPROVAL RELATING TO ABOVESTATED CONVERSION. PAGE 106 REVEALS THAT THE ASSESSEE HAD ALREADY RECEIVED ADVANCE PAYMENT OF RS .19,15,38,000/- BY THE DATE OF AGREEMENT TO SALE FORMING MORE THAN HALF OF THE TOTAL SALE PRICE. IT ADMITTEDLY EXECUTED CONVEYANCE DEED THEREAFTER ON 0 2.04.2009 WITHOUT EVEN AN IOTA OF MENTION THEREIN ABOUT ITS MOU OF TH E SAME DATE WHEREIN IT AGREED TO PAY THE AMOUNT IN QUESTION OF RS.2,33,98, 605/- IN THE NATURE OF RETENTION MONEY IN CASE REVISED PERMISSION OF CONVE RSION OF THE ASSET IN QUESTION FROM INDUSTRIAL TO COMMERCIAL DID NOT COME WITHIN 180 DAYS. WE THEREFORE SEE NO MERIT IN ITS CONTENTION RAISED THA T IT HAD TO PART WITH THE IMPUGNED SUM AS AN OBLIGATION IN THE NATURE OF RETE NTION MONEY. 12. MR. SOPARKAR REFERS TO ASSESSEES MOU PAGE NOS. 90 TO 93 FOLLOWED BY IMPUGNED PAYMENT MADE TO THE VENDEE IN QUESTION. HE STATES THAT THE ABOVE CONVEYANCE DEED WAS VERY MUCH A CONDITIONAL O NE TO BE FINALIZED ONLY AFTER CONVERSION OF THE INDUSTRIAL LAND TO COM MERCIAL ONE. WE FIND THAT THERE WAS NO SUCH IMPEDIMENT IN REGISTERED AGR EEMENT AS WELL AS IN REGISTERED SALE DEED. THE SAID REGISTERED DOCUMENT S CARRYING PRESUMPTION OF TRUTH DEMONSTRATE JUST THE OPPOSITE WHEREIN IT W AS VENDEES LIABILITY/RESPONSIBILITY TO BEAR FOR SUCH A CONVERS ION. MR. SOPARKAR THEN STATES THAT THE SAID CONVERSION DID NOT COME MAKING IT OBLIGATORY FOR THE ASSESSEE TO PART WITH THE IMPUGNED REFUND AMOUNT AF TER THE AGREEMENT IN QUESTION. WE AGAIN SEE NO REASON TO ACCEPT THIS CO NTENTION SINCE THE ASSESSEES CLAIM OF HAVING MADE THE PAYMENT WITHIN TWO DAYS DOES NOT INSPIRE CONFIDENCE IN VIEW OF THE ABOVESTATED OVERW HELMING MATERIAL GOING AGAINST THE INSTANT MOUS TERMS. MR. SOPARKAR QUOT ES VARIOUS CASE LAWS I.E. GODHRA ELECTRICITY CO. LTD. VS. CIT (1997) 225 ITR 746 (SC), CIT VS. ITA NOS. 953 & 1314/AHD/2016 (AMBALAL SARABHAI ENT ERPRISES LTD. VS. DCIT) A.Y. 2010-11 - 9 - AXEL CO. LTD. (2013) 358 ITR 95 PROPOUNDING REAL IN COMES ACCRUAL THEORY. WE HOWEVER OBSERVE THAT THE SAID CASE LAW DOES NOT APPLY TO FACTS OF THE INSTANT CASE WHEREIN THE ASSESSEE HAS NOT BE EN ABLE TO PROVE THAT THE IMPUGNED EXPENDITURE TO BE FALLING UNDER SECTION 48 (I) & (II) OF THE ACT FOR THE PURPOSE OF COMPUTING CONSEQUENTIAL CAPITAL GAINS. MR. SOPARKAR THEN RELIES UPON FURTHER CASE LAWS CIT VS. HOOGHLY MILLS CO. LTD. (2004) 266 ITR 257 (CALCUTTA) QUOTING KUMUDAN PRINTERS (P) LTD. VS. CIT (1997) 226 ITR 680 (MAD.) IN UPHOLDING TRIBUNALS DECISION ALLOWING GRATUITY LIABILITY OF THE SAID ASSESSEE. WE HOWEVER NOTICE THAT IN TAKING OVER AGREEMENT THEREIN OF THE UNDERTAKING SPECIFICALLY I NCLUDED GRATUITY LIABILITY AS AGAINST FACTS OF THE INSTANT CASE WHEREIN THE AS SESSEE APPELLANT HAS FAILED TO PROVE THAT ITS MOU DATED 2.04.2009 IS IN TUNE W ITH REGISTERED DOCUMENTS (SUPRA). WE THEREFORE SEE NO JUSTIFICATI ON IN INTERFERING WITH WELL THOUGHT CIT(A)S CONCLUSION UPHOLDING ASSESSIN G OFFICERS ACTION. 13. BOTH THE LEARNED REPRESENTATIVES THEREAFTER MAD E THEIR RESPECTIVE ARGUMENTS QUA REGISTRATION ASPECT OF THE ABOVESTATE D MOU U/S.17(1) R.W.S. 49 OF THE INDIAN REGISTRATION ACT. WE HOWEVER FIND THAT THIS ASPECT PERTAINING TO THE INSTANT ISSUE IS RENDERED ACADEMI C IN VIEW OF OUR FINDINGS IN PRECEDING PARAGRAPHS. WE ACCORDINGLY UPHOLD THE CIT(A)S ACTION AFFIRMING IMPUGNED DISALLOWANCE. THE ASSESSEES IN STANT SECOND SUBSTANTIVE GROUND IS THEREFORE PARTLY ACCEPTED IN ABOVE TERMS. 14. THE ASSESSEES THIRD SUBSTANTIVE GROUND RAISES THE ISSUE OF DISALLOWANCE OF SALARY AND WAGES OF PACKART PRESS U NIT AMOUNTING TO RS.28,78,876/-. MR. SOPARKAR REFERS TO ABOVESTATED CO-ORDINATE BENCH ORDER IN PRECEDING ASSESSMENT YEAR (SUPRA) SETTING ASIDE THE VERY ISSUE BACK TO THE ASSESSING OFFICER. BOTH PARTIES ARE AD IDEM THAT T HERE IS NO DISTINCTION ON FACTS INVOLVED IN THE TWO ASSESSMENT YEARS. WE THE REFORE FOLLOW THE VERY ITA NOS. 953 & 1314/AHD/2016 (AMBALAL SARABHAI ENT ERPRISES LTD. VS. DCIT) A.Y. 2010-11 - 10 - COURSE OF ACTION HEREIN AS WELL IN REMITTING THE IS SUE BACK TO THE ASSESSING OFFICER FOR DECISION AFRESH AS PER LAW AFTER AFFORD ING ADEQUATE OPPORTUNITY OF HEARING TO ASSESSEE. THIS SUBSTANTIVE GROUND IS TREATED AS ACCEPTED FOR STATISTICAL PURPOSES. 15. THE ASSESSEES AS WELL AS REVENUES FOURTH SUBS TANTIVE GROUND RAISE ISSUE TO CORRECTNESS OF SECTION 14A DISALLOWANCE OF RS.49,03,488/- MADE BY THE ASSESSING OFFICER FOLLOWED BY CONSEQUENTIAL ADDITION IN BOOK PROFITS U/S.115JB OF THE ACT. THE CIT(A) DELETES THE IMPUG NED DISALLOWANCE ON THE GROUND THAT THE ASSESSEE HAS NOT DERIVED ANY EX EMPT INCOME IN THE IMPUGNED ASSESSMENT YEAR. HE FOLLOWS HONBLE JURIS DICTIONAL HIGH COURTS DECISION IN CIT VS. CORRTECH ENERGY PVT. LTD.S CAS E IN TAX APPEAL NO. 239 OF 2014. THE SAME FACTUAL POSITION CONTINUES HEREI N AS WELL WHEREIN THE REVENUE FAILS TO QUOTE ANY JUDICIAL PRECEDENT OVERR ULING THE ABOVE LEGAL PROPOSITION. WE THEREFORE SEE NO REASON TO INTERFE RE IN CIT(A)S CONCLUSION DELETING THE IMPUGNED ADDITION. THE REV ENUES FOURTH SUBSTANTIVE GROUND IS THEREFORE DECLINED WHEREAS AS SESSEES SUBSTANTIVE GROUND IS DISMISSED AS RENDERED INFRUCTUOUS BEING C ONSEQUENTIAL IN NATURE. LATTERS APPEAL ITA NO. 953/AHD/2016 IS THEREFORE P ARTLY ACCEPTED. 16. THE REVENUES SECOND SUBSTANTIVE GROUND ASSAILS THE CORRECTNESS OF CIT(A)S ORDER ALLOWING EXPENDITURE OF RS.4,91,318/ - TO BE REVENUE IN NATURE THEREBY REVERSING ASSESSING OFFICERS ACTION IN ADOPTING ABOVE ITEMS OF REPLACEMENT / MAJOR RENOVATION WORK AS CAPITAL E XPENDITURE. IT APPEARS THAT THE ASSESSEE HAD INCURRED THE IMPUGNED EXPENDI TURE ON VARIOUS HEADS LIKE BARRICADING OF MAIN GATE SIDE WITH MATERIAL AN D LABOUR WORK, SCOOTER PARKING SHED OPPOSITE MAIN GATE, WATERPROOFING OF C IVIL WORK OF BOILER HOUSE. WE AFFORDED AMPLE OPPORTUNITY TO LEARNED DE PARTMENTAL REPRESENTATIVE FOR INDICATING IN THE CASE FILE TO T HE EFFECT THAT ABOVE ITA NOS. 953 & 1314/AHD/2016 (AMBALAL SARABHAI ENT ERPRISES LTD. VS. DCIT) A.Y. 2010-11 - 11 - RENOVATION AND REPAIRS HAVE IN ANY WAY CREATED NEW ASSETS. THE REVENUE FAILS TO PINPOINT ANY SUCH MATERIAL ON RECORD. WE THEREFORE FOLLOW HONBLE JURISDICTIONAL HIGH COURTS DECISION IN MANOJ B. MA NSUKHANI CASE IN TAX APPEAL NO. 941/2010 TO UPHOLD THE CIT(A)S ORDER TR EATING THE IMPUGNED REPAIR EXPENSE AS REVENUE IN NATURE. THE REVENUES APPEAL ITA NO. 1314/AHD/2016 RAISING ALL FOUR SUBSTANTIVE GROUNDS THEREFORE FAILS. 17. WE REFER TO OUR ABOVE DISCUSSION IN PARTLY ALLO WING THE ASSESSEES APPEAL ITA NO. 953/AHD/2016. THE REVENUES APPEAL ITA NO. 1314/AHD/2016 IS DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 13 TH DAY OF SEPTEMBER, 2017.] SD/- SD/- (PRAMOD KUMAR) (S. S. GODARA) ACCOUNTANT MEMBER JUDIC IAL MEMBER AHMEDABAD: DATED 13/09/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )* + ,--. . /0 / DR, ITAT, AHMEDABAD 1 + 23 4 5 / GUARD FILE. BY ORDER / . // . /0