TMI Blog2011 (2) TMI 1122X X X X Extracts X X X X X X X X Extracts X X X X ..... AO this issue is also remitted to the file of the AO to be decided afresh on considering the relevant evidence in accordance with law. - ITA No. 4308(Del) 2009 & 4309(Del)2009 - - - Dated:- 12-2-2011 - SHRI G.E. VEERABHADRAPPA, AND SHRI A.D. JAIN, JJ. Represented by: Appellant by: Shri Hiren Mehta, CA Respondent by: Ms. Y. Kakkar Shri Sudesh Garg, CIT,DR ORDER PER A.D. JAIN, J.M. ITA No 4309 (Del)2009: This is assessee s appeal for assessment year 2006-07 against the order dated 13.09.2009 passed by the Commissioner of Income Tax(Appeals)VIII, New Delhi, taking the following amended grounds:- 1. The order passed by the Appellate Authority is bad in law and bad in facts. 2. The ld. CIT (A) has passed the order on the basis of surmises and conjectures. 3. The ld. CIT(A) while examining the applicability of section 50C and the issue of sale consideration of land at Circle Rate , the ld. AO and the ld. CIT(A) have not appreciated the fact that the land has actually been sold above the Circle Rate . The facts have been mentioned in the written submissions filed by the assessee before the ld. CIT(A). The value of land measuring 6.749 hectares at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) from the AO. The assesse submitted that it could not produce the evidence sought to be produced by way of the additional evidence, before the AO, as the assessee had not been given sufficient time by the AO for producing the evidence; and that the business of the assessee had been suspended temporarily and therefore, the assessee required sometime to trace the documents. 4. The ld. CIT(A) observed that the assessee did not fulfill the requisite conditions for allowance of production of additional evidence; that though the assessee had contended that it had not allowed sufficient time to properly represent its case before the AO, this was factually incorrect; that in the assessment proceedings, the AO had allowed ample opportunity to the assessee company to file the requisite information and details which it entitled to rely on; that the assessee, instead of furnishing the information, continued to ask for adjournments on one pretext or the other; that in these circumstances, the AO had to complete the assessment on 26.12.08, as the assessment was getting time barred on 31.12.08; that non-compliance on the part of the assessee should not be permitted to form a basis for submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; that the company was permitted to complete the legal formalities, finalise accounts, hold meetings and file necessary returns; that it was after reinstatement of possession, the company got to finalise the accounts and file the returns; that the return for assessment year 2006-07, i.e., the year under consideration, it was filed on 29.11.06, declaring net taxable income as nil after set off of brought forward loss with the returned taxable income of Rs. 4,27,530/-; that as such, the company, including its office record, books of account and all the assets were under the control and custody of the Liquidator and remained to be so for ten to twelve years, which was beyond the control of the management of the assessee company; that the reinstatement of possession after ten to twelve years, the record and books were either not available or were in such a torn/damaged condition that they were beyond any reference or use; that on repossession, the inventories of stores/spares, tools, lubricating oil and fixed assets of the office equipment, tube well, furniture, etc. were found to have been stolen or burgled or destroyed and damaged beyond any use or value. The learned counsel for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only in 2008 that a one time settlement came about and the assessee company came out of the red. All the records had been all this while lying with the Liquidator, appointed in 1998. For over a decade, nothing moved. It was in these circumstances, that the assessee was unable to produce the relevant record before the AO. The ld. CIT(A) has rejected the assessee s application for admission of additional evidence, oblivious of these facts. Accordingly, we remit this matter to the AO for decision afresh, in accordance with law, on taking into consideration the fresh evidence filed by the assessee before the ld. CIT(A). 8. Coming to ground No.3, the AO observed that the assessee had shown long term capital loss of Rs.1,50,92,286/- on account of sale of land belonging to M/s. W.T.(India)Ltd., which was amalgamated with the asessee company as per the order dated 4.12.89 passed by the Hon ble Delhi High Court. The AO observed that the sale deed dated 14.10.05 showed the sale value at Rs. 1,07,82,000/-, whereas as per the Circle Rate, the sale value came to Rs. 1,60,65,000/-. The assessee was asked to show cause as to why the Circle Rate be not taken as the value of the sale considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessed by the Stamp Valuation Authority for the purpose of payment of stamp duty, the AO would adopt the value so adopted by the Stamp Valuation Authority for the purpose of capital gains; and that this was what had been done by the AO in the present case. 12. Before us, the learned counsel for the assessee has contended that firstly, the ld. CIT(A) has erred in not giving any finding with regard to the cost of land taken by the AO at Rs. 6,04,719/- as against the fair market value of the land at ₹ 66,82,955/- as on 1.4.81, based on the valuation report of the Government Approved Valuer; that the area of the land sold on 14.10.05 was 3.8380 hectare ; that the Circle Rate for the land was Rs.16,00,000/- per hectare; that however, for the payment of stamp duty, this rate was doubled, since the land was in the name of the firm; that the AO had taken the value of the land at Rs. 1,60,65,000/-, which was wrong and the AO should have taken the value of the land at ₹ 60,00,000/- per hectare only and not at Rs. 32,00,000/- per hectare, the rate having been doubled only for determining the stamp duty; that further, the ld. CIT(A) has not made any comment about the AO having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y implemented; that the assessee had also shown interest waiver income from this OTS aggregating to Rs. 3,17,49,880/-; that had the interest payment not been done to the banks and financial institutions, the OTS could not have come about; that while making the disallowance, the AO observed that u/s 43 B of the Act, it is allowable on payment basis; that however, in the balance sheet as on 31.3.06, there is no interest payable; that the amount in question was paid in the balance sheet and is allowable; that the details of Rs. 8,53,916/- are Rs.8,02,215/- paid to Bank of India and Rs. 51,701/- paid to PICUP. Reference has been made to the details of interest paid (APB 271). Attention has also been drawn to APB 278 and 283 which are the payment certificate from Bank of India and No Due Certificate from PICUP. The learned counsel has further contended that under Rates and Taxes Rs. 75,000/- was paid to MCD as property tax and Rs.5,250/- was paid as filing cost; and that as such, there is no case of disallowance u/s 43 B of the Act. Attention has been drawn to APB 307 to 309, which are the details of expenses and the copy of bank statement for the relevant period concerning the legal ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails were filed before the ld. CIT(A) also; that the debtors related to Government, Semi-Government of India Fame Organisations; that the debts had arisen out of sale of steel tubes and plates and represented claims and deductions made by them on account of quality, like supply and shortages. Attention has been drawn to APB 290 to 297. APB 290 contains details of the amounts written off, whereas APB 291 to 297 are copies of ledger account. It has been further contended that the advances were in the nature of advances to Steel Authority, Telephone Department, State Electricity Board, Excise Duty, etc. It has been submitted that these advances had all been adjusted by the parties towards their claims and deductions were no longer receivable. Reference has been made to APB 298 to 306, which are the details of and Notes on the amounts written off, as also the copies of ledger account. It has been further stated that the inventories were in the nature of stores/spares, LDO and loose tools; that the assets were in the custody of the Liquidator and the Hon ble High Court; that they were of perishable nature and required regular care and maintenance; and that the assets were abandoned and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the afore-discussed inability of the assessee. The same was filed before the ld. CIT(A) who rejected the application for admission of additional evidence. As such, this issue too, is remitted to the file of the AO for decision afresh in accordance with law on considering the evidence filed by the assessee. 31. In view of the above, the assessee s appeal in ITA No. 4309(Del)2009 for assessment year 2006-07, is treated as allowed for statistical purposes. 32. Herein, the assessee is Kalindi Woolen Mills Ltd. The appeal is for assessment year 2006-07. The grounds and issues are much the same as in ITA No. 4309(Del)2009, but for ground No.3. The grounds taken by the assessee read as follows: 1. The order passed by the Appellate Authority is bad in law andbad in facts. 2. The ld. CIT (A) has passed the order on the basis of surmises and conjectures. 3. The ld. AO and ld. CIT(A) while examining the applicability of the section 50 C and the issue of sale consideration of land sold at Circle Rate , have not applied their mind to the fact that the land has actually been sold above the Circle Rate . The facts have been mentioned in the written submissions filed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee to UPFC for interest payment under OTS details of amounts written off and other expenses, the receipts issued by ROC for fees paid for filing documents and copy of bank statement of the assessee for assessment year 2006-07. 36. In the facts and circumstances discussed while dealing with ITA No. 4309(Del)09, this issue is remitted to the file of the AO to be decided afresh in accordance with law on considering evidence produced by the assessee by way of additional evidence before the ld. CIT(A). 37. Ground No. 5 states that the ld. CIT(A) has erred in confirming the addition of Rs. 51,10,000/- in respect of unsecured loans. This issue corresponds to the amended ground No.7 in ITA No. 4309(Del)09, for similar reasons as discussed therein, this issue is also remitted to the file of the AO to be decided afresh in accordance with law on entertaining and considering the evidence filed by the assessee. It has been pointed out that APB 69 to 76 contain all the relevant documents with regard to the unsecured loans. These documents are balance confirmation of M/s. Kalindi International, acknowledgement of return of income filed by Kalindi International for assessment year 2006-07, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed value of old boundary wall as Rs. 1 lakh and 30 year old, broken and dilapidated factory building as Rs. 24,53,000/-, and (f) the total of land value + boundary wall + factory building, after rounding off, as Rs. 61,15,000/- for levy of stamp duty. The sale deed of 14.10.05 shows (a) the Circle Rate of land as Rs. 16 lakhs per hectare, (b) the area sold as 1.113 hectare, (c) the land value as per Circle Rate to be Rs. 17,80,800/-. ii) Thus the sale deeds of 14.10.05 records the land value as per Circle Rate as Rs. 17,80,800/-. iii) The actual sale value received by the company is Rs. 37,63,000/-. If the value of factory building Rs. 5,00,000/- is excluded, then the sale value received for the land comes to Rs. 32,63,000/-, i.e., higher than the Circle Rate. iv) The learned AO could not appreciate this point while framing the assessment order. v) The learned AO has accepted the factory building sale value at Rs. 5,00,000/- and therefore, this needs no explanation. vi) The observation of the learned AO that the purchase price of the land has not been disclosed by the company is incorrect. This value has been mentioned even in the computation filed with the retu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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