TMI Blog2017 (2) TMI 1340X X X X Extracts X X X X X X X X Extracts X X X X ..... o be allowed as business loss because, it was incidental and linked to the purchase of stock-in-trade and was taken as part of the cost of the land in this year while determining the business income from the sale of land in this year - Decided against revenue - ITA No. 115/Del/2013 - - - Dated:- 28-2-2017 - Sri Amit Shukla, Judicial Member And Sri O.P. Kant, Accountant Member Appellant by : Sh. Anil Kumar Sharma, Sr.D.R Respondent by : Sh. VK Aggarwal, A.R. ORDER Amit Shukla, Judicial Member The aforesaid appeal has been filed by the Revenue against the impugned order dt. 15.06.2010, passed by the Ld.CIT(A)-13, New Delhi, for the quantum of assessment passed u/s 143(3) of the Income Tax Act, 1961 (the Act) for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany had intended to purchase 1,77,000 square metres of land which was owned by as much as 42 co-owners, the list of which has been given at page 35 of the assessee s paper book. The said piece of land was intended to be purchased @ ₹ 875/- per square metre. However, Mr.M.Kishore was unable to procure the entire land and was only able to facilitate the purchase of 1,31,050 square metres which was bought by the assessee @ ₹ 550/- per sq.metre. The balance amount was to be settled with mutual understanding later on. However, the amount of ₹ 4,32,42,500/- which was to be received from Mr.M.Kishore could not be recovered and this is an admitted fact before Investigation Wing of the department. The assessee in its books of acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of all drew our attention to the sale deed executed between the assessee company and M/s Advitiya Fabrics Private Limited to whom the said land in Pilerne, Goa was sold. From the said sale deed he pointed out that the entire background of the acquisition of the land has been mentioned, that out of total plot of land admeasuring 1,71,050 square metres only a part of it was acquired. The said land has been sold for a sum of ₹ 20,66,85,900/- on 20th of January,2009, i.e. in the year under consideration. He also drew our attention to the copy of ledger accounts of Mr. M.Kishore as on 31st March,2007 and 31st March,2009 and also the ledger account of bad debts. From these details he submitted that first of all, there cannot be any doubt th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f real estate development and during the course of its normal business activity it has sought to acquire a plot of land in Pilerne, Goa. The assessee had intended to purchase an area of land of 1,71,000 square metres through one, Mr.M.Kishore who was to facilitate the acquisition of the said land from various co-owners. For this purpose an advance of ₹ 11,64,20,000/- was made to Mr.M.Kishore. However instead of acquiring 171000 sq.metres of land which was agreed for a rate of ₹ 875/- per square metre, he could only facilitate to acquire 1,31,050 sq.metres of land which was purchased by the assessee at the rate of ₹ 550/- per square metre. In the ledger account of Mr.M.Kishore maintained its books of account, it had shown t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acquired the land for a sum of ₹ 7,31,77,500/- and the balance amount which was paid to Mr.M.Kishore remained as advance receivable by the assessee in the accounts in the Financial Year 1st April,2008 to 31st March, 2009. In the current financial year, the assessee has first made a journal entry whereby the provision for bad debts for amount of ₹ 4,32,42,500/- was shown on credit side and corresponding debit was made in the account of Mr. M.Kishore. At the year end on 31.3.2009, the assessee had passed the following entry in the ledger account for claiming it as a bad debt . Embryonic Properties P.Ltd. Bad debts Ledger account 1st Arpil,2008 to 31st March, 2009 Date Particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s amount appears to be different, hence it is not a case of bad debts. However it is an undisputed fact that the amount of ₹ 43,24,500/- which has been paid to Mr.M.Kishore prior to 31st March, 2007, till date has not been recovered which is even evident from the letters written before the Investigation Wing and also admitted by Mr.M.Kishore, before the investigation wing, that the said amount is lying with him which would be settled later on. This is evident from the facts and submissions, noted by Ld.CIT(A). If the said amount was not being recovered and has been claimed as loss by the assessee in this year, i.e. when sale of land was made, then the same needs to be allowed as business loss because, it was incidental and linked to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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