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2015 (2) TMI 863 - HC - Income TaxDevelopment agreement - whether capital gains can be said to have arisen in the subject assessment year to the extent of the value of 18,000 sq.feet of constructed area to be provided by the developer even though the same was not provided for? - Held that:- The income accrued and earned under the subsequent agreement dated 6.7.2002 was offered as capital gains in the subsequent years. Therefore, on the application of the real income theory, the Tribunal held that on these facts there would be neither accrual nor receipt of income to warrant bringing to tax to the constructed area of 18,000 sq.ft which has not been received by the respondent-assessee. No occasion to tax the same can arise. The Tribunal on consideration of facts has reached a finding of fact that no income in respect of 18000 sq.ft of constructed area has been accrued or received. This finding cannot be said to be perverse or arbitrary. - Decided in favour of assessee. Purchase and subsequent cancellation of the shares belonging to an estranged brother of the person in the management of the company - whether is in the nature of revenue expenditure or not? - Held that:- Tribunal records a finding of fact that in view of the dispute between the two warring groups of shareholders the business of respondent assessee had suffered. It records that the total sales of the respondent-assessee which was in the range of ₹ 20 to 25 crores per annaum during the predispute period had come down to around ₹ 9 crores in the financial year 1999-2000 when dispute arose and remained in the range of ₹ 10 to 14 crores during the period of litigation between its two groups of shareholders spanning over six years. It also records that after the settlement of dispute in the financial year 2005-06 there was a substantial increase in the sales touching nearly ₹ 18 crores per annum. The impugned order of the Tribunal also notes that after settlement of the dispute new products were launched by the respondent assessee company. All this was evidence of the fact that the dispute between two groups of shareholders had affected the business of the company. The amounts which were paid by the respondent assessee for the purpose of purchase of its shares, to its shareholder for subsequent cancellation was an expenditure incurred only to enable smooth running of the business. Thus, the expenditure was incurred for carrying on its business smoothly and therefore, was a deductible expenditure. Thus, the impugned order of the Tribunal is essentially a finding of fact. - Decided in favour of assessee.
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