TMI Blog2013 (10) TMI 918X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee relating to the said "boundary dispute land", cannot be assessed to tax in the assessment year under consideration i.e. in the assessment year 2007-08. The assessee has given break up of the amount of Rs.11,86,83,483/- arrived at for the NDZ land and we observe that the AO doubted the said calculation merely on suspicion and ignoring the fact on record placed by the assessee before the authorities below merely to bring the said amount of Rs.4,13,16,517/- to tax in the assessment year under consideration though the said amount has been shown by the assessee in its books of account as deposit. The assessee has rightly contended that the said deposit of Rs.4,13,16,517/- cannot be considered as payment for the purchase price of the land as the land was to be demarcated and rates were to be determined as per agreed consent terms - Addition of Rs.4,13,16,517/- received by assessee from SDC, as sale consideration in the assessment year under consideration is not justified – Decided in favor of Assessee. Requirement of revised return, when the claim already made in the original return has not been allowed by the AO – Held that:- AO could not refuse to consider the correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dipchand Gardi, Director of the assessee-company was also a partner, in the year 1979. The said land is located at Survey No.41 of Village Oshiwara. Out of said land, approximately 177 acres was acquired by MHADA and approximately 180 acres of land was sold as industrial area to various parties. It is stated that land of approximately 224 acres is under "No Development Zone" (hereinafter referred to as NDZ) and this piece of land was given on lease to Pankaj CHS Ltd.(hereinafter referred to as PCHS) with a right to redeem it and make it freehold after making the payment at the rate mentioned in the agreement dated 17.9.1981 which is Registered with Sub-Registrar of Assurances. It is stated that in turn PCHS had given development rights in the said piece of land to Samarth Development Corporation (hereinafter referred to as SDC) vide agreement dated 18.9.1981 with the agreed price for giving development rights was Rs.10 per sq.ft. During the Financial Years 2005-06 and 2006-07, assessee company had received approximately Rs.3 crores and Rs. 9 crores from SDC which was shown as deposits. AO has stated that the deposits would be shown as sale proceeds after receipt of full considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 97,57,440/- sq.ft. and accordingly total consideration of the land is worked out at Rs.9,70,86,528/- (9757440 x 9.95). The land is Marshy land which is covered by mangroves. That the amount was received from SDC. AO has stated that there has been no written agreement for converting freehold land to leasehold land or any triparty agreement or MOU with SDC. 3.5 AO has stated that according to the assessee, as per agreement of lease dated 17.9.1981, PCHS was to pay ground rent along with simple interest at the rate of 9%. The total ground rent as per terms mentioned in the agreement worked out to Rs.47.31 Lakhs and the interest at the rate of 9% on the said lease rent worked out to Rs.22,29,795/-. Out of overall amount received from SDC, above amount has been transferred to profit and loss account being lease rent and interest thereon. 3.6 AO has stated that as the assessee-company had received almost full consideration under the agreement of 1981 and during the survey on 22.3.2007, the assessee-company conceded to account for the profit on sale of revisionary rights and paid taxes accordingly, subject to pendency of the conveyance of the land. 3.7 It is relevant to state he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.1 A) "(a) The company has received amount of Rs.16 crores from Samarth Development Corpn. During the period from 20.12.2005 to 19.08.2006. (b) The Director of company - Shri Deepchand Gardi, was specifically asked about nature of the deposits received from Samarth Development Corpn. During the statement recorded on oath on 22.02.2007, a specific query was raised to him as to whether the amount shown as deposits is refundable or can be claimed in any way under the terms and conditions of the agreement in the event of the buyer being unable to develop the property. In reply, assessee has categorically specified as under: "No, in case the full sale price and lease agreement is not received, we will be entitle to forfeit these amounts in view of the provisions of breach of contract. In the next two questions he has further clarified these transactions, the relevant questions and replies are as under: Qstn. No.6: These implies that whatever deposit you have received so far are as good as part purchase price and if so, why should it not be shown as part of sale proceeds and pay due taxes on the same. I agree that what we have received is part consideration of the sale price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (b) The same is not only accepted by you but Chairman of Pankaj CHS- Shri Vijay Parekh in his statement dated 4.12.2009 and a letter from Samarth Development Corporation (copy enclosed). (c) Shri Deepchand Gardi had accepted that the entire amount received from Samarth Development Corpon. is non-refundable. The same fact has also been confirmed by Samarth Development Corpon. Accordingly, it was mentioned in the show cause notice that the above facts also indicate that the nature of entire amount received from Samarth Development Corpon. should have been treated as same. D. The assessee was asked to furnish a detailed reply to this office on 24.12.2009 along with all necessary supporting documents on which it wanted to rely. It was also mentioned that while making reply, it should also keep in mind, the various documents and explanations submitted by it during the assessment proceedings, so far. The assessee was also asked to explain the present status of both the deals, which shall include the final consideration, if any decided/ received or any other written documents made or executed in with regard to the deals". 3.9 The AO stated that the assessee furnished its reply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement and transaction pertaining to NDZ land, the same is not true for Rs.4.14 crore received for boundary dispute land and the same is refundable, if the outcome of judgment is not in favour of company - Oshiwara. (f) Otherwise also, regarding non-refundable nature of deposit of Rs.4.14 crore, it is stated that it will be taxed when it is forfeited. (g) Regarding statement recorded during the course of survey, it was mentioned that while giving statement - Shri D.S.Gardi held in his mind that only the land of which assessee company is owner is land under NDZ. Therefore, voluntarily and without hesitation he agreed to pay advance tax on land falling under NDZ i.e. on Rs.12 crore. Since for Rs.4.14 crore, assessee company has no land to offer, no tax can be paid on the same. (h) Subsequently, bifurcation of amount of Rs.11,86,83,483/- has been given which besides land cost ground rent and interest thereupon chargeable by assessee from Pankaj CHS, also consists of an amount of Rs.1,46,36,160/- payable to Pankaj CHS, which was initially received by assessee who in turn has paid this to Pankaj CHS, who in turn has paid taxes thereupon. (i) Subsequently, it is said that it wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 are discussed, it was clearly mentioned that the lessee shall be entitled to purchase the reversion as aforesaid only upto 15.09.1981. This date had expired long back. (iii) In the statement of Shri Vijay Parikh then Chairman of PCHS was recorded u/s.131 of the Income Tax Act, when asked as to why the society had never paid any rent or interest as per agreement to the assessee for so long, stated that when society entered into agreement with Oshiwara, simultaneously development agreement was done with Samarth by him. That actually, the deal of development in reality was between SDC and the assessee. The PCHS was involved because it saved stamp duty as well as application of Land Ceiling Act. As no clearance was obtained by SDC for development, he did not pay anything to us and in turn we could not pay anything to the assessee. The AO stated that above reply makes it very clear that PCHS was used as a conduit only to save stamp duty and application of Land Ceiling Act. (iv) That even when sale of development rights had taken place in 2006 on oral agreement basis, role of chairman of PCHS was very limited. Mr. Gardi in reply to Question No.3 stated that he was almost 95 years, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale consideration. The assessee, subsequently, floated a theory that besides the land rights in NDZ land, it had entered into another deal with SDC with regard to land in boundary dispute with Government of Maharashtra. Thus, assessee submitted that out of total amount of Rs.16,00,00,000/- received from SDC, a sum of Rs.11.86 crores had been towards the land under NDZ and the balance amount of Rs.4,13,16,517/- was towards land under boundary dispute. AO has stated that even if the agreement relating to sale of boundary dispute land is considered with reference to agreement dated 18.2.1981 between the assessee company and Apan Ghar (proposed) and Shri Swamy Samarth Prasanna CHS(proposed), the agreed price for sale of boundary dispute land is Rs.10 per sq. yard and the overall consideration for 86 acres land i.e. 348018 sq.mtr. or 416226 sq.yards comes to Rs.41.26 lakhs only while, the assessee is associating a much bigger sum of Rs.4.13 crores to the said land. Thus it itself attacks the reliability of assessee's computation seriously. (vi) AO has stated that there has been no written agreement between assessee either regarding the deal relating to land in NDZ or land in boundar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the interest as per the agreement. The sale price was as such mentioned in the said lease agreement. The A.O. has just on the basis of suspicion, added this amount to sale price and levied the tax accordingly. 4.1 It is further contented that excess amount was received for some other transaction. It was only on the insistence of the department, this sale was recognized in the books of accounts. Secondly, this amount was lying with the appellant with the consent of the Developer to be adjusted in future against some other transaction. Excess amount as alleged by the AO was not excess amount for this deal but was received against some altogether different transaction/ deal. The A.O. has not brought any evidence in support of his contention that actual sale price is more than the stated in the books of account. The sale price has been duly confirmed by the buyer also. These facts were confirmed by the Developer in their statement recorded under section 131 of the Act. Even during survey, the Director of the Appellant mentioned that company had received in total Rs 12,00,00,000/- from the developer against the of the leased out land to Pankaj Society as discussed in order. Amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Varsova and the said land is owned by Government of Maharashtra. The boundary and the demarcation made in the map attached are correct and finally agreed by all the parties. The land under development zone reserved for D P Road, BEST Depot, civic amenities, residential zone and National Institute of Oceanography etc. were demarcated and decided and the map was drawn accordingly. Out of the total disputed/ suit land admeasuring 86 acres and 32 gunthas, only about 22 acres (estimated) was agreed for the plaintiffs subject to the terms. The re-measurements of the area with regard to the entire land is to be made by the City Survey Officer and the boundaries are to be demarcated as per the map drawn and attached to the consent terms The land to be given to the plaintiffs i.e. the Appellant or the nominee of the Appellant or claiming through the Appellant shall be governed by the Development Control Regulation of BMC. Whatever the expenditure on development and protection of the land is incurred and spent by MHADA on the land would be paid and reimbursed to the MHADA by the plaintiffs. The land which is agreed to be given to the plaintiffs, roughly about 22 acres, is not free of cost, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uire any interference at his end. He has stated that no prudent person will part with such a sizeable sum in respect of a disputed asset, that money will exchange hands only when there is a reasonable hope for sale to SDC by the assessee. Ld. CIT(A) has stated that even going by version of the assessee, the amount was paid by SDC consequent of the consent terms drafted on 19.12.2006, that the amount was paid in lieu of surrender of rights of the assessee in favour of SDC. He has stated that even SDC in its letter to the AO has conceded, that the basis of calculation of consideration of Rs.11.86 crores with respect to land in NDZ was not found acceptable as the assessee company had computed above amount attributable to NDZ land on the basis of agreement dated 17.9.1981 with PCHS. Ld. CIT(A) has stated that AO has rightly stated that the sanctity of agreement made in 1981 itself was seriously doubtful as it was never executed in the spirit earlier, that the purpose of the agreement was more to protect the land from Urban Land Development Ceiling than the purpose enumerated in the agreement. That the assessee received the amount in lieu of transfer of the rights in the said land and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arashtra and MHADA. The said land was physically in the possession of assessee company and dispute started in 1978. It travelled right from the level of Collector, Bombay up to Bombay High Court and ultimately settled before Hon'ble Apex Court by its order dated 23.10.2008. The ld. AR referred pages 19 to 29 of the Paper book, which is a copy of written submissions filed by the assessee company before the AO dated 23.12.2009 and stated that the assessee gave details of "boundary dispute land" interalia that after long litigation in the court of law, the assessee and the Government of Maharashtra /MHADA agreed to consent terms which were already agreed upon, signed, sealed and executed on 19.12.2006. However, the said consent terms when placed before the Hon'ble Single Judge of Bombay High Court, the same were not accepted by the Hon'ble Bombay High Court and the Single Judge rejected the consent terms on the ground that various question were required to be gone into and consent terms were not lawful. That the assessee filed an appeal before the Division Bench of the Hon'ble Bombay High Court and the Division Bench remanded matter to the ld.Single Judge for ascertaining the genuinen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of Survey Team, agreed to recognize the said transaction of land of 224 acres i.e. NDZ land, as sold and agreed to pay due taxes in full knowing that it would have to pay even interest for late payment of advance taxes inspite of the fact legally no sale had taken place. Thus, the assessee- company recognized the amount as sale at the instance of the Survey Team who calculated the taxes and prepared challan for payment of tax. Ld. AR submitted that assessee received the amount from SDC and credited in its books in the name of PCHS and Apna Ghar Co-operative Housing Society Ltd. and the amount was recorded as deposit received. It is only at the instance of department at the time of survey, the deposit of Rs.12 crores (approximately) form NDZ land was recognized as sale to avoid litigation and to co-operate with the department. Ld.AR submitted that presumption drawn by AO/CIT(A) that the assessee had floated a new story is not correct because all the facts were mentioned in the audited account and filed with the respective departments on respective dates much before the date of Survey. That it is mere suspicion of the AO that the assessee received more consideration than recognize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded merely on suspicion and presumption. 7. On the other hand, ld. DR relied on the orders of authorities below. 8. We have carefully considered the orders of authorities below, submissions of the ld. Representatives of the parties and written submissions filed by assessee before AO/ld. CIT(A), copies placed at pages 19 to 29, 30 to 38 and 39 to 56 of the paper book. We have also considered the submissions of Shri Gardi recorded during survey on 22.3.2007, copy placed at pages 57 to 59 of the paper book. 9. We observe that the assessee is engaged in the business of trading and development of land. In the year 1979, the assessee-company purchased approximately 723 acres of land located at Survey No.41 of Village Oshiwara. Out of said land, approximately 177 acres was acquired by MHADA and approximately 180 acres of land was sold as industrial area to various parties. The land of approximately 224 acres is under "NDZ " and was given on lease to PCHS with a right to redeem it and to make freehold after making the payment at the rate mentioned in a registered agreement dated 17.9.1981 ( Registered at Sr.No.S-2728). We observe that the major terms and conditions of the said agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action of land between the assessee-company and Apna Ghar CHS (proposed), Shri Swamy Samarth Prasanna CHS (Proposed) and said land was located at Survey No.120 of Village Varsoa. We also observe that in respect of said land dispute started in 1978 and traveled from the level of Collector Bombay and the matter went to Bombay High Court in Suit No.3429 of 1991. The said fact could not be brushed aside merely by stating that it was a concocted story by the assessee to link the part consideration out of total amount of Rs.16 corers received by it from SDC. The fact that there was a dispute in respect of land located at Survey No.120 of village Varsoa is also substantiated that assessee-company and Government of Maharashtra /MHADA agreed for consent terms which were signed, sealed and executed on 19.12.2006. However, the said consent terms were not accepted by Hon'ble Single Judge of Hon'ble Bombay High Court. Therefore matter went to Division Bench of the Hon'ble Bombay High Court and the Division Bench remanded it to the ld. Single Judge to ascertain the genuineness of the consent terms. It is also observed that the matter went to the Hon'ble Apex Court and the Hon'ble Apex Court by i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct have not been disputed by the authorities below in their orders in-spite of the fact that the assessee has stated in the written submissions filed before the authorities below as well as during the course of his submissions at the time of assessment proceedings and before the First Appellate Authority and also before us. The said fact is also evident from the copies of the notes to Account which are placed at pages 51 to 53 of the paper book relating to the year ended on 31.3.2008 and pages 54 to 56 of the paper book relating to year ended on 31.3.2009. 13. Considering the facts of the case, we find substance in the submissions of ld. AR that the deposit received for the "boundary dispute land" cannot be bought to tax in the year under consideration as the consent terms and conditions itself were approved by the Hon'ble Apex Court vide its order dated 23.10.2008. Therefore, any deposit received by the assessee relating to the said "boundary dispute land", cannot be assessed to tax in the assessment year under consideration i.e. in the assessment year 2007-08. The assessee has given break up of the amount of Rs.11,86,83,483/- arrived at for the NDZ land and we observe that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of authorities below. During the course of hearing, ld. AR submitted that the assessee filed requisite details at the time of assessment proceedings, but the AO did not accept the same on the ground that the assessee should have filed revised return of income to claim additional amount of donation. Ld DR merely relied on the orders of authorities below. We are of the considered view that AO could not refuse to consider the correct facts when the claim of the assessee is already on record and assessee claimed wrong amount by making incorrect bifurcation. AO is bound to consider the claim of the assessee correctly as per law and on the basis of documents produced before him in respect of a claim made in the return. It is not a new claim which was made by the assessee. Hence, the reliance placed on the decision of Hon'ble Apex Court in the case of Goetze India Ltd (supra) by AO and not considering correct claim was not justified on the ground that the said claim could be made only by way of revised return because it was not a new claim. That the AO has to consider the correct amount to be allowed as deduction while making the assessment on the basis of evidence as may be furnished bef ..... X X X X Extracts X X X X X X X X Extracts X X X X
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