9911796707
TMI Blog2013 (10) TMI 918X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is to purchase right, title and interest of the individual or partnership firm and obtain conveyance of the land in the name of the assessee company by purchasing title of the land. The assessee - company became owner of a very large piece of land located in Oshiwara Village. It is stated that the assessee-company purchased a land of approximately 723 acres at Oshiwara village, from New Swastik Land Development Corporation, in which Shri 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court to take consent terms on record. The legal battle was being fought by SDC. 3.4 AO has stated that according to the assessee, during the year, PCHS opted for converting the said land of 224 acres falling under NDZ, Coastal Regional Zone (hereinafter referred to as CRZ) from leasehold to freehold and agreed to pay consideration at Rs.9.95 per sq.ft. as agreed in the agreement dated 17.9.1981. The total land under NDZ was measured 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and under boundary dispute. AO has stated that the Chairman of Pankaj CHS Shri Vijay Parekh was called and his statement was recorded, inquiries were made from SDC and facts so gathered did indicate that the figures of trading receipts shown in the profit and loss account are not prima facie correct. 3.8 In view of above, AO, issued a show cause notice on 18.12.2009 with regard to the following facts: (Relevant para of Assessment Order 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oned that without prejudice, even if it is accepted that the amount was received towards boundary dispute land, prima facie the nature of deposit being same, why the same shall also not brought to tax. C. Following observations were also brought to the notice of assessee: (a) There is no written agreement with Samarth Development Corporation and Pankaj CHS from where the real nature of transaction could have been ascertained. (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 whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed / acquired by assessee, bring it to the books at the price formulated by the Government and will then sale the same to Apna Ghar Co-op. Hsg. Scty. and Samarth Development Corpn. Therefore, the sale and purchase consideration cannot be determined and accordingly, the taxable profit cannot be worked out. (e) It was mentioned that in the statement during the course of survey, Shri D.S.Gardi was referring to the agreement 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid it to PCHS. (ii) As per agreement dated 17.09.1981, the PCHS was required to pay monthly rent of Rs. 41,500/- from 10.10.1996 onwards, on or before the 10th of every preceding month. However, no such rent was ever paid making it clear that in reality, the agreement was never executed. Importantly, as per Para. 6 of the agreement dated, 17.9.1981, wherein PCHS got rights to purchase reversion @ Rs.9.95 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of survey on 22.3.2007, Shri Gardi had not referred to the said boundary disputed land. On the other hand, Shri Gardi agreed that what had been received by the assessee company was part consideration of sale price and under no circumstances it was refundable. (v) AO has stated that assessee received Rs.16,00,00,000/- from SDC till the end of the previous year and the said amount should be treated as 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 conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement was duly registered with the Government authorities. The said land was and is still under the No Development Zone and there would not be any ready buyer for the said land. Appellant was bound by the terms of the agreement entered between the appellant and the society. It was to receive the agreed rate of reversionary right and the arrears of ground rent. It recovered the ground rent along with 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fendants that the said land admeasuring about 86 acres and 32 gunthas is a part of S.No.120 of Village Varsoa, Taluka Andheri, Mumbai Suburban District and is owned by the Government of Maharashtra and MHADA. However, as the land was physically in the possession of the appellant, the consent terms were arrived at. 4.3 The land admeasuring about 86 acres and 37 gunthas is part of S No.120 of village 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emarcation of the land from the Government and by paying the consideration of the land to be formulated as per consent terms in the suit No.3429 of 1991." 5. Ld. CIT(A) has stated that after considering the submissions of the assessee, the facts, and the conclusion drawn by AO in respect of taxation of Rs.4.13 crores out of total amount received by assessee amounting to Rs.16 cr., it does not require 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submitted that right from Financial Year 1984-85 this fact had been mentioned in the Financial Account either by way of notes to account or in the report of Board of Directors which are on record of the department. He submitted that the dispute relating to the land i.e "boundary dispute land" was sub-judice, that the said land is part of S.No.120 of Village Varsoa and owned by Government of Maharashtra 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 C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the owner i.e. land under NDZ and at the instance of the department agreed to pay income tax on the land falling under NDZ i.e. on Rs.12 crores though no conveyance had been made in respect of the said land. He referred pages 39 to 56 of the paper book which is a copy of written submissions filed by the assessee before ld. CIT(A) dated 1.3.2011. Ld. AR submitted that the assessee at the instance 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age Oshiwara was going on. Since, the matter is in dispute, the assessee company has not considered the same in the books of account. He submitted that similar note was also given in respect of notes on accounts for the year ended on 31.3.2009 and referred pages 54 to 56 of the paper book. Ld. AR submitted that the said addition of Rs.4,13,16,517/- is liable to be deleted as the same has been added 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire amount of Rs.16 crores received is sale consideration for the land transaction entered into by the assessee with PCHS. Ld. CIT(A) has also confirmed the action of AO. However, we observe that there was a dispute going on between the assessee with Government of Maharashtra. We observe that the assessee has placed on record facts to substantiate the contention that there was an other transaction 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that it was following the procedure of accounting profit on sale of land in the year in which actual conveyance made but only at the instance of department, the assessee recognized the transaction of sale of land relating to the land situated in Survey No.41 of village Oshiwara and paid the taxes accordingly to buy peace and to avoid litigation as agreed to by the department. The said fact 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion other than filing revised return and placed reliance on the decision of the Hon'ble Apex Court in the case of Goetze India Ltd (284 ITR 323). Being aggrieved, assessee filed appeal before the First Appellate Authority. 17. Ld. CIT(A) confirmed the action of AO. Hence, this appeal before the Tribunal. 18. We have heard the ld. Representatives of the parties, perused the orders 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 dec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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