TMI Blog2016 (2) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... se, in brief, are that the assessee is a partner in M/s. Real Value Advertiser and derives income from remuneration from the firm, share of profit, interest on capital, dividend income and bank interest. He had filed his original return of income for the impugned assessment year on 30-09-2008 declaring business income of ₹ 40,31,860/-. 3. The AO received information from Addl.CIT, Range-3, Pune that during survey action u/s.133A of the I.T. Act, 1961 in the case of Shri Kailash Babulal Wani conducted on 12-03-2008, it was noticed that the assessee has received ₹ 3 crores from Fullmoon Housing Finance Pvt. Ltd. towards sale of land situated at Baner, Pune. On receipt of this information, the AO issued notice u/s.148 to the assessee. In response to the said notice, the assessee filed a letter stating therein that the return filed on 30-09-2009 be considered as return filed in response to notice u/s.148. 4. During the course of assessment proceedings the AO, on going through the computation of income noted that the assessee has claimed exemption u/s.54F of ₹ 3.25 crores treating the money received of ₹ 3 crores as Long term Capital gain on sale of plot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken place. Based on the various documents filed before the Ld. CIT(A) it was submitted that the assessee Shri Sanjay Nemichand Lohade got all the rights in the said property. Thereafter Shri Kailash Wani approached the assessee, i.e. Shri Sanjay Nemichand Lohade for withdrawing the suit No. 1006/1996 and for relinquishment of his rights in the said property, Shri Kailash Wani was ready to pay ₹ 3 crores to him. Accordingly, Shri Sanjay Nemichand Lohade, i.e. the assessee filed application in the court and withdrew the Special Suit No.1006/1996 by using the Power of Attorney. Thereafter, Shri Kailash Wani sold the entire property to Fullmoon Housing Finance Pvt. Ltd. Pune. This MOU was executed on 16-05-2007 between Fullmoon Housing Finance Pvt. Ltd. and Shri Kailash Wani. In the said MOU the total price of the property and schedule for payment and names of the party to whom and how much amount to be paid on behalf of Shri Kailash Wani by the proposed purchaser Fullmoon Housing Finance Pvt. Ltd. was mentioned. In the said MOU it was very specifically mentioned that the total cost was fixed at ₹ 9,26,46,600/- which is inclusive of ₹ 3 crores to be paid to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deed (i.e. ₹ 48 lacs for 80R). The above 8 sale deeds were registered at sl.no.8883 to 8890 on 17/10/1995 in the office of Sub Registrar, Haveli, Pune. Dhorje filed suit against Kadam family Wani vide civil suit no. 1006/96 with the prayer that a decree for damage of ₹ 3.50 crs be passed. 6.2. Later on 12/10/2000 Dhorje Wani executed M.O.U. through which Dhorje compromised and withdraw the suit filed against 80R (which were sold to Wani and others through 8 sale deeds) and continued civil suit against Kadam family for possession of 81 R. However, through same M.O.U. Dhorje agreed that Wani or his nominees will continue the said civil suit against Kadam family. According to this M.O.U., Wani paid Dhorje ₹ 6 lacs as compensation. Dhorje agreed that hereafter Wani will take carae of the civil suit on behalf of Dhorje. Subsequently since Dhorje could not attend court matters and other meetings regarding sale of land therefore, he gave Power of Attorney to Shri. Sanjay Lohade. This Power of Attorney in favour of Shri. Sanjay Lohade, the appellant was signed on 16.7.2007 and through it the appellant was given all the rights on behalf of Dhorje for executing and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1882 ); or (vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property. Explanation - For the purposes of sub- clauses (v) and (vi), immovable property shall have the same meaning as in clause (d) of section 269UA;]. 7.2. Therefore, it needs to be examined whether the appellant had any rights over the capital asset duly conferred on him by the owner or was allowed possession of the property in question in part performance of a contract as per sec. 53A of the Transfer of Property Act, 1882. The subsequent paras would therefore, discussed what were the rights conferred on the appellant and whether any of those rights and obligations fell within the definition of Transfer or not. 7.3. As already stated above, after the expiry of the original owner Shri Vyankatesh Kadam on 4.2.1987 his widow and six daughters became the legal heirs of the 161 ares of property specifically bearing S.Nos. 5/1A (herein referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 12.10.2000 referred to in the preceding paragraph, Shri Dhorje signed a Power of Attorney Agreement in favour of appellant on 6.7.2001. On the same date viz., 16.7.2001 Shri Dhorje again entered into MOU with Shri Wani and Shri Lohade whreby the following were agreed. a) The settlement / compromise between Shri Dhorje and Shri Wani for plot B is reiterated. b) Consent of Dhorje for any transaction between Lohade and Kadam for Plot A is recorded. c) Shri Lohade is to take steps to withdraw the Civil Suit 1006/96 d) Development rights in respect of 40 ares land in Plot B given to Shri Lohade e) Shri Lohade is to execute deeds and documents in respect of Plots A and B f) Shri Dhorje receives agreed consideration from Shri Wani as full and final settlement in exchange for his no objection for all the transactions referred to above. g) Shri Dhorje and Shri Wani would have no interest in Plots A and B except the 4 development agreements duly between Wani (and 3 others) with Shri Lohade and his wife in respect of portion of Plot B. 7.6. The appellant has contended that all rights and interest including development rights stand vested in him through the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne of the documents referred to above are unregistered documents, merely documented on ₹ 20 stamp paper and notarized. In all the documents referred to above, dated 12.10.2000, 16.7.2001 and 16.5.2007, the description of the property shows that Kadam property is in possession of Plot A and Wani Family in possession of plot B. The land which subsequently became the subject matter of MOU between Fullmoon Housing Pvt. Ltd. and Kailash Wani (41 ares out of plot A) was till then rightfully owned by the Kadam family and Shri Kailash Wani (who as per MOU dated 12.10.2000, referred to in para 7.4 supra, acquired collateral rights enjoyed by Shri Pradeep Dhorje. At no point in time, was the appellant also given possession of the property in part performance of any contract as per section 53A of Transfer of Property Act, 1882. The receipt of ₹ 3 crores by way of consideration from Fullmoon Housing Pvt. Ltd. therefore, cannot be treated as long term capital gains in the hands of the appellant and has been rightly treated as commission and brokerage by the Assessing Officer. In the result, Grounds No.1 to 11 are dismissed. 8. It may be mentioned here that the appellant has raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee were unregistered documents which were merely notorised on a stamp paper of ₹ 20/- and further on the ground that the sale deed dated 03.11.2007 entered between Shri Kailash Wani and M/s. Full Moon Housing Pvt. Ltd. could not be produced by the assessee. 4.2 The learned CIT(A) erred in holding that the amount of ₹ 3 Crs. received by the assessee was in the nature of brokerage and commission without bringing on record any evidence in support of the said conclusion drawn by him. 5 The learned CIT(A) ought to have appreciated that the assessee had acquired the development rights in respect of the land at S.No. 5/1A vide MOU dated 16.07.2001 and the amount of ₹ 3 Crs. received by the assessee vide MOU dated 16.05.2007 was in consideration of the surrender of development rights acquired by the assessee therein and hence, the amount of ₹ 3 Crs. was rightly offered to tax as capital gain. 6 The learned CIT(A) erred in not appreciating the correct facts of the case and hence, the addition sustained may kindly be deleted. 7 The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal. 9. The assessee has also raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Ld. Counsel for the assessee drew the attention of the Bench to the MOU dated 16-05-2007 which was entered into between Shri Kailwash Wani and Fullmoon Housing and Finance Pvt. Ltd. Referring to para 3 of the said MOU he submitted that it was decided that Shri Kailwash Wani would pay the amount to Shri Sanjay Nemichand Lohade for releasing all his rights in the said property and it was further stated that said amount would be ₹ 3 crrores. Thus, as per this agreement, the assessee has received a sum of ₹ 3 crores for releasing his rights in the said property. He submitted that the assessee claimed this transaction resulted into long term capital gain while the AO and the CIT(A) held that this amount is brokerage or commission paid to the assessee. Accordingly, they taxed it as business income as against Long term Capital gain shown by the assessee. 15. The Ld. Counsel for the assessee submitted that brokerage or commission is to be paid for the services rendered in connection with the sale transaction. In this case for the sale of land to Fullmoon Housing Finance Pvt. Ltd. the AO or the CIT(A) have not proved the nature of services, if any, rendered by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd regarding 41R Sanjay Lohade was holding Development rights. According to this M.O.U. Fullmoon Housing Pvt. Ltd. paid ₹ 3 crs to Sanjay Lohade, ₹ 3.40 crs to Kadam family and ₹ 2.11 crs to Wani. He submitted that from the above it is clear that Shri Sanjay Nemichand Lohade was holding development rights. Therefore, how the CIT(A) can say that the assessee has received brokerage or commission for transfer of the said land. He submitted that an agreement is enough for getting right in the property. 20. Referring to the decision of the Pune Bench of the Tribunal in the case of Shri Kailash B. Wani vide ITA No.858/PN/2013 order dated 30-06-2015 for A.Y. 2008-09 he submitted that the Tribunal in the said decision has held that Shri Sanjay Nemichand Lohade had a right in the land and it is for that purpose, the compensation has been paid for releasing his rights in the land. He submitted that there is no evidence found during the course of survey or thereafter that the assessee is a broker or mediator. 21. So far as the additional ground is concerned the Ld. Counsel for the assessee submitted that the compensation received by the assesses constitutes damage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh B. Wani and Shri Sanjay Nemichand Lohade whereas MOU on 16-05-2007 was entered into between Shri Kailash B. Wani and Fullmoon Housing and Finance Pvt. Ltd. Although the same was clarified during proceedings u/s.144A before the Addl.CIT, however, the same was not properly appreciated by the Addl.CIT. He submitted that the decision of the ITAT has got relevance because it had categorically held in the order that the assessee had a right in the said property. Therefore, in view of the decision of the Hon ble Bombay High Court the same should he held as capital receipt not exigible to tax. He accordingly submitted that the ground raised by the assessee should be allowed. 26. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find in the instant case a survey u/s.133A of the Act was conducted in the premises of Shri Kailash Babulal Wani during which an MOU dated 16-05-2007 was impounded. As per the said MOU land admeasuring 41 Ares is to be purchased by Fullmoon Housing Pvt. Ltd. for total consideration of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Nemichand Lohade held that Shri Sanjay Nemichand Lohade was given not only the power of attorney but was also given the right to obtain the development agreement and purchase the said land in his name and for that purpose the entire litigation involved in Civil Suit No.1006/1996 was also required to be attended by him at his own cost and responsibility. It has further been held in the said decision that when the MOU was impounded the contents of the MOU has to be considered and accepted as a whole and the revenue cannot be permitted to use a part of the MOU as correct and the other part as incorrect. The relevant observation of the Tribunal from Para 13 onwards read as under : 13. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find in the instant case a survey action u/s.133A of the I.T. Act was conducted in the business premises of the assessee during which an MOU dated 16-05-2007 was impounded. As per the said MOU land admeasuring 41 Ares is to be purchased by M/s. Full Moon Housing P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MOU as genuine he should not have doubted the payment made to Mr. Sanjay N. Lohade as for non business consideration. Further, the CIT(A) also observed that the amount of ₹ 3 crores received by Mr. Sanjay N. Lohade has been treated as taxable being earning from commission and brokerage by the AO as per the direction of the Addl.CIT, Ahmednagar Range which has been upheld by the CIT(A). It is also the observation of the CIT(A) that the document found during survey has to be considered as a whole and those facts which favour the assessee cannot be totally ignored. 13.2 We do not find any infirmity in the order of the CIT(A) deleting the addition. As mentioned earlier, the MOU was found during the course of survey. Out of the 5 entries totalling to ₹ 9,26,46,600/- the amount of ₹ 2,11,46,600/- received by the assessee in cash was offered by him as additional income during the course of survey. The assessee has honoured this and included the same in his return of income. The Ist 3 items are accepted by the AO as genuine, therefore, we fail to understand as to how and why the amount of ₹ 3 cores should not be held as genuine as business expenditure when the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For receipt of aforesaid money, what did you do as quit-pro-quo? Ans. I filed affidavit for withdrawal of civil suit which was pending before the Civil Court. Q.24 How, the money received of ₹ 3 crores from Foolmoon has been accounted for and offer3ed to tax? During the proceedings of summons a computation sheet has been filed which is showing sale consideration of ₹ 3 crores of the land in question and exemption of u/s.54F has been claimed of ₹ 3.25 crores. You may explain with any supporting evidences, that at the first place when the property was not belonging to you, how the money received is shown as sale consideration, in which you only had withdrawn Civil Suit in the name of Shri Dorje? Also provide copy of the affidavit filed before the Civil Court, withdrawing the civil suit and copy of any other document, deed which you may have signed in favour of Foolmoon Housing Pvt. Ltd.,? Ans. I have not shown the amount of ₹ 3 crores in my books of accounts. As and when the money was received out of ₹ 3 crores the same was shown as Advance in my books of accounts and no portion of it has been offered to tax till date. The computation sheet file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Oct, 2010 To The Additional Comm. of Income Tax, Range-3, Pune Respected Sir, I, the undersigned do hereby state and confirm as under : 1. That I have received ₹ 3,00,00,00.00 by account payee cheque from M/s. Foolmoon Housing Pvt. Ltd., details of which are under : Date Ch.No. Amount 30-08-2007 523128 11,00,000/- 01-11-2007 240271 50,00,000/- 16-11-2007 240272 25,00,000/- 12-12-2007 249704 25,00,000/- 05-03-2008 240293 50,00,000/- 05-03-2008 240292 50,00,000/- 10-03-2008 249734 50,00,000/- 11-10-2010 RTGS 39,00,000/- 3,00,00,000/- 2. That the said amount is received by me for releasing all rights and for wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the CIT(A), therefore, we find no infirmity in the order of the CIT(A) deleting the addition of ₹ 3 crores from the hands of the assessee. In this view of the matter and in view of the detailed reasonings given by the CIT(A) while deleting the addition we find no infirmity in his order and therefore, uphold the same. Grounds of appeal No. 1 to 3 by the Revenue are accordingly dismissed. (emphasis supplied by us). 29. In view of the above we find force in the submission of Ld. Counsel for the assessee that the amount of ₹ 3 crores received by the assessee is for releasing his rights in the property concerned. 30. We find in the case of Tata Services Ltd. (Supra) relied on by the Ld. Counsel for the assessee, the assessee had entered into an agreement for acquiring the property. The purchase was to be completed within six months. The vendor was to obtain at his cost the necessary permission from the Government authorities. Later, the vendor wanted to cancel the agreement on the ground that the sub division of the plot had not been granted by the Municipal Corporation. Ultimately under Tripartite agreement the assessee transferred and assigned all its rights, tit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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