2013 (4) TMI 783

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... in business of real estate. Land was purchased for the purpose of its business for which part payment was made in cash. As the land so purchased was shown as stock in trade, the Assessing Officer disallowed 20% of cash payment by invoking provisions of Section 40A(3) of the Income-tax Act, 1961. 4. By the impugned order the ld. CIT(A) after considering various case laws cited by ld. Authorized Representative confirmed the action of Assessing Officer for disallowance of Rs. 6 lakhs u/s 40A(3) in respect of cash payment of Rs. 30 lakhs made for purchase of land. 5. Against the above order of CIT(A), the assessee is in further appeal before us. 6. It was argued by ld. Authorized Representative that even though payment for purchase of land f .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ear of debiting such expenses in profit and loss account and an undertaking was also furnished by the assessee to the effect that it will come forward to offer the disallowance in the year in which such expenses will be debited in the profit and loss account. However, the facts of instant case are distinguishable. Since the assessee was engaged in the business of building construction and property development, the land so purchased essentially constituted its stock in trade. Even though the assessee had not shown the transaction of purchase and closing stock in trade in its profit and loss account, but once such asset is brought to the balance sheet as stock in trade, as a natural corollary, such transaction can only come out of trading acc .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... are guided by the observation of Hon'ble Supreme Court in the case of Distributors (Baroda) (P) Ltd. 155 ITR 120, wherein Justice Bhagwati, while reversing the decision of the Hon'ble Supreme Court on the very same issue, wherein he was also one of the judges, held that view taken earlier was erroneous and it is must to correct the same. Following was the observation of the Hon'ble Justice Bhagwati : "To perpetuate an error is no heroism. To rectify it is compulsion of the judicial conscience. In this, we derive comfort and strength from the wise and inspiring words of Justice Bronson in Pierce vs. Delameter ( A.M.Y. at page 18 ) : " a judge ought to be wise enough to know that he is fallible and, therefore, ever ready to l .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X