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Commissioner of Income Tax Versus Ratnaraj N. Bhandari

2016 (7) TMI 761 - BOMBAY HIGH COURT

Claim of expenditure of the amount forfeited by the Seller for non-fulfillment of the purchase agreement - ITAT deleted the addition - Held that:- The sale agreement between the respondent-assessee and his vendor M/s. Emtech Solution (P) Ltd. is collusive. We find that the CIT (A) as well as the Tribunal have rendered concurrent findings of fact that the parties had entered into agreement which was genuine. In fact, the vendor M/s. Emtech Solutions (P) Ltd. had itself confirmed the transaction a .....

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g taxes. Mr. Pinto responded by stating he is not aware. In any case it is a settled position that nature of receipt in the hands of the payee will not determine the nature of payment i.e. capital or revenue in the hands of the payer. The respondent assessee is dealer in immovable property and it is for a businessman to decide the manner in which he should conduct his business and take steps which are in the best interest of his business. A mere loss in a venture does not mean that the transac .....

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ibunal (the 'Tribunal'). The appeal relates to the Assessment Year 2009-10. 2. The revenue urges the following question of law for our consideration : (i) Whether on the facts and in the circumstance of the case and in law, the Tribunal was correct in holding the orders of the CIT (A) deleting the addition of ₹ 2.40 crore agreement that was claimed as expenditure, made by the Assessing Officer, being the amount of forfeited by the Seller for non-fulfillment of the purchase agreemen .....

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le dated 12th January, 2009 for consideration of ₹ 12.40 crores. Time was the essence of the contract and the amount of ₹ 12.40 crores was to be paid in installments as set out in schedule to agreement dated 12th January, 2009. The respondent had paid the cheques aggregating to ₹ 2.40 crores before the execution of agreement on 12th January, 2009. However, the respondent was unable to make subsequent payment leading to forfeiture of amount of ₹ 2.40 crores paid by the res .....

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n of ₹ 2.40 crores holding that the transaction was not genuine. This resulted in addition of ₹ 2.40 crores to the respondent's income. 4. Being aggrieved, the respondent carried the issue in appeal to the Commissioner of Income Tax (Appeals) [CIT (A)]. On consideration of facts, the CIT (A) concluded that the transaction was genuine. This was evident from the fact that before entering into the agreement the respondent had the property title verified by an Advocate and also publi .....

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ted, the vendors had served notice on the assessee dated 23rd February, 2009 in which it is clearly stated that cheques amounting to ₹ 1 crore issued by him had been dishonoured by the bank. It also has warned the respondent of dire consequences for dishonour of the cheque. Taking into account the aforesaid facts, to save his reputation and to avoid unnecessary litigation, the respondent agreed to forfeiture of ₹ 2.40 crores in terms of the agreement for sale dated 12th January, 2009 .....

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