TMI Blog2016 (1) TMI 1305X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed price which includes the cost of the land paid to the land owners and stamp duty and registration charges. Therefore, the general proposition adopted by the Assessing Officer would not be applicable to the facts and circumstances of the case. This fact is supported by the balance sheet of Inscol which revealed that it has purchased the land inclusive of stamp duty and registration charges. Since, the transaction is inclusive of stamp duty and registration charges, therefore, ld. CIT(Appeals), on proper appreciation of facts and material on record correctly deleted both the additions. Addition on account of advances forfeited by the land owners - Held that:- When the total sale consideration received from Inscol is treated as income in the hands of the assessee, authorities below were not justified in not allowing benefit of forfeited amount as expenditure in the hands of the assessee. Since it was liability of the assessee to bear the expenditure incurred on account of forfeited amount as advance given to the land owners, therefore, it shall have to be allowed as deduction in favour of the assessee. Further, on the same anology, when the Assessing Officer has allowed cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntal Expenses (@Rsl5 lakh per acres) Forfeiture amount Commission / brokerage for procurement of land Service charges for getting permission @Rs 75000/ - per acres. 2. That the Second Party will establish the boundary once the Agreement to Sell has been entered into and will bear full responsibility till the registration and CLU of the said land takes place. 5. That the first party shall pay the stamp duty/registration expenses/Miscellaneous and same shall be deducted from the agreed price mentioned in the clause l or sale consideration. 6. The first party shall not be responsible for advances given for purchasing land on behalf of first party in case registration of land is not done or in case of forfeiture of advances. The amount of advances forfeited shall be borne by the second party or deducted from the agreed sale consideration. 7. That is further agreed that the sale consideration of ₹ 60 lakhs per acre includes the CLU EDC Charges @15 lakhs per acre the 2nd party shall be responsible for taking CLU. All expenses for getting permission EDC charges shall be the responsibility of 2nd party in case of non availability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from Inscol by the assessee and in this financial year, assessee had not paid any CLU charges and so, its claim of reducing CLU charges from sale proceeds was not correct. The Assessing Officer, accordingly, reduced the amount of ₹ 2,40,00,000/- from cost of acquisition. However, subsequently, a rectification order has been passed by the Assessing Officer, since the action of the Assessing Officer resulted into double disallowance of ₹ 2,40,00,000/-. 6. The assessee had also reduced an amount of ₹ 50 lacs from the sale consideration on account of advances given for acquisition of land to the following persons : i) Shri Nirmal Gurdev ₹ 20 lacs ii) Shri Sandeep Singla ₹ 10 lacs iii) Shri Prabhjit Singh ₹ 20 lacs Total ₹ 50 lacs 7. The Assessing Officer asked the assessee to explain the purpose for which the advances were given and to provide the agreements relating to these persons. The assessee had file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d EDC charges. The assessee had shown this amount as liability in the balance sheet. As per assessee, expenditure of ₹ 40 lacs was incurred on this account but the Government did not grant CLU and so the assessee had refunded ₹ 2 Crores to Inscol in the next year. Since the assessee had incurred expenditure of ₹ 40 lacs and have refunded ₹ 2 Crores to Inscol, ld. CIT(Appeals) held that assessee had rightly claimed the deduction at ₹ 2,40,00,000/- out of total receipts from Inscol and Assessing Officer has wrongly disallowed this amount. This addition was accordingly, deleted. 12. After hearing rival submissions, we do not find any merit in this ground of appeal of the revenue. The ld. DR relied upon order of the Assessing Officer and contended that this amount was paid to the assessee, therefore, it was income of the assessee. The ld. counsel for the assessee, however, reiterated the submissions made before authorities below and submitted that assessee is a service provider and these expenses included in the value of the land. Copy of the MOU in reference has been filed. Copy of the letter from Director, Town Country Planning, Haryana dated 03.11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Registration Charges have been made by the assessee. Therefore, assessee is entitled for deduction of the same. 14. The ld. CIT(Appeals) considered the issue in the light of the MOU between assessee and the buyer and found assessee was to bear Stamp Duty and Registration Expenses. The MOU was for purchase of land by the assessee on behalf of Inscol and all the details regarding who will make the payment for what, are mentioned in this MOU. Perusal of the balance sheet of Inscol reveals that it had purchased land inclusive of Stamp Duty and no stamp duty and registration charges was separately debited to the land account and so, it was evident that this amount is inclusive of stamp duty and registration charges. The assessee is a service provider who purchased the land on behalf of Inscol, therefore, the conditions mentioned in the MOU clearly shows that Assessing Officer was not justified in disallowing Stamp Duty and Registration Charges from the cost of acquisition. The ld. CIT(Appeals), accordingly, deleted both the additions. 15. After hearing rival submissions, we do not find any merit in this ground of appeal of the revenue. The ld. DR relied upon order of the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee and these three persons forfeited the amount. Since advances were not given for purchase of land in respect of which, short term capital gain has been declared, the ld. CIT(Appeals) confirmed the order of Assessing Officer and dismissed this ground of appeal of the assessee. 20. We have considered the rival submissions. The ld. counsel for the assessee reiterated the submissions made before authorities below and submitted that MOU in question includes forfeiture amount and referred to Clause-I and 10 of the MOU, which is reproduced above as clause-I and 6. On the other hand, ld. DR relied upon order of the authorities below. 21. On consideration of the rival submissions, we do not find any justification to sustain the addition of ₹ 50 lacs. It is not in dispute that advances were given for acquisition of land to three persons in a sum of ₹ 50,00,000/-. It is also not in dispute that Inscol could not purchase the land from these land owners and the amounts were forfeited by the land owners. Inscol has debited the assessee's account as the assessee company was responsible for getting the registration done in the name of Inscol. The advance was given for purch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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