Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

M/s. Vascon Hadapsar Ventures Versus The Dy. Commissioner of Income Tax, Central Circle – 2 (1) , Pune

2017 (9) TMI 1227 - ITAT PUNE

Addition on account of income from alleged sale of land - assessment in who's hand - to be taxed in the hands of partnership firm or successor company - AO did not accept the dissolution of partnership firm - The assessee claims that on dissolution of partnership firm, the land was passed on to M/s. Vascon Engineers Ltd. (the successor company) - Held that:- Departmental Representative for the Revenue has failed to controvert the documents filed by the assessee in this regard and in view of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

entative for the Revenue has tried to improve and stated that even if dissolution is there, but possession was handed over on 07.05.2007 and hence, taxable. We find no merit in both the stands - As the taxes have been paid on the profits arising on sale of said land by M/s. Vascon Engineers Ltd. in the instant year itself at higher rates and no benefit has arisen to the said concern on this account. There is no merit in disturbing the same. Accordingly, we delete the addition made in the han .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eir joint venture agreement and have been so assessed. Because of inconsistency, we find no merit in the stand of Revenue and since due taxes have been paid on the transaction, the ratio laid down in CIT Vs. Excel Industries Ltd. and Mafatlal Industries P. Ltd. [2013 (10) TMI 324 - SUPREME COURT] is squarely applicable and we apply the same and delete the addition in the hands of assessee. - ITA No.1285/PUN/2013 - Dated:- 18-9-2017 - MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM For The Ass .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d by the Assessing Officer u/s.143(3) r.w.sec.153A of the Act was bad in law and invalid. 2. The Learned Commissioner of Income Tax(Appeals) has erred in law and in facts in not appreciating that the assessment made in the name of the firm was invalid and unjustified. 3. The Learned Commissioner of Income Tax(Appeals) has erred in law and in facts in not appreciating that no assessment can be made unless any incriminating material is found as a result of the search. The assessment made in the pr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d. on the alleged income added should be treated as tax paid by the appellant. 7. The appellant craves leave of your Honor to add to, alter, amend and/or delete all or any of the foregoing grounds of appeal. 3. The grounds of appeal No.1 to 4 are not pressed, hence the same are dismissed as not pressed . 4. The only issue raised by the assessee is against addition of ₹ 13,82,94,326/- on account of income from alleged sale of land to M/s. Suzlon Energy Ltd. The connected issue raised by way .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eturn of income on 16-09-2008 showing loss of ₹ 91,450/-. In response to the notice issued under section 153A of the Act the assessee again filed the return of income declaring loss of ₹ 91,450/-. The Assessing Officer during the course of assessment proceedings noted that the assessee firm had come into existence on 12-05-2006 with the following partners : (1) Vascon Engineers Ltd. - 50% share (2) Panchashil Real Estate Consultants Pvt. Ltd. - 50% share 6. The assessee entered into .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s, in all the assessee acquired land admeasuring 59,603 sq. mtrs. for a consideration of ₹ 71.50 crores. The Assessing Officer further noted that subsequently the assessee entered into an agreement dated 07-05-2007 to sell a part of the land admeasuring 41,200 sq.mtrs to Suzlon Energy Ltd. for ₹ 75 crores. The assessee had not offered any such income in the return of income filed for the instant assessment year. Thus, the Assessing Officer asked the assessee to clarify as to why the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fulfillment of the said payment obligation. The remaining ₹ 10 crores were to be paid on final conveyance. The assessee further pointed out that Suzlon Energy Ltd. paid only ₹ 55.40 crores till the execution of the agreement and the balance was not paid, hence possession of the land was not handed over to Suzlon Energy Ltd. on the date of agreement and the sale was not completed on that date. It was further contended by the assessee before the Assessing Officer that before completing .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Engineers Ltd. in financial year 2007-08. 7. The Assessing Officer however did not find the explanation of the assessee as correct since certain documents were found which suggested the existence of the firm even after the date of dissolution, i.e. 29-05-2007. Therefore, another show cause notice was issued to the assessee referring to the several documents found during the course of search on the premises of the assessee and business premises of Panchashil Real Estate Consultants Pvt. Ltd. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

m that the dissolution deed was executed on 29-05-2007 between the partners, the assessee pointed out that it had disclosed the fact of dissolution in the annual report for the year ending 31-03-2008. Second contention raised by the assessee was that M/s. Vascon Engineers Ltd. had offered the income to tax. The Assessing Officer was of the view that from the various documents filed by the assessee, it was very clear that there was connivance between the partners on the issue of shifting the inco .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eason that M/s. Vascon Engineers Ltd. had similar expertise in residential projects. The Assessing Officer was of the view that the dissolution dated 29-05-2007 and the Joint Venture agreement dated 01-06-2007 were done with the motive of shifting the income of the firm to one partner, i.e. M/s. Vascon Engineers Ltd. As far as the Joint Venture dated 01-06-2007 was concerned, there was no provision of making any payment to Shri Atul Chordia before commencement of the residential project but even .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ccount of land sale during Assessment Year 2008-09 and offered ₹ 12 crores on account of building construction contract during Assessment Year 2009-10 to the assessee firm and since Vascon Engineers Pvt. Ltd. was intending to go public and hence was interested in jacking up its profits with the motive of getting better valuation. The Assessing Officer thus held that the partners mutually entered into a conspiracy according to which one of the partner M/s. Vascon Engineers Pvt. Ltd. was all .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g Officer thus held that the arrangement was made to shift the profit of the assessee firm to M/s. Vascon Engineers Pvt. Ltd. and even the dissolution was merely an arrangement on paper to give a colour of genuineness but the same could not be accepted. Therefore, the Assessing Officer held that the profit on account of sale of land needed to be taxed in the hands of assessee where the assessee had bought and sold the property. Even the agreement to sell was prior to the date of dissolution of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ny of the authorities. The second contention of the assessee that the original partnership was with Panchashil Real Estate Consultants Pvt. Ltd. whereas the later Joint Venture was with Shri Atul Chordia was also rejected by the CIT(A). Shri Atul Chordia was the Managing Director of entire Panchashil group. The next contention of the assessee that at the time of agreement to sell, part of the land agreed to be sold to Suzlon Energy Ltd. had not even been purchased by the firm. Where the firm was .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the order of CIT(A). 11. The Ld. Authorised Representative for the assessee after taking us through the facts of the case referred to the chart showing the details of plot of land purchased and sold. The Ld. Authorised Representative for the assessee pointed out that plots at Sl. Nos. 1 & 2 has not been sold. The assessee further pointed out that the first piece of land for ₹ 65 crores was purchased from Shri Sunil Tupe and others, i.e. Syndicate Realtors for a sum of ₹ 65 crore .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s purchased after the dissolution. The Ld. Authorised Representative for the assessee further pointed out that sale to Suzlon Energy Ltd. was after the dissolution of the firm and undoubtedly agreement to sale was executed on 07-05-2007 which was prior to sale but the conveyance was completed subsequent to purchase of part of the land afterwards. He also pointed out that the profit on the sale of entire transaction was offered by Vascon Engineers Ltd. He further pointed out that though the origi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ubsequent to search placed at page 163 of the paper book, this fact of dissolution was mentioned. The Ld. Authorised Representative for the assessee also referred to the book entries wherein the development account of Suzlon Energy Ltd. was transferred to Vascon Engineers Ltd. by the assessee placed at pages 126 and 127 of the paper book. He further referred to the entries by the Vascon Engineers Ltd. wherein the said concern has shown the sale of ₹ 75 crores against which the assessee is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ascon Engineers Ltd. which was developed later and the profit was offered in Assessment Years 2013-14 & 2014-15. The sale deed was executed on 22-04-2008 by M/s. Vascon Engineers Ltd. though on behalf of the partnership firm; merely because name was used wrongly and unlawfully, does not make the firm alive, which was otherwise dissolved prior to that date. He pointed out that the case of the revenue was that no valid dissolution had taken place because the land deals was in the name of Vasco .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ct with Shri Atul Chordia. Further, there was a profit of ₹ 12 crores on which M/s. Vascon Engineers Ltd. Paid taxes and the department accepted. The Ld. Authorised Representative for the assessee pointed out that CIT(A) says that Shri Atul Chordia in subsequent agreement had 50% share. So this agreement was colourable; but in fact Shri Atul Chordia had only 16% share and the conclusion of the CIT(A) in this regard was incorrect. He placed reliance on the following decisions to decide the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssessee in conclusion pointed out that M/s. Vascon Engineers Ltd. had declared the income from capital gains which has been assessed in its hands. In other words, income arising from sale of one asset has been assessed on substantive basis in the hands of two parties i.e. the assessee before us and M/s. Vascon Engineers Ltd. He further clarified that in any case, M/s. Vascon Engineers Ltd. had shown income of ₹ 103 crores and there is no merit in the case of Revenue authorities that income .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

red to by the assessee to establish the date of dissolution of the assessee firm were self-serving documents, the annual report of partner and the reporting to SEBI etc. He stressed that where possession was given on 07-05-2007 itself, then the gain arising on sale of the property could be added in the hands of the assessee. He stated that some dissolution had taken place but when the same had taken place is not clear. He stressed that the department was not contesting the fact of dissolution bu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

purchaser on 07.05.2007 on execution of agreement to sell. In the alternate, it was pointed out by the learned Departmental Representative for the Revenue that if the contention of assessee in respect of dissolution of firm is considered true for a moment, the property was passed on to Suzlon Energy Ltd. on 07.05.2007 and hence, the profits arise on that date and need to be taxed in the hands of assessee even then. He thereafter, relied on different decisions of the Hon'ble Supreme Court fo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to provide the copies of decisions, some of which are not reported. However, he also relies on the ratio laid down in Kedarnath Jute Mfg. Co. Ltd. Vs. CIT 1971 AIR 2145 for the proposition that the provisions of law relating thereto and not the view which the assessee might take of his rights nor can existence or absence of entries in the books of account be decisive or conclusive in the matter. 15. The Ld. Authorised Representative for the assessee pointed out that perusal of the terms of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

though is in the name of Vascon Hadapsar Ventures but entire consideration was received by M/s. Vascon Engineers Ltd. may be though Vascon Hadapsar Ventures but the substance of the transaction proves the case of the assessee. 16. We have heard the rival contentions and perused the record. The grounds of appeal No.1 to 3 are not pressed and hence, the same are dismissed as not pressed. The issue vide grounds of appeal No.4 to 6 is against the addition of ₹ 13.83 crores made on account of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he assessee and Syndicate Realtors on payment with topline sharing was entered into. On 28-04-2007 a supplementary agreement with Syndicate Realtors was executed wherein the terms of Joint Venture were changed to Development Agreement on lumsum consideration rather than topline sharing. On 28-04-2007 itself an MOU was entered into between the assessee and M/s. Suzlon Energy Ltd. On 07-05-2007 an agreement to sale by the assessee was executed with Suzlon Energy Ltd. for sale of 41,200 sq.mtrs. of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

with Shri Atul Chordia for Project Management of project of M/s. Suzlon Energy Ltd. On 19-06-2007 certain portions of land belonging to Tupe family were agreed to be purchased which in turn were to be sold to Suzlon Energy Ltd. as per the agreement dated 07-05-2007. On 29-06-2007 possession of the land was handed over to Suzlon Energy Ltd. as part of the sale agreement, when Suzlon Energy Ltd. had paid substantial amount to M/s. Vascon Engineers Ltd. The copy of the letter dated 29-06-2007 under .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fore addressing the issue raised, we may also look at the details of plot purchased for further sale to M/s. Suzlon Energy Ltd. The assessee vide purchase agreement dated 05.06.2006 had acquired different pieces of plots of land from M/s. Syndicate Realtors constituted of Sunil Tupe and another admeasuring 54,400 sq. mtrs. of land. The copy of agreement is placed at pages 13 to 38 of Paper Book. Out of this land, the assessee has retained 12600 sq. mtrs. and 5800 sq. mtrs. of land which is unsol .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ce of land was acquired on 19.06.2007 admeasuring 5200 sq.mtrs. for total consideration of ₹ 6.50 crores from Ramdas Tukaram Tupe and others. The copy of said agreement is placed at pages 87 to 111 of Paper Book. The total cost of acquisition of land was ₹ 71.50 crores and the proportionate cost of land and other expenses was worked out at ₹ 61.17 crores. The profit on sale of land i.e. where the sale value was ₹ 75 crores, was worked out at ₹ 13.83 crores. In other .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

owever, the case of Revenue is that the said profit on sale of land is to be assessed in the hands of assessee on the date of entering into agreement to sell itself. 18. The first reason for not accepting the claim of assessee is that the assessee was unable to produce original Dissolution Deed. The assessee claims that the partnership firm was dissolved on 29.05.2007 and the running business of assessee firm was taken over by M/s. Vascon Engineers Ltd. The assessee was directed to file the copy .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e learned Authorized Representative for the assessee pointed out that the stamp papers for executing the Deed of Retirement Cum Dissolution was purchased on 15.03.2007 but since the accounts were not finalized, the date of retirement was shifted to 29.05.2007 and hence, the entries in hand on the said document vis-à-vis the date of dissolution. Our attention was drawn to clause 2 of the said Deed, wherein it was agreed between the parties that the amounts of business of said firm on the b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s made to the Notes and Accounts to the Balance Sheet of Panchashil Real Estate Consultants Pvt. Ltd. as on 31.03.2008, wherein it categorically declared that on 29.05.2007 M/s. Vascon Hadapsar Ventures was dissolved and hence, the company is no longer a partner as on 31.03.2008. The said Balance Sheet is signed on 15.07.2008 by the Director and also by the auditor. The copy of the same is placed at pages 157 to 161 of the Paper Book. Further, in the Notes to Accounts, similar declaration was ma .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

were filed with SEBI on 14.11.2007, wherein the factum of dissolution on 29.05.2007 was mentioned and it was also mentioned that the business of partnership was to be carried out by M/s. Vascon Engineers Ltd. It was further declared that M/s. Vascon Hadapsar Ventures, former partnership firm, in which it was a partner entered into Development Agreement dated 19.06.2007 with Ramdas Tukaram Tupe and others for the development of 1.28 acres of land located at Hadapsar, Pune. Under the said agreeme .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

009 before the ADIT (Inv), Unit II(1), Pune, which was written by M/s. Vascon Engineers Ltd. on behalf of M/s. Vascon Hadapsar Ventures i.e. assessee before us. In the said communication, it was clarified that M/s. Vascon Hadapsar Ventures held the land as stock-in-trade in the books of account and was in the business of development projects. It was further pointed out that since the business of partnership firm was to carry out the business as builder and developer and the gain arising on sale .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s under:- Date Amount 22.6.2006 5,00,00,000 14.2.2007 10,50,00,000 14.2.2007 9,90,47,983 30.4.2007 10,00,00,000 30.4.2007 20,00,00,000 20.6.2007 9,59,52,017 Sub total - payment due on the date of agreement 65,00,00,000 Payment due on the date of final conveyance 22.4.2008 - received on 26.4.2008 10,00,00,000 Total 75,00,00,000 19. It was also mentioned in that letter as per clause 2 of the above agreement to sell that M/s. Suzlon Energy Ltd. was required to pay sum of ₹ 65 crores on or bef .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ded over to M/s. Suzlon Energy Ltd. on the date of agreement and the sale was not completed on that date. Subsequently, the said amount was paid on 20.06.2007 and only after the receipt of above payment, the possession was handed over and the sale was recognized. So, the sale was completed only on 29.06.2007 i.e. after the firm was dissolved on 29.05.2007 and hence, the sale was recognized by M/s. Vascon Engineers Ltd. and offered to tax during assessment year 2008-09. It was further explained t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ment with M/s. Suzlon Energy Ltd. was signed and executed only by the authorized signatory of M/s. Vascon Engineers Ltd. The sale was completed after payment of ₹ 9.59 crores and the corresponding possession being handed over to M/s. Suzlon Energy Ltd. on 29.06.2007, the company recognized the same in its books of account in accordance with Accounting Standards (AS)-9 and the taxes thereon were paid during assessment year 2008-09. So, a request was made that the income should not be taxed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ntures through its partner M/s. Vascon Engineers Ltd. through its authorized signatory Mr. S.P. Nair. The copy of handing over of possession is filed during the course of hearing, which is letter dated 29.06.2007 and the possession has been handed over of land admeasuring 41,200 sq.mtrs. carved out of property. The said letter is signed by the authorized signatory for M/s. Vascon Hadapsar Ventures and the quite peaceful and vacant possession of the property has been received by M/s. Suzlon Energ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ere was Joint Venture Agreement between M/s. Vascon Engineers Ltd. on one side and Mr. Atul Ishwardas Chordia i.e. one Director of Panchashil Real Estate Consultants Pvt. Ltd. for the project management of M/s. Suzlon Energy Ltd. The copy of said agreement is placed at pages 76 to 86 of the Paper Book. The agreement is dated 01.06.2007 and M/s. Vascon Engineers Ltd. has declared itself to be well and sufficiently entitled to or seized and possessed of all that piece and parcel of property at Had .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r of the said property and had clear and marketable title of the property. It also declared that it had full right of authority to deal with the said property. It is pointed out here itself that the said joint venture was in respect of balance property which was not sold to M/s. Suzlon Energy Ltd. but was adjacent to the land sold to M/s. Suzlon Energy Ltd. The learned Authorized Representative for the assessee has pointed out that the profit arising on development of the said project has not be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Chordia paid the taxes on the said profits received by him. In the later years, there was balance profit shown and declared by the individual parties. 21. The case put up by the learned Authorized Representative for the assessee is that dissolution has to be seen from the general principles of law and not from the documentation undertaken by the assessee i.e. while executing the agreement to purchase the rights from Tupe family for the balance portion of land, the agreement was entered into by t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

19.06.2007 being executed by the assessee though it claims that the firm was dissolved on 29.05.2007. In other words, the firm was continuing, that is why it entered into the said agreement with Tupe family. The claim of dissolution of firm on 29.05.2007 is challenged by the Revenue on this issue of assessee entering into an agreement with Tupe family on 19.06.2007. The Revenue has also not accepted the explanation of assessee for non-production of original Dissolution Deed and has doubted the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r Ventures and M/s. Syndicate Realtors as vendors and M/s. Suzlon Energy Ltd. as the vendee. Vide clause (d) at page 116 of Paper Book, parties were desirous of executing the Deed of Conveyance as agreed in the document dated 07.05.2007 and the vendors conveyed and transferred to the purchasers the said land free from all encumbrances for consideration and the terms mentioned in it. The learned Departmental Representative for the Revenue referred to different terms of agreement to point out that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n Hadapsar Ventures and further handing over of possession of execution of agreement to sell dated 07.05.2007. Here, it was vehemently argued by the learned Departmental Representative for the Revenue that since the possession has been given on 07.05.2007 i.e. on the date when the assessee was not dissolved then the profit arising on that date need to be taxed in the hands of assessee. Further, reference was made to other covenants of the agreement, wherein the vendors i.e. M/s. Vascon Hadapsar .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessee dissolved the firm and had not given the possession on the date of execution of agreement to sell, but had given the possession on a later date which was after the date of dissolution of the partnership firm, then there is no question of assessability of business profits on sale of land in the hands of dissolved firm but in the hands of partner who had taken over the assets and liabilities of the partnership firm. The case of Revenue on the other hand, is that there is no dissolution o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r the nomenclature of the documents nor any particular activity undertaken by the parties to the contract would be decisive. It is well settled proposition that an agreement and the mitigating circumstances have to be considered as a whole and the intention of parties is to be gathered from the same. It is necessary to look at the substance rather than form. Applying the said principle to the facts of the present case, we find that the first agreement which was executed was the partnership deed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d into an agreement with M/s. Suzlon Energy Ltd. dated 07.05.2007 to sell the rights in the land admeasuring 36,000 sq.mtrs. out of 54,400 sq.mtrs. acquired from M/s. Syndicate Realtors along with 5200 sq.mtrs. of adjacent land which was yet to be acquired from Mr. Ramdas Tukaram Tupe and others. The perusal of agreement to sell dated 07.05.2007 placed at pages 57 to 71 of the Paper Book reflects that the vendors for the agreement to sell were Mr. Sunil Tupe and others along with Mr. Ramdas Tuka .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

from Tupe family on 19.06.2007. The said development agreement is also signed by M/s. Vascon Hadapsar Ventures through its partner. On the other hand, the assessee claims that the Retirement Cum Dissolution Deed was executed on 29.05.2007, under which the said asset was acquired by M/s. Vascon Engineers Ltd. and the other partner Panchashil Real Estate Consultants Pvt. Ltd. retired from the partnership firm. The position of law vis-à-vis dissolution is that once the partnership firm is di .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

be assessed in the hands of M/s. Vascon Engineers Ltd. It may be reiterated herein that M/s. Vascon Engineers Ltd. has duly accounted for the profits of sale of said land in its books of account and has also paid taxes thereon. The said income has been assessed in the hands of M/s. Vascon Engineers Ltd. as declared by it and has been assessed in the hands of assessee before us also on the ground that no dissolution of partnership firm had been completed. The reason for non acceptance of dissolu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ght prior to the date of dissolution. The assessee has explained the various terms of said agreement. Secondly, the factum of dissolution as on 29.05.2007 has been declared by M/s. Vascon Engineers Ltd. by way of details filed before SEBI as it wanted to come out with IPO. The said declaration was made on 14.11.2007. The said company came out with the IPO much later. The other retiring partner had also in its Balance Sheet declared that it had retired from the partnership firm and was no more a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lf of M/s. Vascon Hadapsar Ventures had explained the total facts of the property transactions, dissolution of M/s. Vascon Hadapsar Ventures and taking over of assets by M/s. Vascon Engineers Ltd. In the totality of the above said communication being available on record, some of which is with the authorities other than the Income Tax Department, it cannot be held that no dissolution of erstwhile firm had taken place. We reverse the findings of Assessing Officer and the CIT(A) in this regard. 24. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

thereafter and documents were signed on that account. Admittedly, M/s. Vascon Engineers Ltd. has taken over the project for which, it was the initial contributor and because the other partner had not contributed anything for the purchase of said asset, the other partner retired and the assets and liabilities were taken over by M/s. Vascon Engineers Ltd. However, the land deal had not completed and certain documentation had to be completed which were signed in the name of M/s. Vascon Hadapsar Ve .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ere was dissolution of firm. Merely because the documentation have been executed subsequent to the dissolution of firm in the name of erstwhile firm, it would not bring the firm into existence which by act of partners has been dissolved and the relation between the partners has been severed. In the absence of agreement to continue the partnership, no burden can be cast on the said firm which already stands dissolved, to pay the taxes, on a venture which was completed after the date of dissolutio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and continues to assess the said income in two hands i.e. in the hands of assessee firm before us and in the hands of M/s. Vascon Engineers Ltd., wherein the said entity had disclosed the income as part of its profits for the year at about ₹ 103 crores. 25. Another aspect which needs to be met is the plea of learned Departmental Representative for the Revenue that since the possession of property was given on 07.05.2007 itself as mentioned in the agreement to sell, then the transaction of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cution of agreement to sell on 07.05.2007. The assessee in this regard explained that pursuant to the said payment of about ₹ 10 crores, the possession was handed over on 29.06.2007 to M/s. Suzlon Energy Ltd. The learned Departmental Representative for the Revenue has failed to controvert the documents filed by the assessee in this regard and in view of the said facts and circumstances and in view of the fact that certain portion of consideration not being paid to the assessee, it cannot b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

07 and hence, taxable. We find no merit in both the stands. 26. Now, coming to the next aspect of the issue. The Hon ble Bombay High Court in CIT Vs. Nagri Mills Co. Ltd. (1958) in 33 ITR 681 (Bom) while deciding the issue of allowability of deduction had observed that the question as to the year in which the deduction is allowable may be material when the rate of tax chargeable on the assessee in two years, was different but where the rates chargeable on the assessee are uniform, then whether t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ax. There is no dispute that in the subsequent accounting year, the assessee did make imports and did derive benefits under the advance licence and the duty entitlement pass book and paid tax thereon. Therefore, it is not as if the Revenue has been deprived of any tax. We are told that the rate of tax remained the same in the present assessment year as well as in the subsequent assessment year. Therefore, the dispute raised by the Revenue is entirely academic or at best may have a minor tax effe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version