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2018 (3) TMI 893

ed by the authorities, the assessee company could not commence the business. However, no business activities were carried out by the assessee during the year. Ultimately, the land was sold to West Bengal Government for a total sum of ₹ 8.51 crores which was sold in two parts and two deeds were executed in this regard. The assessee has calculated the income/loss from capital gain u/s 50C of the Act. All the investments including improvement made in the earlier years have been duly recorded in the balance sheet and have been accepted under assessment proceedings from time to time, as investments is not under dispute. - Therefore the assessee’s investment is treated as investment for the purpose of capital gain alongwith purchase cost and site development and the same has to be allowed under the head capital gain and in no stretch of imagination it can be an adventure in the nature of trade. - For compensation paid to VLS capital Ltd as cost of improvement to be deducted from sale consideration for the purposes of Capital Gains - Held that:- As the amount was borrowed from VLS Capital Ltd for setting up LPG Bottling plant where formal approvals were not accorded by the v .....

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ores paid to VLS Capital Ltd out of the business income assessed. The plea is without prejudice to the claim of the appellant that the gain from the sale of land is assessed as Long Term Capital. 7. The appellant craves to be allowed to add any fresh ground of appeal and /or delete or amend any of the grounds of appeal. 3. Briefly stated, the facts of the case as emanating from the order of the Assessing Officer are reproduced herein below: The assessee has during the year sold landed property of around 18 acres in West Bengal area with in the vicinity of Barasat Town in the District of 24 N Paragna West Bengal to Bengal Housing Board vide 2 separate sale deeds for a total consideration of ₹ 8,51,00,000/-. This land is stated to be acquired in the year 1995 - 1996 for ₹ 1,84,29,294/- and thereafter site development v/ith cost of ₹ 1,71,31,949/- is stated to be made during the F.Y. 1995 - 1996 to F.Y. 1998 - 1999. Thus meeting the total cost of land to the assessee of ₹ 3,55,61,243/-. The assessee from the sale consideration has reduced an amount of ₹ 3,40,00,000/- stated to be paid to one M/s. VLS Capital Ltd.. Accordingly capital gain after indexation .....

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ound that this transaction of the assessee company with M/s. VLS Capital Ltd. is not a real one. The original title deeds as such do not contain any financial value so long as the title and possession of the land is with the assessee company. Secondly, VLS Capital Ltd. had been a share holder of 14% of shares in the assessee company till last year and even during the period this share prior to sale of this land. The MOU being relied upon is a collusive agreement between the assessee and VLS Capital Ltd. The assessee has also produced certain news paper cutting to show about the dispute in the assessee company and M/s. VLS Capital Ltd. These are all created documents to make believe the story cooked by the assessee in collusion with M/s. VLS Capital Ltd. On the facts and circumstances of the case, this expenditure claimed of ₹ 3,40,00,000/- is not genuine hence not allowed. It is also been mentioned here that M/s. VLS Capital Ltd. had not shown this 4 With the above remarks and after taking into consideration all the facts of the case the total income of the assessee is worked out as under: Income from business Sale consideration of land ₹ 8,51,00,000/- Less - Expenditur .....

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ctivities were carried out by the assessee during the year. Ultimately, the land was sold to West Bengal Government for a total sum of ₹ 8.51 crores which was sold in two parts and two deeds were executed in this regard. The assessee has calculated the income/loss from capital gain u/s 50C of the Act. All the investments including improvement made in the earlier years have been duly recorded in the balance sheet and have been accepted under assessment proceedings from time to time, as investments is not under dispute. 6. Regarding the expenditure made necessary evidences were placed on record and no dispute in that regard has ever been made. These submissions were submitted before the DCIT, Central circle - 17, New Delhi placed at pages 41 and 42 of the paper book. The assessee also submitted a letter to the DCIT, Central Circle 17, New Delhi dated 7.12.2011, available at pages 43 & 44 of the paper book in this regard. The Assessing Officer has not pointed out any defect in the same. For the years since 1995 there is no dispute in this regard as to the cost of land i.e. purchase of land and the improvement of the same. It is also not in dispute that the assessee company w .....

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