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TMI Blog2018 (3) TMI 1652X X X X Extracts X X X X X X X X Extracts X X X X ..... he following grounds: 1. In upholding that initiation of reassessments proceedings under section 147 of the Ad on the basis that income chargeable to tax had escaped assessment is valid and proper in law. 2. In upholding that the amount payable by the Appellant to Gm Metals Ltd ((OM) and Wellwisher Construction and Finance Pvt Ltd {'WW') amounting to Rs. 87.05 crores reflected in its books of accounts under the head 'inventories', is a non-business expenditure. 3. In upholding the disallowance of interest expense attributable to the monies borrowed for financing the payments to OM and WW and reducing such interest from the value of 'Inventories'. The Appellant craves leave to add, alter, vary, omit, substitute or amend any of the above grounds of appeal, at any time before or at, the time of appeal, so as to enable the Honorable Income-tax Appellate Tribunal to decide this appeal according to law. " 4. The brief facts of the case, are that the assessee filed its return of income for the A.Y. 2009-10 on 29.09.2009 declaring total loss to the tune of Rs. 2,97,26,441/-. The return was processed u/s 143(3) of the I.T. Act dated 30.12.2011 by assessing the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 133 & 1137/M/2016 dated 10.11.2017 in the assessee's own case is on the file in which the issue of reopening and u/s 147/148 of the Act has been decided against the assessee. The relevant para is 4.6 which is hereby reproduced below as under: - "4.6. We have heard the rival contentions of the parties and perused the relevant records placed before us including the various case laws relied by both the parties and also the rebuttal by the ld AR. The undisputed facts are that the assessee bought over the interest in the land allotted by the MIDC from two other companies namely M/S OM. and M/S Well Construction and Finance Pvt Ltd for a consideration of Rs. 100.80 Cr. In the present case the assessment has been completed on 22.12.2008 u/s 143(3) of the Act and was re-opened by issue of notice u/s 148 of the Act on 28.5.2012 apparently four years after the end of relevant assessment 19 ITA No.1132 and 1133/Mum/2016 year. The case of the assessee was re-opened after the AO of the assessee received information from the AO of M/S OM after the assessment of OM for AY 2008-09 was framed in December, 2010 stating that the transaction between assessee, OM and WW was a sham and non genuine. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the CIT(A) in which the CIT(A) has confirmed the order passed by the AO in connection with amount payable to two parties namely Om Metals Ltd. and Wellwisher Construction & Finance Pvt. Ltd. amounting to Rs. 87.05 crores reflected in its books of accounts under the head of inventories which was held as non-business expenditure. At the very outset, the Ld. Representative of the assessee has argued that this issue has duly been covered by the finding of the Hon'ble ITAT in the assessee's own case in ITA. No.1132, 1133 & 1137/M/2016 for the A.Y. 2006-07, 2007-08 & 2008-09 dated 10.11.2017. However, on the other hand, the Ld. Representative of the Department has refuted the said contention. Before going further, we deemed it necessary to advert the finding of the Hon'ble ITAT in the assessee's own case (supra) on record. The relevant finding has been given in para no. 5.8 which is hereby reproduced below as under: - "5.8. We have considered the rival contentions and perused the relevant records placed before us including case laws cited by the parties. The undisputed facts are that the land measuring 50 acres was allotted to assessee and two other JV partners OM and WW by MIDC upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isionary jurisdiction u/s 263 of the Act which stood quashed by the ITAT. In other words the amounts paid by the assessee to OM and WW were taxed in their hands as genuine transaction by the deptt. It is difficult to understand that when the revenue treated the transaction as genuine in the hands of two JV partners , how the same transaction can be non genuine and sham in the hands of the assessee. Moreover the chronology of events clearly shows that the application was made in the joint names of the assessee, OM and WW. The land was also allotted by MIDC on the said application made by the three joint venture partners . Thereafter MIDC on an application made by the JV partners approved the relinquishment of interest in the said land by two JB partners OM and WW in favour of the assessee on payment of specified premium. It is relevant to note that records of MIDC proved that the assessee, OM and WW were the joint owners of the plot of land till the relinquishment of rights by OM and WW was approved by MIDC which showed the transaction being genuine and out of business consideration. A business decision was taken 46 ITA No.1132 and 1133/Mum/2016 by the assessee to purchase the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.80 crores. The necessary sanction was obtained from MIDC. The assessee accounted and provided for the transaction in its books of accounts as on 31.03.2006 by increasing the cost of land/inventories and correspondingly crediting the two JV partners with Rs. 50.40 cores each and showing the remaining payable at the year end under the head of sundry creditors. The transaction was accepted by the AO at the time of scrutiny proceedings. In the meantime the assessment was completed for the A.Y. 2008-09 in December, 2010 in Jaipur approximately two years after the completion of assessment of the assessee. The assessment order was forwarded to the assessee by the Assessing Officer who reopened the case of the assessee. In the case of Om, the amount to the tune of Rs. 50.40 crores was treated as revenue receipt and accordingly the taxed. In the case of WW the money received from the assessee was received as capital receipt and MAT was paid thereon. However, the CIT(A) invoked the revisionary jurisdiction u/s 263 of the Act which was quashed by the ITAT. In brief the amount was paid by the assessee to OM and WW were taxed in their hand as genuine transaction by the Department. When the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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