TMI Blog2019 (4) TMI 1178X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 7.3 Crores received from the said trust, an amount of ₹ 1.64 Crores was adjusted as advance for the land in the year under consideration. It was noted that though such advance of ₹ 1.64 Crores was given on the basis of the MOU dated 26/02/2007, the MOU itself does not mention such payment. The two revenue authorities and the Tribunal concurrently came to the conclusion that the claim of expenditure was not genuine. There were major discrepancies in the accounts and the documents presented by the Assessee in relation to such claim. We do not find there is any question of law arising. It is true that once in course of a business an expenditure is shown to have been incurred for the purpose of business, the Assessing Officer would not substitute his judgment for that of the Assessee in making such expenditure. However in the present case, the very genuineness of the expenditure has been rejected - No question of law arises - Appeal is dismissed. Disallowance of expenditure u/s 37(1) - The revenue authorities and the Tribunal concurrently held that the payments were not genuine. Reference to unregistered document was only by way of additional ground to reject th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogent reasons for rejecting expenses claimed by the Appellant? 2. Though as many as 6 questions are framed, the disputed issues are only 2, namely of the disallowance of expenditure of a sum of ₹ 6,00,60,000/ paid by the Assessee to one public charitable trust and another sum of ₹ 4.07 Crores paid by the Assessee to individuals. These questions arise in the following background. 3. The Appellant Assessee is an individual. For the Assessment Year 2009 2010, she had filed the return of income declaring total income of ₹ 5.58 Lakhs from her business of real estate development. The Assessing Officer undertook scrutiny assessment of this return. During such assessment, it was found that the Assessee had entered into an agreement for purchase of an immovable property. According to her, it was found that there were number of charges and impediments in the title to the property and to clear this, the Assessee had to incur considerable expenditure. Out of various expenditures, the Assessing Officer disputed 2 of them. One was with respect to a sum of ₹ 6,00,60,000/ to one BRAC Trust by way of lumpsum compensation. Upon inquiry by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties were claiming right over the land under unregistered documents, would not establish that they had no right over the land. 7. The learned Senior Counsel relied on the decisions in the case of Commissioner of Income tax III Vs. Panchmahal Steel Ltd. [2013] 33 taxmann.com 10 (Gujarat) and Commissioner of Income tax 16 Vs. D. Chetan Co. [2016] 75 taxmann.com 300 (Bombay) in respect of the contention that forward contract is not prohibited. 8. Reliance was placed on the decision in the case of Commissioner of Income Tax, Andhra Pradesh Vs. Dhanrajgirji Raja Narasingirji [1973] 91 ITR 544 (SC) to contend that the wisdom of the businessman in incurring the expenditure cannot be questioned by the Assessing Officer. 9. Reliance was placed on the decision in the case of Mahaveer Kumar Jain Vs. Commissioner of Income Tax [2018] 404 ITR 738 (SC) to contend that the same income cannot be taxed twice. 10. Reliance was placed on the decision of Gopal Das Estates Housing (P.) Ltd. Vs. Commissioner of Income tax [2019] 103 taxmann.com 334 (Delhi) to contend that the expenditure incurred for obtaining clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He further observed that : (v) The basis of the compensation as stated by the appellant is that she paid half the amount received firm M/s. Riverview properties as sale consideration since the trust was to be given half of the subject land i.e. 6.5 acres of land. While on one hand Shri Jugraj Palresha was given a compensation of ₹ 1,45,00,000/ on an advance of ₹ 1,00,00,000/ for a prospective sale of 3.25 acres, the BRACT was compensated with an amount of ₹ 6,00,60,000/ on the alleged advance of ₹ 1,64,40,000/ . The reason for this is not far to seek. In case of BRACT, the entire amount of compensation is covered u/s 11 of the Act as the BRACT is a registered Trust under sec. 12A of the I.T. Act. As a matter of fact, BRACT had shown deficit in the revised return of income filed for the A.Y. 2009 10 and the entire compensation got subsumed in the deficit and no tax was paid by BRACT on the compensation shown to have been received from the appellant. (vi) Another important aspect to be noted is that the appellant had entered into the MOU on 26.02.2007 for sale of 6.5 acres of the property wherein the agreed consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entered into MOU with BRACT in respect of the land on 26 02 2007. On the said date the assessee had neither any interest nor any right in the land. It was only on 19 04 2007 when the assessee entered into an agreement with owners of the land, the interest of assessee was created in the land. In the first instance it has not been explained as to in what capacity the MOU was entered into by the assessee with BRACT. The ld. AR of the assessee has submitted that the BRACT has already shown the amount of ₹ 6,00,60,000/ in books of account and has also disclosed the same in its return of income. We are of the considered view that the transaction by the assessee with BRACT is merely an eyewash and an attempt to circumvent the provisions of the Act. The BRACT s a trust and is enjoying the provisions the benefit of section 12A of the Income Tax Act. The amount of ₹ 6,00,60,000/which has been diverted to BRACT by the assessee in the name of alleged compensation even if shown by the trust in its return of income would not attract tax liability. Thus, in the guise of compensation the assessee is trying to reduce tax incidence on the huge income generated from sale of land. The Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Paramount Infrastructures was ₹ 40 Lakhs as per the above mentioned agreement dated 7th December 2007. iv) Fourthly, M/s Paramount Infrastructures have not even responded to the summons issued by the Assessing Officer. It is also not known whether M/s Paramount Infrastructures and others admitted the alleged compensation in their respective return of income or adjusted against losses, if any, or these persons or claimed as exempted income. The appellant, except furnishing PAN and payment details in case of M/s Paramount Infrastructures, has not furnished the details of return of income filed if any, the income returned by the said person etc. even during the present proceedings. 6.3 In view of the above discussion, the observation made by the assessing Officer that the evidences filed by the appellant in support of its claim lack transparency and credibility is not without any reason or justification. The appellant failed to substantiate with reliable evidence that M/s Paramount Infrastructures and others had existing rights in the property in question and the settlement consideration was paid for removal of these rights. Therefore, it cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties are not genuine and the documents in support of the payments are fabricated. We have thoroughly examined the documents that have been placed on record before us in the form of paper book. The land measuring 13.5 acres comprising in Survey No.45, Village Mhalunge, Tehsil Mulshi, Pune was jointly owned by the families of Pashankars, Padales and some other persons. The Kalate family entered into an agreement with the owners of the land in December, 2005. A 'Visar Pavti' dated 07 03 2005 was executed by the owners of the land in favour of Kalate family, consideration of the land was fixed at ₹ 1,20,00,000/ . The Kalate family paid ₹ 20,00,000/to the owners of the land through various cheques. Thereafter, on 25 01 2007 the Kalate family entered into an agreement for sale of the land with Shri Ajit Bandhu Mutha. The agreement between Kalate family and Shri Ajit Bandhu Mutha is at pages 111 to 115 of the paper book. A close scrutiny of the agreement shows that it has been executed on ₹ 100/ non judicial stamp paper and it is an unregistered document. The agreement is neither witnessed nor notarized. The total sale consideration agreed as per the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show that the agreements were sham, fabricated or not genuine. In the present case it has been unambiguously brought out that various documents placed on record are not genuine. Two parallel sets of transaction have been carried out. After the execution of one transaction in the one limb of transactions, it has been mentioned that there has been n encumbrances on the land. The documents executed throughout are unregistered and suffer from various contradictions and shortcomings. The only documents registered in the entire gamut of transactions is to an agreement of sale between the owners of the land and the assessee in favour of M/s. River View Properties Pvt. Ltd. These registered transactions are not in dispute and have resulted in huge gain to the assessee. The other peripheral transactions have been induced to reduce the tax liability. Thus, we are of the considered view that the judgments relied by the ld. AR during the course of submissions will not support the case of assessee and have no application in the facts and circumstances of the present case. In view of our detailed reasons above, we dismiss ground Nos.1 and 2 raised in appeal by the assessee. 17. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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