TMI Blog2019 (10) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... me has been accepted by the appellant during the assessment proceedings. In the above circumstances Assessing Officer was legally correct in assessing a sum u/s 41(1) in the assessment year 2011- 12 Disallowance of depreciation - block of assets whose WDV is NIL- HELD THAT:- AO has worked out the short term capital loss and the same has been allowed u/s 50 of the I.T.Act. As a result, the Written Down Value (WDV) for the block of assets consisting of plant and machinery and building became NIL. Therefore, the disallowance of claim of depreciation of this block of assets, whose WDV is NIL is correct and hence the addition is confirmed. Disallowance of Commission expenses - HELD THAT:- The assessee has not produced any evidence to show that it has incurred any commission expenditure during the relevant assessment year. Hence, we hold that the Assessing Officer has correctly disallowed the claim of commission payment. Appeal filled by assessee dismissed. - ITA No.482/Coch/2016 (Asst. Year 2011-2012) - - - Dated:- 4-9-2019 - Shri Chandra Poojari, AM And Shri George George K, JM Appellant by: Sri. P. Sathisan Respondent by: Smt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated in section 53A of the Transfer of Property Act, 1882 has been fulfilled in the assessee s case, and therefore, as per the provisions of section 2(47)(v) of the I.T.Act, the assessee was liable for long term capital gains in the relevant assessment year, viz., A.Y. 2011-2012. 3.2 Aggrieved by the order of the Assessing Officer bringing to tax the long term capital gain in the current assessment year, the assessee preferred an appeal to the first appellate authority. It was contended before the CIT(A) that as per the clauses of the sale agreement, the provisions of section 2(47)(v) of the I.T.Act is not applicable because only a small portion of land was given as symbolic possession. It was stated that possession was handed over as security for the amount received on execution of the sale agreement. It was submitted that the sale agreement culminated in execution of sale deed dated 29.09.2011 and all the conditions for a transfer has been satisfied only in the subsequent assessment year, viz., A.Y. 2012-2013. The CIT(A) held that the Assessing Officer has analyzed the entire issue in great detail and has categorically observed that the conditions mentioned in sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted the order of the Income-tax authorities. 3.4 We have heard the rival submissions and perused the material on record. The assessee had declared long term capital gain and paid due tax in the subsequent year, viz., A.Y. 2012-2013. The only issue raised insofar as the long term capital gain is concerned is whether there is a transfer of property as contemplated u/s 2(47)(v) of the I.T.Act during the relevant assessment year, viz., A.Y.2011-2012. On perusal of the sale agreement dated 10.11.2010, we noticed that there are two sellers. The assessee is represented by the Managing Director Sri.Sanjay Guptha and other seller is Sri.Anun Kumar Agarwal. The assessee had agreed to sell 179.88 cents of land whereas the second seller Sri.Arun Kumar Agarwal had agreed to sell 13.75 cents of land. Both these properties are sought to be purchased by MSIL. The assessee, on execution of the sale agreement dated 10.11.2010, received ₹ 8.5 crore out of the total consideration of ₹ 39,91,53,835, whereas, the second seller out of the total consideration of ₹ 3,05,93,750 received ₹ 50 lakh on execution of the sale agreement. On a query from the Bench, both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled to enforce specific performance of the agreement against each other in case of breach of any conditions mentioned in this Agreement to Sell. 26. That the SELLERS agree and confirm that all the obligations required for completion of sale and execution of the Sale Deed shall be complied with by the SELLERS. . 29. SELLERS unequivocally agree, confirm and accept that on or after the execution of this Agreement to Sell, if the Schedule Property agreed to be sold under this Agreement to Sell or any part thereof, is lawfully notified for acquisition or requisitioned by any Government, Central or State, or any local body or authority local or otherwise, the PURCHASER alone shall be entitled for and have the right for claiming the compensation in respect of the Schedule Property or any part thereof, notified for such acquisition as aforesaid and the SELLER has no right or any entitlement, whatsoever, to raise any claim in respect of the Schedule Property or any part thereof, not withstanding any terms of this Agreement to Sell or any delay caused for execution of the Sale Deed. 30. SELLERS have today hande ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.4.3 The clauses of the sale agreement dated 10.11.2010 clearly mentions that on execution of sale agreement, both the sellers have handed over to the purchaser actual and physical possession of the entire property and the purchaser is put in physical possession in absolute control of the schedule property mentioned. As per clause of the sale agreement, the sellers were to demolish and remove the existing superstructure within three months from the date of agreement. For easy ingress and egress, the sellers were granted permission to enter property by purchaser (MSIL) (clause 10). Therefore, it is crystal clear that the possession of the property was handed over to the purchaser and the purchaser in turn gave permission to the sellers to enter the impugned property to carry out certain acts in compliance with the conditions such as demolishion of factory, building etc. The learned AR had contended that there ought to be willingness to perform as per the terms of the sale agreement and such willingness of performance was concluded only on execution of the sale deed and receipt of entire sale consideration. We are afraid that such contentions are devoid of any merit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the provisions of section 2(47)(v) of the I.T.Act r.w.s. 53 A of the T.P.Act, 1882. The learned AR had sought to distinguish this judgment by stating that in the case of Harbour View (supra), the Hon ble Kerala High Court was considering a case where substantial portion of the sale consideration was paid on execution of sale agreement, whereas, in this case only ₹ 8.5 crore was paid out of total consideration of ₹ 39.91 crore. Hence, it was submitted that the Hon ble Kerala High Court in the case of Harbour View (supra) will not have application to the facts of the instant case. We have carefully perused the judgment of the Hon ble High Court in the case of Harbour View (supra). The Hon ble Kerala High Court was of the view that when vendee is put in possession of property and is in receipt of part payment of sale consideration on execution of sale agreement, there was transfer as per provisions of section 2(47)(v) of the I.T.Act r.w.s. 53A of the T.P.Act, 1882. The relevant finding of the Hon ble High Court reads as follow:- 17. Hence, we find that the Tribunal went wrong in holding that the possession was not handed over in pursuance of the ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited (supra), we hold that the assessee is liable to be taxed for long term capital gain in the current assessment year. It is ordered accordingly. 3.4.6 In the result, this issue raised by the assessee is dismissed. 4. Addition of ₹ 1,42,266 u/s 41(1) of the I.T.Act : 4.1 The Assessing Officer had made an addition of ₹ 1,42,266 by observing as under:- 3.2 In response, assessee vide letter dated 22.10.2013 submitted that sundry creditors have been fully written off in the subsequent year i.e. A.Y. 2012-13 consequent to the finalization of the sale deed. This explanation is considered as inadequate and unsatisfactory in view of the fact that the finalization of the sale deed has nothing to do with the cessation of liability of creditors. Further assessee vide letter dated 29/10/2013 furnished the list of sundry creditors written off in subsequent years. It was only to the extent of ₹ 1,42,266/-. The assessee itself has agreed vide order sheet noting dated 31/10/2013 that .that the liability ceased to exist in relation to them .. they are not payable. Accordingly the liability in relation to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n value (WDV) of the block of assets consisting of plant and machinery and building becomes NIL. Therefore the Assessing Officer was legally correct in disallowing the claim of depreciation of this block of assets whose WDV is NIL. Hence the addition of ₹ 2,28,470/- is hereby confirmed. 5.3 We have heard the rival submissions and perused the material on record. The Assessing Officer has worked out the short term capital loss of ₹ 13,38,670 and the same has been allowed u/s 50 of the I.T.Act. As a result, the Written Down Value (WDV) for the block of assets consisting of plant and machinery and building became NIL. Therefore, the disallowance of claim of depreciation of this block of assets, whose WDV is NIL is correct and hence the addition of ₹ 2,28,470 is confirmed. 6. Commission expenses of ₹ 18,55,605 6.1 The assessee had claimed ₹ 18,55,605.50 as commission paid. In the course of assessment proceedings, it was noticed that the commission sought to be deducted was not paid during the relevant assessment year. Further, the A.O. held that there was no evidence submitted before him for payment of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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