TMI Blog2021 (9) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee company owns the land behind the lands owned by the Directors and if the lands owned by the Directors are purchased, then it would give better access to the land owned by the company and it will be a good decision of the company to improve its financial well being. These decisions are all commercial decisions, which have to be taken by the assessee, and it is not for the Assessing Officer to sit in the arm-chair of the assessee and suggest the ways and means to run their business as long as there is no unlawful activity, which has been alleged to have been done by the assessee. Thus, we are of the considered view that the Tribunal was right in affirming the order passed by the CIT(A) holding that the decision to purchase the lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that long term capital gain is not leviable on the lands sold and the provisions of Section 40A(2)(b) are not applicable? 3.Whether on the facts and circumstances of the case, the Tribunal was right in upholding the order of CIT(A) by allowing the expenditure on purchase of land at ₹ 2.75 Lakhs per cent was proper? 3.The respondent/assessee is a company engaged in Real Estate Development and they filed return of income for the Assessment Year under consideration, i.e., AY 2007-08, on 14.11.2007, declaring 'NIL' income. The return was initially processed under Section 143(1) of the Act and subsequently, the case was selected for scrutiny and notice under Section 143(2) was issued. The Assessing Officer found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(b) of the Act is concerned, the CIT(A) granted the relief to the assessee, however, the CIT(A) directed the Assessing Officer to allow the expenditure on purchase of land @ ₹ 2,75,000/- per cent and to disallow @ ₹ 25,000/- per cent, which was paid to the Directors. 5.Aggrieved by the said order, the Revenue as well as the assessee filed appeals before the Tribunal. The appeal filed by the Revenue was numbered as I.T.A.No.744/Mds/2010 and the appeal filed by the assessee was numbered as I.T.A.No.812/Mds/2010. The Tribunal, by the impugned common order, dismissed the appeal filed by the Revenue and allowed the appeal filed by the assessee. 6.The Revenue, aggrieved by the dismissal of their appeal by the Tribunal which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atest sale price, the assessee had a substantial gain of ₹ 19 Crores, the CIT(A) granted relief to the assessee. However, the CIT(A) directed the Assessing Officer to allow the expenditure @ ₹ 2,75,000/- per cent and disallow @ ₹ 25,000/- per cent. 9.We find from the order of the CIT(A) that there is no reason given by the CIT(A) for disallowing ₹ 25,000/- per cent. This finding would run contrary to the finding recorded by the CIT(A) in Para No.6.4 of the order dated 30.03.2010, wherein, the assessee was granted relief and on facts it was held that the decision for purchase of land from the Directors at ₹ 3 Lakhs per cent was a business decision and it was shown before the CIT(A) that the assessee company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, we find that the decision is distinguishable on facts. 11.Reliance has been placed on the decision of the Division Bench of this Court in the case of Vaduganathan Talkies vs. Income Tax Officer, Non-Corporate Ward 20(5), Chennai-34 reported in [2020] 120 taxmann.com 25 (Madras) . In the said case, the assessee company had made cash payment for the purpose of acquiring rights to screen movies in theatres, which ran to several lakhs of rupees, though payees were identifiable, and since inspite of availability of Banking facility, the assessee had been regularly effecting cash payments, the said payments were disallowed in terms of Section 40A(3) of the Act r/w. Rule 6DD of the Income Tax Rules, 1962. The case on hand i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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