TMI Blog2021 (11) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the property where the registered sale deed has not been executed in favour of the prospective buyer. We uphold the order of the CIT(A) in confirming the AO's action in disallowing the assessee's claim of long term capital loss - As it is clear from the order of AO that the assessee can offer income under the head long term capital gain in the year in which the land is duly transferred in all respects as per the above cited decision to the proposed buyer to which the assessing officer can decide the issue as per law in the respective year. Disallowance u/s 14A rwr 8D(2)(iii) - HELD THAT:- We do not accept the contention of the assessee that no administrative/ managerial expenses incurred by the assessee for earning exempt income. Assessee earned dividend income which is exempt u/s 10(34)/10(35). The findings given by the CIT(A) are not in accordance with rule 8D(2)(iii). The disallowance can be made under this rule only on 0.5% of the average value of investments which yield exempt income. The assessee has received dividend from the investments as quoted in the above table and the average value of these investments is ₹ 53,03,543/- and 0.5% of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts of the case are that the assessee engaged in the manufacturing and sale of formulations an bulk drugs, filed its return of income admitting total loss of ₹ 4,71,210/-, which was revised to the loss of ₹ 5,89,41,575/- in the revised return filed on 31/03/2013 under the normal provisions and income of ₹ 17,00,61,779/- under the provisions of section 115JB. The said returns were processed u/s 143(1) of the Act. Subsequently, the case was converted to scrutiny through CASS and accordingly, statutory notices were issued to the assessee, against which, the AR of the assessee furnished the required information. 2.1 The AO completed the assessment u/s 143(3) of the Act on 28/03/2013 revising the total loss of ₹ 2,06,23,441/- as against the loss declared by the assessee at ₹ 5,89,41,575/-, by making following disallowances: 1. Disallowance of excess claim of weighted deduction u/s 35(2AB) - ₹ 1,40,14,670 2. Disallowance of long term capital loss - ₹ 24,76,342 3. Disallowance u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signed that transfer of the property had indeed taken placed in the year under consideration. 6.2 Before us, the ld. AR of the assessee submitted that since the property was handed over and full consideration was received by the assessee company the impugned property shall be considered to have been transferred in accordance with the provisions of section 2(47) of the Act. In this connection, he relied on the decision of the Hon'ble High Court of Bombay in the case of Dr. Joao Souza Proenca Vs. ITO, 90 Taxmann.com 63 to submit that since the assessee received entire consideration and also handed over possession, transfer u/s 2(47) should be considered to have taken place. He submitted that in his deed/affidavit dated 31/03/2010, Shri Bhagwandas has unequivocally affirmed that he got possession of the impugned property from the assessee company and was in possession of the property from 29/03/2010 and also that entire sale consideration of ₹ 1.50 crores was also paid to the assessee company. 6.3 The ld. DR, on the other hand, besides relying on the orders of revenue authorities submitted that no sale deed has been produced by the assessee before the authorities t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm his part of the contract. 19. It is also well-settled by this Court that the protection provided under Section 53A is only a shield, and can only be resorted to as a right of defence. Rambhau Namdeo Gajre v. Narayan Bapuji Dhgotra [2004] 8 SCC 614 , para 10. An agreement of sale which fulfilled the ingredients of Section 53A was not required to be executed through a registered instrument. This position was changed by the Registration and Other Related Laws (Amendment) Act, 2001. Amendments were made simultaneously in Section 53A of the Transfer of Property Act and Sections 17 and 49 of the Indian Registration Act. By the aforesaid amendment, the words the contract, though required to be registered, has not been registered, or in Section 53A of the 1882 Act have been omitted. Simultaneously, Sections 17 and 49 of the 1908 Act have been amended, clarifying that unless the document containing the contract to transfer for consideration any immovable property (for the purpose of Section 53A of 1882 Act) is registered, it shall not have any effect in law, other than being received as evidence of a contract in a suit for specific performance or as evidence of any collateral t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the nature referred to in Section 53A in Section 2(47)(v) in order to arrive at the opposite conclusion. This expression was used by the legislature ever since sub-section (v) was inserted by the Finance Act of 1987 w.e.f. 01.04.1988. All that is meant by this expression is to refer to the ingredients of applicability of Section 53A to the contracts mentioned therein. It is only where the contract contains all the six features mentioned in Shrimant Shamrao Suryavanshi (supra), that the Section applies, and this is what is meant by the expression of the nature referred to in Section 53A . This expression cannot be stretched to refer to an amendment that was made years later in 2001, so as to then say that though registration of a contract is required by the Amendment Act of 2001, yet the aforesaid expression of the nature referred to in Section 53A would somehow refer only to the nature of contract mentioned in Section 53A, which would then in turn not require registration. As has been stated above, there is no contract in the eye of law in force under Section 53A after 2001 unless the said contract is registered. This being the case, and it being clear that the said JDA was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears and further as the company has sufficient own funds, the AR submitted that disallowance u/s 8D(2) is not justified. 7.2 After considering the submissions of the assessee, the CIT(A) deleted the disallowance made by the AO under rule 8D(2) (ii) on the ground that assessee has huge own funds when compared to a small investments made in equity shares and mutual funds. 7.3 The CIT(A) confirmed the disallowance under rule 8D(2)(iii) on the ground that since the said rule provides for nominal disallowance of expenditure as per the given working towards establishment/administration expenses at 0.5% average value of investment as appearing in the balance sheet on the first day and last of the previous year as the disallowance. 7.4 Before us, the ld. AR of the assessee in his written submissions, inter-alia, stated that no particular expenses was brought to its notice which could have been incurred for the purpose of earning exempt income, that there were no such expenses of managerial nature which could be attributed towards earning of exempt income and that during the year no activity of sale or purchase was done in respect of shares. He relied on the decisions in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) in allowing assessee's claim of bad debits of ₹ 90,01,443/- and ground No. 4 is against deletion of addition of ₹ 97,96,233/-. 10. As regards ground No. 3 relating to the addition of ₹ 90,01, 443/-, the AO observed that the assessee claimed bad debts of ₹ 1,49,86,880/- regarding receivables from C F agents. The AO noted that the assessee could not furnish any details regarding efforts taken through legal measures and also did not furnish any confirmations regarding write off of the receivables from those C F agents/dealers. The assessee requested for allowing debts lying for more than 3 years before FY 2009-10 as bad debts written off. Considering the assessee's request, only a sum of ₹ 59,85,437/- was allowed by the AO as bad debts on the ground that the age of such debts is more than 3 years before FY 2009-10 and the balance amount of ₹ 90,01,443/- being relatively younger debts, was disallowed. 10.1 Before the CIT(A), the AR of the assessee submitted that taking of legal steps for recovery of receivables and confirmations for write off of receivables is not necessary for allowing write off bad debts after the amendments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R of the assessee submitted that the assessee is engaged in the business of supply of medical formulations to various Government Departments and in the process, bid for tenders and pays EMD while bidding for tenders. It also made deposits with various Government Departments for taking facilities from them in the course of carrying on its business. Apart from the above, the appellant pays advances to various parties for supply of materials and for providing services. After adjustments by the said parties, some balances are left over in the said account for a number of years which cannot be recovered and they were written off, which is allowable as deduction u/s.28 and 37(1) of the Act. The AR relied upon a number of decisions particularly that of Mohan Meakin Vs CIT (348 ITR l09)(Del), wherein it was held that the deposits/advances made during the course of business which later become unrealizable for various reasons are allowable as deduction. The AR also relied upon the recent judgment of Hon'ble ITAT, Visakhapatnam in the case of DCIT vs Friends Shoes Company to buttress the argument. 11.2 The CIT(A) deleted the disallowance by observing as under: 6.2 I have caref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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