TMI Blog2022 (11) TMI 572X X X X Extracts X X X X X X X X Extracts X X X X ..... g otherwise. We are afraid that the aforesaid observation of the A.O does not find favour with us, as the land in question, as claimed by the assessee was purchased as an investment and formed part of its fixed asset in the balance sheet. Notwithstanding that the assessee had purchased the aforesaid property in question as a fixed asset , even if it is to be presumed that the same in the coming times is to be commercially exploited by it for constructing/developing a housing project, the same merely on the said basis would not trigger the applicability of sub-section (3) of Section 40A of the Act, as at the relevant point of time the assessee had made an investment towards purchase of a capital asset and not stock-in-trade. On a subsequent conversion or treatment by the assessee of the aforesaid capital asset as a stock-in-trade of its business of a real estate builder and developer, the provisions of sub-section (2) of Section 45 would though get triggered, but then such subsequent event would not lead to invocation of section 40A(3) of the Act. As the assessee in the case before us had at the relevant point of time made the investment towards purchase of a capital ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hadeo Others, Sirsa Khrud 29.03.2015 4,75,000 - - 4,75,000 2. Girija Bai, Choubey Coliny, Raipur 26.03.2015 57,75,000 57,75,000 - 3. Smt. Taramunni Kutela Bhata 30.12.2014 2,83,50,000 2,63,50,000 20,00,000 Total 3,46,00,000 3,21,25,000 24,75,000 It was observed by the A.O that the assessee had shown the aforesaid land as a fixed asset in its balance sheet . Considering the fact that the assessee was engaged in the business of a developer and builder, the A.O held a conviction that the aforesaid land was acquired by the assessee not as an investment but for the purpose of constructing a housing project on the same. Accordingly, the A.O was of the view that the purchase of the land in question though claimed by the assessee as a part of its fixed asset was in fact the stock-in-trade of its business as that of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the ld. AR in order to drive home his contentions. 7. As is discernible from the orders of the lower authorities, we find that it is a matter of fact borne from the record that the assessee had purchased the aforesaid land in question for a consideration of Rs.3,70,78,202/- (including registration charges) as a fixed asset and had reflected the same as such in its balance sheet for the year under consideration. However, the A.O being of the view that as the assessee was engaged in the business as that of a real estate builder and developer, therefore, the land in question would have been acquired by him for developing a housing project and not as an investment. 8. Controversy involved in the present appeal finds its genesis in the assumption of the A.O, that the land in question was acquired/purchased by the assessee as a part of its stock-in-trade, and not as an investment as was projected in its balance sheet. Before proceeding any further, we shall deal with the scope and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bench of this Tribunal held as follows: 10. We have also taken ourselves through the judgement of the Jurisdictional High Court in the case of CIT vs Industrial Engineering Projects Pvt. Ltd. (cited supra) which has been relied upon before us for the proposition that reimbursement of expenses cannot be treated to be a Revenue receipt. How the judgement of the Apex Court in Tuticorin Alkali Chemicals Fertilizers is applicable to the facts of the present case has not been set out in the order of the authorities nor has the Ld. DR been able to address the applicability of the said judgement to the issue at hand. We have taken ourselves through the said judgement and seen that it proceeds on entirety different facts and circumstances and has no applicability to the facts of the present case. Consequently, it is seen that from the ratio of the judgements relied upon before the CIT(A) and also before us which have been discussed in the earlier part of this order no arguments have been advanced by the Revenue so as to contend how they are not applicable to the case at hand, no distinguishing fact, circumstance or position of law has been relied upon so as to come to a contrary findi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... test of reasonableness in order to qualify for deduction. Further, I propose to provide that payments made in amounts exceeding Rs. 2,500 after a date to be notified later, will be allowed as a deduction only if these are made by crossed cheques or by crossed bank drafts. 10. Backed by our aforesaid observations that Sec.40A(3) of the Act would not take within its sweep a capital expenditure, we shall now deal with the sustainability of the disallowance of Rs.24.75 lac made by the A.O. As observed by us hereinabove, it is a matter of fact borne from the record that the purchase of the land in question for a consideration of Rs.3,70,78,202/- (supra) was shown by the assessee as an investment and formed part of its fixed assets in the balance sheet for the year under consideration. Observation of the A.O that the assessee had purchased the land in question not as an investment, but as stock-in-trade of its business as that of a builder/developer is merely backed by his assumption that as the assessee was engaged in the business as that of a real estate builder and developer, therefore, the land in question in all probability would have been purchased for the said business purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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