THE ITO,, BARODA. v. SHRI SIDDHARTH S.PATEL., BARODA.

ITA 2959/AHD/2003 | 1994-1995
Pronouncement Date: 23-04-2010 | Result: Dismissed

Appeal Details

RSA Number 295920514 RSA 2003
Assessee PAN EYEAR1991A
Bench Ahmedabad
Appeal Number ITA 2959/AHD/2003
Duration Of Justice 6 year(s) 9 month(s) 23 day(s)
Appellant THE ITO,, BARODA.
Respondent SHRI SIDDHARTH S.PATEL., BARODA.
Appeal Type Income Tax Appeal
Pronouncement Date 23-04-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 23-04-2010
Date Of Final Hearing 08-04-2010
Next Hearing Date 08-04-2010
Assessment Year 1994-1995
Appeal Filed On 30-06-2003
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD D BENCH (BEFORE S/SHRI G.D. AGARWAL VICE-PRESIDENT AND BHAVESH SAINI JUDICIAL MEMBER) ITA.NO.1852 AND 1853/AHD/2003 ASSTT.YEAR : 1997-1998 AND 1998-1999 ITO WARD-4(3) BARODA. VS. SHRI SIDDHARTH S. PATEL KIRTI TOWER TILAK ROAD BARODA. ITA.NO.2959/AHD/2003 ASSTT.YEAR : 1994-1995 ITO WARD-4(3) BARODA. VS. SHRI SIDDHARTH S. PATEL KIRTI TOWER TILAK ROAD BARODA. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI C.K. MISHRA ASSESSEE BY : SHRI S.N.SOPARKAR O R D E R PER G.D. AGARWAL VICE-PRESIDENT: THESE ARE THREE APPEALS BY THE REVENUE AGAINST THE ORDERS OF THE COMMISSIONER OF I NCOME-TAX (APPEALS)-II BARODA DATED 16-4-2003 AND 3-2-2003 IN RESPECT OF T HE ABOVE THREE ASSESSMENT YEARS. SINCE ASSESSEE BEING SAME AND THE GROUNDS A RE RELATED WE DISPOSE OF ALL THESE APPEALS BY THIS COMMON ORDER. ITA NO.2959/AHD/2003 - AY : 1994-1995 2. IN THIS APPEAL BY THE REVENUE THE FOLLOWING GRO UNDS ARE RAISED: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD.CIT(A) ERRED ION DELETING THE ADDITION OF RS.11 00 000/- BEING ON- MONEY RECEIPT BY THE ASSESSEE IN HIS INDIVIDUAL CAP ACITY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS.1 30 000/- BEING UNEXPLAINED EXPENDITURE OF INTEREST PAYMENT ON-MONE Y. ITA.NO.1852 AND 1853/AHD/2003 AND ITA.NO.2959/AHD/2003 -2- 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS.70 0 00/- BEING UNEXPLAINED INVESTMENT IN FENCING. 3. THE FACTS OF THE CASE ARE THAT SEARCH ACTION UND ER SECTION 132(1) OF THE INCOME TAX ACT 1961 HAD TAKEN PLACE AT THE RESIDEN CE OF THE ASSESSEE ON 30-6- 1994. DURING THE COURSE OF SEARCH CERTAIN LOOSE P APERS WERE FOUND AND SEIZED. ONE OF THE LOOSE PAPERS SHOWED THE CALCULATION OF I NTEREST AT THE RATE OF 18% ON AN AMOUNT OF RS.11 LAKHS. DURING THE COURSE OF SEA RCH PROCEEDINGS IN THE STATEMENT IT WAS ADMITTED BY THE ASSESSEE THAT THE SUM OF RS.11 LAKHS WAS PAID IN CASH FOR THE PURCHASE OF THE LAND. THE LAND WAS PURCHASED FOR DEVELOPMENT. IN THE ORIGINAL ASSESSMENT PROCEEDINGS THE AO MADE THE ADDITION OF THE ABOVE AMOUNT OF RS.11 LAKHS AS UNEXPLAINED INVESTMENT BY THE ASSESSEE. ON APPEAL THE CIT(A) SET ASIDE THE ASSESSMENT ORDER WITH THE FOLLOWING DIRECTIONS: . I HAVE PERUSED THE LOOSE PAPERS WHICH WERE SEI ZED DURING THE COURSE OF SEARCH AND WHICH FORM THE BASIS OF PRESEN T ADDITION. ON THE LOOSE PAPERS THE ENTRY IS FROM 1.4.1`994 TO 30.3.19 94 BUT THE CALCULATION SHOWS THAT THE INTEREST HAS BEEN CALCUL ATED FOR THE WHOLE MONTH I.E. FROM JANUARY TO MARCH. IF THE INTEREST HAS BEEN CALCULATED TILL MARCH 1994 THE POINT NEED TO BE INVESTIGATED IS WHETHER ANY PAYMENT WAS MADE IN THE MARCH 1994 OR IT HAS BEEN MADE SUBSEQUENTLY. THE OTHER TWO PARTNERS OF M/S.MODERN PROPERTIES SHOULD ALSO BE EXAMINED IN THIS REGARD BECAUSE IT WAS ULTI MATELY THE FIRM WHICH HAS DEVELOPED THE PROPERTY AND HAS ENTERED INTO AGR EEMENTS WITH THE CUSTOMERS. IN THE LIGHT OF THE ABOVE OBSERVATIONS IN MY OPINION THE ENTIRE ISSUE NEEDS FRESH EXAMINATION AND FRESH CONS IDERATIONS. THIS ISSUE IS THEREFORE SET ASIDE AND RESTORE TO THE FIL E OF THE ASSESSING OFFICER FOR CONSIDERATION. THE AO EXAMINED THE OTHER TWO PARTNERS OF M/S.MODER N PROPERTIES WHICH DENIED ANY SUCH PAYMENT HAVING BEEN MADE BY THE FIR M. IN THIS BACKGROUND THE AO MADE THE ADDITION OF RS.11 LAKHS FOR UNEXPLA INED INVESTMENT ON THE PURCHASE OF ABOVE PLOT OF LAND. RS.1 30 000/- WAS ADDED BEING THE INTEREST PAID FOR DELAYED PAYMENT OF SUM OF RS.11 LAKHS AND ANOTH ER RS.70 000/- WAS ADDED FOR UNEXPLAINED INVESTMENT IN FENCING OF THE ABOVE PLOT OF LAND. THE CIT(A) ITA.NO.1852 AND 1853/AHD/2003 AND ITA.NO.2959/AHD/2003 -3- IN HIS ORDER DATED 16-4-2003 DELETED THE ABOVE THRE E ADDITIONS. WHILE DOING HE RELIED UPON THE ORDER OF THE CIT(A) FOR A.Y.1996 -97 WHEREIN THE CIT(A) HAS HELD AS UNDER: MR.BAKSHI FURTHER CONTENDED THAT AS THE APPELLANT HAS BEEN SELLING THE SAID LAND TO VARIOUS CUSTOMERS AFTER DEVELOPING AND CREATING FACILITIES ON THE SAME THE PURCHASE OF LAND WILL BE AN EXPEND ITURE AND NOT INVESTMENT. THE COUNSEL ARGUED THAT THE APPELLANT IS ENGAGED IN THE BUSINESS OF REAL ESTATE AND SUCH AMOUNT IS SPENT FO R THE PURCHASE OF LAND AND THEREFORE THE ADDITIONS TO THE EXPENSES WOULD H AVE THE NULLIFYING EFFECT FOLLOWING THE DECISION OF AHMEDABAD TRIBUNAL IN THE CASE OF RUBY BUILDERS 63 TTJ 202 AND PATNA TRIBUNAL IN THE CASE OF NISHANT HOUSING DEVELOPMENT PVT. LTD. 52 ITD 103. AFTER EXAMINING THE FACTS OF THE CASE I AM INCLINED TO ACCEPT THE APPELLANTS CONTEN TION THAT IF AT ALL ANY ADDITION N BE MADE IT CAN BE MADE U/S.69C OF THE A CT AND THE SAID DECISIONS NULLIFY SUCH ADDITIONS. 4. THE REVENUE AGGRIEVED WITH THE ORDER OF THE CIT( A) IS IN APPEAL BEFORE US. 5. IT WAS STATED BY THE LEARNED COUNSEL FOR THE ASS ESSEE THAT THE ISSUE IS SQUARELY COVERED BY THE FOLLOWING DECISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT: I) CIT VS. STAR BUILDERS 294 ITR 338 (GUJ); II) KRISHNA TEXTILES VS. CIT 310 ITR 227 (GUJ) HE STATED THAT EVEN IF IT IS STATED THAT THE ABOVE PLOT OF LAND WAS PURCHASED BY THE ASSESSEE BUT IT WAS NOT IN DISPUTE THAT THE PU RCHASE WAS MADE AS STOCK-IN- TRADE. THE ASSESSEE IS IN THE BUSINESS OF DEVELOPM ENT OF REAL-ESTATE. THEREFORE ANY PAYMENT FOR THE PURCHASE OF PLOT IS REVENUE EXP ENDITURE AND THEREFORE EVEN IF ANY ADDITION IS MADE THE DEDUCTION FOR THE SAME WOULD BE ALLOWED UNDER SECTION 37. HE ALSO POINTED OUT THAT THE AME NDMENT IN SECTION 69C WAS W.E.F. 1-4-1999 AND WOULD APPLICABLE FROM ASSTT.YEA R 1999-2000 ONWARDS. THE LEARNED DR ON THE OTHER HAND RELIED UPON THE OR DERS OF THE AUTHORITIES BELOW. ITA.NO.1852 AND 1853/AHD/2003 AND ITA.NO.2959/AHD/2003 -4- 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED MATER IAL PLACED BEFORE US. WE FIND THAT THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF STAR BUILDERS (SUPRA) HAS HELD AS UNDER: ASSUMING BUT NOT ACCEPTING THAT SOME UNEXPLAINED I NCOME HAS BEEN INVESTED IN THE CONSTRUCTION THE FACT REMAINS THAT THE BUSINESS OF THE ASSESSEE IS CONSTRUCTION. IF WE ADD ON ACCOUNT OF UNEXPLAINED INCOME IN THE INVESTMENT THAT WILL GIVE RISE TO THE COST OF T HE CONSTRUCTION AND THE RESULT WILL REMAIN THE SAME I.E. ZERO. IN THE CASE OF KRISHNA TEXTILES (SUPRA) THEIR LORD SHIPS OF THE HONBLE GUJARAT HIGH COURT HELD AS UNDER: THAT SINCE IT WAS AN ADMITTED POSITION THAT THE ASSESSEE WAS CARRYING ON BUSINESS IN COAL AND LIGNITE AND PURCHASES WERE MADE FROM TIME TO TIME FROM GMDC EVEN IF ANY ADDITION WAS REQUIRED T O BE MADE UNDER SECTION 69C THE ENTIRE EXPENDITURE TOWARDS IT HAD TO BE ALLOWED AS A DEDUCTION UNDER SECTION 37(1). THE ASSESSMENT YEAR UNDER CONSIDERATION WAS ADMITTEDLY 1987-88 TO WHICH THE A MENDMENT OF SECTION 69C WOULD NOT APPLICABLE. BOTH THE ABOVE DECISIONS OF THE HONBLE JURISDICTIO NAL HIGH COURT WOULD BE SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. ADMITTEDLY THE PLOT OF LAND WAS PURCHASED AS STOCK-IN-TRADE BECAUSE THE A SSESSEE IS IN THE BUSINESS OF DEVELOPMENT OF REAL-ESTATE. THE ASSESSMENT YEAR UN DER CONSIDERATION IS 1994- 95. THE PROVISO TO SECTION 69C WHICH PROHIBITS ALL OWING OF DEDUCTION FOR UNEXPLAINED EXPENDITURE WAS INSERTED BY THE FINANCE (NO.2) ACT 1998 W.E.F. 1- 4-1999. THEREFORE THE ABOVE PROVISO WOULD NOT BE APPLICABLE TO THE ASSESSMENT YEAR UNDER CONSIDERATION. IN VIEW OF TH E ABOVE WE RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE HONBLE GUJARAT HIGH COURT UPHOLD THE ORDER OF THE CIT(A) AND REJECT THE REVENUES APPEAL . ITA.NO.1852 AND 1853/AHD/2003 AND ITA.NO.2959/AHD/2003 -5- ITA NO.1852/AHD/2003 A.Y.1997-98 7. THE FIRST GROUND OF THE REVENUES APPEAL READS A S UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS.6.70 LACS BEING SUPPRESSION OF SALE CONSIDERATION OF LAND SOLD TO S HRI ATUL DALMIA. WHILE DELETING THE ADDITION THE LD.CIT(A) FAILED TO APPRECIATE THE FULL FACTS AND THE DETAILED REASONING BROUGHT OUT BY THE AO IN THE ASSESSMENT ORDER. 8. AT THE TIME OF HEARING BEFORE US IT IS STATED B Y THE LEARNED DR THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE H AS SOLD A PIECE OF LAND TO SHRI ATUL DALMIA AT RATE WHICH IS MUCH BELOW THE MA RKET VALUE OF THE LAND IN THAT AREA. THE AO FOR DETAILED DISCUSSION IN THE A SSESSMENT ORDER HAS POINTED OUT WHAT WAS THE CORRECT MARKET VALUE OF THE LAND P REVAILING AT THE RELEVANT TIME IN THAT AREA AND ACCORDINGLY WORKED OUT THE CO RRECT SALE CONSIDERATION FOR SUCH PIECE OF LAND. THE AO HAD MADE ADDITION ON TH E BASIS OF PREVAILING MARKET RATE OF THE LAND IN THAT AREA. HOWEVER THE CIT(A) WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE DELETED THE ADD ITION. HE THEREFORE SUBMITTED THAT THE ORDER OF THE CIT(A) SHOULD BE REVERSED AND THAT OF THE AO BE RESTORED. THE LEARNED COUNSEL FOR THE ASSESSEE APART FROM RE LYING UPON THE ORDER OF THE CIT(A) HAS POINTED OUT THAT THE IDENTICAL ISSUE IS CONSIDERED BY THE ITAT IN ASSESSEES OWN CASE FOR A.Y.1996-97. IN FACT THE A O ALSO WHILE MAKING THE ADDITION ON THE BASIS OF MARKET VALUE OF THE LAND HAS RELIED UPON THE FINDINGS OF THE AO FOR A.Y.1996-97. THAT IN A.Y.1996-97 THE ADDITION MADE ON SIMILAR BASIS HAS BEEN DELETED BY THE CIT(A) AND THE ORDER OF THE CIT(A) HAS BEEN SUSTAINED BY THE ITAT. HE ALSO SUBMITTED THAT AT TH E RELEVANT TIME THERE WAS NO PROVISION FOR MAKING THE ADDITION IN RESPECT OF SAL E CONSIDERATION ON THE SALE OF THE PROPERTY ON THE BASIS OF PREVAILING MARKET RATE . THE AO HAS NOT POINTED OUT THAT ANYTHING OVER AND ABOVE WHAT WAS MENTIONED IN THE SALE DEED WAS ITA.NO.1852 AND 1853/AHD/2003 AND ITA.NO.2959/AHD/2003 -6- RECEIVED BY THE ASSESSEE. HE THEREFORE SUBMITTED T HAT THE ORDER OF THE CIT(A) SHOULD BE SUSTAINED. 9. WE HAVE CAREFULLY CONSIDERED ARGUMENTS OF BOTH T HE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE CIT(A) HAS DISC USSED THE FACTS OF THE CASE IN DETAIL AND AFTER CONSIDERING THE ENTIRE FACTS DELET ED THE ADDITION OF RS.6 70 000/- MADE BY THE AO. THE RELEVANT FINDINGS OF THE CIT(A ) READS AS UNDER: 2.7 I HAVE CONSIDERED THE SUBMISSIONS AS WELL AS A RGUMENTS PUT FORTH BY THE LEARNED COUNSEL FOR THE APPELLANT. THE AO H AS INFERRED THAT THE APPELLANT HAS NOT SHOWN PURCHASE OF SAID LAND IN IT S ACCOUNTS WHICH WAS STATED TO BE PURCHASED IN THE YEAR 1991. HOWEVER THIS HAS NO IMPACT ON THE TAXABILITY OF ALLEGED SALE CONSIDERATION. I F THE SAME WAS UNACCOUNTED THE NECESSARY ACTION WAS REQUIRED TO B E TAKEN AS PER PROVISIONS OF LAW FOR THE YEAR 1991 AS THE APPELLAN T IN THE SALE DEED WITH SHRI ATUL DALMIYA HAS CATEGORICALLY MENTIONED THE Y EAR OF PURCHASE 1991 WHICH HAS TO E ACCEPTED WITHOUT DISPUTE. THE AOS HAS MADE THE ADDITION OF RS.6 70 000 ESTIMATING THE SALE PRICE A T RS.48 000 PER VIGHA FOR LAND SOLD OF 13.96 VIGHAS. THE CONTENTION OF T HE APPELLANT IS THAT ENTIRE LAND I.E. DEVELOPED LAND OF 12.17 VIGHA AND 13.96 VIGHA AS UNDEVELOPED LAND HAS BEEN SOLD AT A LUMP SUM CONSID ERATION OF 4 50 000. THE ONLY DISPUTE IS FOR ADOPTION OF THE SALE PRICE PER VIGHA WHICH ACCORDING TO THE AO WAS UNDERSTATED. IT IS O BSERVED FROM THE ALE DEED MADE WITH SHRI ATUL DALMIYA CLEARLY STATES THA T THE LAND SOLD UNDER CONSIDERATION WAS AGRICULTURAL LAND AND HENCE THE C ONTENTION OF THE APPELLANT GETS SUPPORT FROM THE SAME. THE APPELLAN T ALSO SUBMITTED DETAILS OF COST ALLOCATED TO DEVELOPED LAND/UNDEVEL OPED LAND (DEALT WITH IN SUBSEQUENT PARA IN SEPARATE GROUND) FROM WHICH I T IS OBSERVED THAT THE COST OF DEVELOPED LAND HAS BEEN CALCULATED AT R S.1 17 433 PER VIGHA AND ACCORDINGLY THE SALE PRICE FOR DEVELOPED OF 1.1 7 VIGHAS SOLD TO ATUL DALMIYA COMES TO RS.1 37 397. THE COST FOR UNDEVEL OPED LAND AS PER CALCULATION OF THE APPELLANT HAS BEEN DERIVED AT RS .10 035 AND FOR LAND OF 13.96 VIGHAS SOLD TO ATUL DALMIYA COMES TO RS.1 48 088. FURTHER THE APPELLANT HAS ALLOCATED LAND DEVELOPMENT CHARGE OF RS.48 500 TO ARRIVE AT TOTAL COST OF LAND AT RS.3 25 985 AS AGAINST WHI CH THE SAME IS SOLD AT RS.4 50 000. IT IS ALSO OBSERVED THAT THE AO HAS T AKEN THE AREA OF DEVELOPED LAND SOLD TO ATUL DALMIYA AS 1.77 VIGHA W HICH IN FACT IS 1.17 VIGHA ONLY. FURTHER THE AOS INFERENCE IS PURELY A GUESS WORK. EVEN TAKING AVERAGE SALE PRICE OF ENTIRE LAND THE SAME COMES TO APPROX. RS.208 000 PER VIGHA. SINCE THE APPELLANT HAS BIFU RCATED THE LAND AS DEVELOPED/UNDEVELOPED THE EXPLANATION OF THE APPEL LANT CANNOT BE ITA.NO.1852 AND 1853/AHD/2003 AND ITA.NO.2959/AHD/2003 -7- DISBELIEVED UNLESS OTHERWISE SOME CONTRARY EVIDENCE ARE ON RECORD. THE LAND SOLD AT RS.4 50 000 FOR WHICH THE COST OF RWS. 3 25 985 HAS BEEN WORKED OUT BY THE APPELLANT CANNOT BE SAID TO BE SO LD AT UNDERVALUED PRICE SINCE PROFIT RETAINED COMES TO RS.1 24 0125 A CCORDING TO THE CALCULATION OF THE APPELLANT. THIS PROFIT MARGIN O F ABOUT 38% OF COST CANNOT BE TREATED AS UNREASONABLE. FURTHER THE A O HAS ACCEPTED SALE CONSIDERATION IN CASE OF DR. BHARAT MODI OF RS.4 25 6000 FOR 1.68 VIGHA DEVELOPED LAND OUT OF WHICH RS.3 44 000 WERE TOWARD S DEVELOPMENT CHARGES AND RS.81 4000 AS COST OF UNDEVELOPED LAND. IN THE FACTS AND CIRCUMSTANCES OF THE CASE I DO NOT SEE ANY REASON TO DEVIATE FROM THE SALE CONSIDERATION RECEIVED BY THE APPELLANT OF RS. 4 50 000 IN CASE OF SHRI ATUL DALMIYA AND THE AO IS DIRECTED TO ACCEPT THE SAME AS DECLARED. THE ADDITION MADE OF RS.6 70 000 IS THER EFORE DIRECTED TO BE DELETED. THUS THE CIT(A) HAS RECORDED THE FINDING THAT THE AO HAS MADE ADDITION ON THE BASIS OF GUESS WORK AND THERE WAS NO REASON FOR DEVIATING FROM THE SALE CONSIDERATION ACTUALLY RECEIVED BY THE ASSESSEE. W E FIND THAT THE IDENTICAL ISSUE IS CONSIDERED BY THE ITAT IN ASSESSEES OWN CASE FO R A.Y.1996-97 VIDE ITA NO.1745/AHD/2004 DATED 27-8-2009 WHEREIN THE ITAT H AS HELD AS UNDER: 7.. IF THE AO HAD ANY DOUBT OVER THE CONSIDERAT ION FOR TRANSFER OF LAND HE COULD HAVE REFERRED THE MATTER TO VALUATION INSTEAD OF BASING HIS CONCLUSIONS ON THE AFORESAID DRAFT MO U DATED 30.4.1994. MOREOVER THE AO HAS NOT BROUGHT ANY MATERIAL TO SH OW THAT SHRI RAHUL S. PATEL HAS RECEIVED ANY EXTRA MONEY THAN WHAT IS STATED IN THE SALE DEED. IT IS TRUE THAT AN APPARENT MUST BE CONSIDER ED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE AP PARENT IS NOT THE REAL. THE ONUS TO PROVE THAT THE APPARENT IS NOT THE REAL IS ON THE PARTY WHO CLAIMS TO BE SO. [CIT VS. DURGA PRASAD MORE 82 IT R 540 (SC)] . SINCE THE REVENUE HAVE NOT PLACED ANY MATERIAL BEFO RE US THAT CONSIDERATION BEYOND THE AMOUNT OF RS.2.50 LACS ST IPULATED IN THE SALE DEED WAS PAID BY SHRI SIDDHARTH S. PATEL TO SHRI RA HUL S. PATEL WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE LD.CIT(A). 7.1 EVEN OTHERWISE HONBLE ALLAHABAD HIGH COURT I N CIT VS. SMT. RAJKUMARI VIMLA DEVI & ANOTHER 279 ITR 360 (ALL.) FOLLOWING THEIR OWN DECISION IN THE CASE OF DINESH KUMAR MITTAL VS. ITO 193 ITR 770; [1991] UPTC 1209 HAVE HELD THAT IT CANNOT BE RECOG NIZED AS A RESULT OF LAW TO THE EFFECT THAT THE VALUE DETERMINED FOR THE PURPOSE OF STAMP DUTY IS THE ACTUAL CONSIDERATION PASSING BETWEEN THE PAR TIES TO A SALE. THE ITA.NO.1852 AND 1853/AHD/2003 AND ITA.NO.2959/AHD/2003 -8- ACTUAL CONSIDERATION MAY BE MORE OR MAY BE LESS. W HAT IS THE ACTUAL CONSIDERATION THAT PASSED BETWEEN THE PARTIES IS A QUESTION OF FACT TO BE DETERMINED IN EACH CASE HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THAT CASE. SINCE THE FACTS OF THE CASE UNDER APPEAL BEFORE US ARE IDENTICAL TO THE FACTS BEFORE THE ITAT IN ASSESSMENT YEAR 1996-97 RATIO O F THE ABOVE DECISION WOULD BE SQUARELY APPLICABLE. IN THE YEAR UNDER APPEAL A LSO AS PER THE SALE DEED THE ASSESSEE HAS SOLD THE LAND FOR A SUM OF RS.4 50 000 /-. THE AO HAS NOT POINTED OUT ANY EVIDENCE THAT THE ASSESSEE HAS RECEIVED ANY AMOUNT OVER AND ABOVE THE SALE CONSIDERATION MENTIONED IN THE SALE DEED. THE ADDITION WAS MADE PURELY ON THE BASIS OF ASSUMPTION THEREFORE THE ABOVE DE CISION OF THE ITAT IN ASSESSEES OWN CASE WOULD BE SQUARELY APPLICABLE. WE RESPECTFULLY FOLLOWING THE SAME UPHOLD THE ORDER OF THE CIT(A) ON THIS PO INT AND THE GROUND NO.1 OF THE REVENUES APPEAL IS REJECTED. 10. GROUND NO.2 OF THE REVENUES APPEAL READS AS UN DER: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS.7 11 330 BEING SUPPRESSION OF SALE CONSIDERATION OF LAND SOLD TO S MT.USHABEN GANDHI AFTER HOLDING THAT THE TRANSACTION IN QUESTION HAD TAKEN PLACE ONLY IN THE YEAR RELEVANT TO AY 1998-99. WHILE DELETING THE AD DITION THE LD.CIT(A) FAILED TO APPRECIATE THE CONTENTS OF AGREEMENT DATE D 28-6-1996 AND IGNORED THE CONTENTS OF THE LETTER DATED 17-3-1997 OF SMT.USHABEN GANDHI TO THE AO CONFIRMING THAT THE POSSESSION OF LAND IN QUESTION WAS TAKEN DURING THE YEAR UNDER CONSIDERATION. THE TRA NSACTION IN QUESTION IS CLEARLY A TRANSFER WITHIN THE MEANING OF CLAUSE (V) OF SUB-SECTION 47 OF THE SECTION 2 OF THE I.T.ACT. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US. THE ASSESSEE HAD SOLD 2.65 VIGHAS OF DEVELOPED LAND TO SMT.USHABEN GANDHI. THE POSSESSION OF THE LAND WAS HANDED OVER TO HER ON 28-6-1996 BUT THE SALE DEED WAS EXECUTED ON 21-4-1997. THE ONLY DISPUTE IS WHETHER THE PROFIT FROM SUCH SALE WAS ASSESSABLE IN A.Y.997-98 OR IN 1998-99. THE ASSESSEE HAS OFFERED INCOME IN A.Y.1998-99 WHILE TH E AO ASSESSED THE SAME IN ITA.NO.1852 AND 1853/AHD/2003 AND ITA.NO.2959/AHD/2003 -9- A.Y.1997-98. THE CIT(A) ACCEPTED THE ASSESSEES CO NTENTION THAT THE SALE HAS TAKEN PLACE ONLY DURING THE ASSESSMENT YEAR 1998-99 . ACCORDINGLY HE DELETED THE ADDITION OF RS.11 01 313/-. THE REVENUE AGGRIE VED WITH THE ORDER OF THE CIT(A) IS IN APPEAL BEFORE US. 12. WE HAVE HEARD BOTH THE SIDES AND PERUSED MATERI AL PLACED BEFORE US. WE FIND THAT THE ISSUE UNDER CONSIDERATION IS COVER ED BY THE FOLLOWING THE DECISIONS OF THE JURISDICTIONAL HIGH COURT: I) CIT VS. MOTILAL C. PATEL & CO. 173 ITR 666 (GUJ) I N WHICH THE RELEVANT OBSERVATIONS OF THE HONBLE COURT IS AS UN DER: THAT AFTER CORRECTLY APPRECIATING THE POSITION IN LAW AND HOLDING THAT THE ONLY RIGHT WHICH THE AGREEMENT FOR SALE CONFERR ED WAS THE RIGHT TO OBTAIN ANOTHER DOCUMENT NAMELY THE SALE DEED THE TRIBUNAL FELL INTO AN ERROR IN REACHING THE CONCLUSION THAT THE AMOUNT OF RS.66 066 WHICH THE ASSESSEE HAD RECEIVED IN SAMVAT YEAR 2027 REPR ESENTED ITS INCOME EARNED IN THAT YEAR. THE AMOUNT WHICH THE ASSESSEE RECEIVED IN SAMVAT YEAR 2027 2AS ONLY AN ADVANCE AND WOULD BECOME PROF ITS IN ITS HANDS ONLY ON COMPLETION OF SALE IN FAVOUR OF THE SOCIETY . IT WAS ONLY ON COMPLETION OF THE SALE THAT THE AMOUNTS WHICH THE A SSESSEE HAD RECEIVED IN SAMVAT YEAR 2027 AND THE BALANCE OF THE SALE PRI CE WHICH IT HAD RECEIVED IN SAMVAT YEAR 2028 BECAME THE PROFIT OF T HE ASSESSEE. II) CIT VS. ASHALAND CORPORATION 133 ITR 55 (GUJ) WHER EIN THE FOLLOWING HAS BEEN HELD: I) THAT THE ASSESSEE RECEIVED A TOTAL SUM OF RS.2 13 772 IN ADVANCE TOWARDS THE SALE PRICE OF THE LAND WHICH IT HAD AGR EED TO SELL TO THE SOCIETY BUT THE RECEIPT COULD NOT BE CONSIDERED TO BE ITS INCOME. THE BUSINESS OF THE ASSESSEE WAS TO PURCHASE AND SELL L AND. UNLESS THE TITLE OF THE ASSESSEE WAS EXTINGUISHED THE TITLE OF THE PURCHASER COULD NOT ARISE. BOTH COULD NOT BE THE EXCLUSIVE OWNERS OF T HE SAME PROPERTY AT THE SAME TIME. SO LONG AS THE ASSESSEE CONTINUED T O BE THE OWNER IT COULD NOT BE SAID THAT HIS TITLE WAS DIVESTED AND T HAT THE SALE HAD RESULTED IN ANY PROFIT TO HIM. ITA.NO.1852 AND 1853/AHD/2003 AND ITA.NO.2959/AHD/2003 -10- THE RATIO OF THE ABOVE DECISION OF THE HONBLE JURI SDICTIONAL HIGH COURT WOULD BE SQUARELY APPLICABLE TO THE CASE UNDER APPEAL BEF ORE US. THE ASSESSEE IS IN THE BUSINESS OF PURCHASE AND SALE OF THE LAND. THU S IT WAS THE CASE OF SALE OF STOCK-IN-TRADE AND NOT A CAPITAL ASSET. THE REVENU E HAS RELIED UPON THE DEFINITION OF THE TRANSFER WITHIN THE MEANING OF SECTION 2(47). HOWEVER THIS DEFINITION OF TRANSFER IS APPLICABLE IN RELATION TO CAPITAL ASSET AND NOT STOCK- IN-TRADE. IN VIEW OF THE ABOVE WE RESPECTFULLY FO LLOWING THE ABOVE DECISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT UPHOLD TH E ORDER OF THE CIT(A) AND REJECT THE GROUND NO.2 OF THE REVENUES APPEAL. 13. GROUND NO.3 OF THE REVENUES APPEAL READS AS UN DER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) ERRED IN DELETING THE DISALLOWANCE OF INT EREST EXPENDITURE OF RS.1 48 204/- OUT OF THE DEVELOPMENT EXPENSES CLAIM ED EVENTHOUGH THE SAID INTEREST EXPENDITURE WAS PERTAINING TO THE AGR ICULTURAL LOAN TAKEN BY THE ASSESSEE FOR CULTIVATION OF LAND. 14. THE AO HAS DISALLOWED THE INTEREST ON THE GROUN D THAT THE ASSESSEE HAS BORROWED THE MONEY FOR AGRICULTURAL PURPOSE. HOWEV ER IN THIS REGARD THE CIT(A) RECORDED THE FOLLOWING FINDINGS: 4.2 . IN THE APPELLANTS CASE IT IS ESTABLISH ED THAT THE BORROWING HAS BEEN USED FOR THE PURPOSE OF BUSINESS AND MERELY BECAUSE OF THE FACT THAT THE AMOUNT WAS SANCTIONED FOR AGRICULTURAL PURPOSE IS IRRELEVANT AND THE AO SHOULD HAVE ONLY B OTHERED TO SEE WHETHER THE LOAN WAS UTILIZED FOR THE PURPOSE OF BU SINESS OR NOT. IN THE APPELLANTS CASE THE ENTIRE LOAN WAS UTILIZED FOR T HE PURPOSE OF THE BUSINESS OF DEVELOPMENT OF REAL ESTATE WHICH IS UL TIMATELY TRADED AND THEREFORE THERE IS NO JUSTIFICATION ON THE PART OF AO IN DISALLOWING THE INTEREST. 4.3 I HAVE CONSIDERED THE SUBMISSIONS MADE AND ARGU MENTS PUT FORTH BY THE LEARNED COUNSEL FOR THE APPELLANT. THE CONT ENTION OF THE APPELLANT IS FOUND TO BE REASONABLE AS WELL AS CONV INCING THAT ONCE THE LOAN WAS UTILIZED BY THE APPELLANT FOR THE PURPOSE OF BUSINESS THE FACT THAT THE PURPOSE OF LOAN SANCTIONED BY THE BANK WAS DIFFERENT CANNOT BE ITA.NO.1852 AND 1853/AHD/2003 AND ITA.NO.2959/AHD/2003 -11- A REASON FOR MAKING THE SAID DISALLOWANCE. THE AO IS DIRECTED TO ALLOW THE INTEREST AS CLAIMED. THE APPELLANT SUCCEEDS ON THIS SCORE. 15. AT THE TIME OF HEARING BEFORE US THE ABOVE FIN DING OF THE FACT RECORDED BY THE CIT(A) HAS NOT BEEN CONTROVERTED. THE CIT(A ) HAS SPECIFICALLY RECORDED THE FINDING THAT THE MONEY BORROWED FROM T HE BANK WAS UTILIZED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THEREFORE WHEN ADMITTEDLY MONEY WAS UTILISED FOR THE PURPOSE OF BUSINESS IN OUR OP INION THE DISALLOWANCE OF INTEREST THEREON WAS NOT JUSTIFIED AND THE CIT(A) R IGHTLY DELETED THE SAME. ACCORDINGLY GROUND NO.3 OF THE REVENUES APPEAL IS REJECTED. ITA NO.1853/AHD/2003 AY 1998-99 16. GROUNDS RAISED IN THE APPEAL READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN 1LAW THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS.5.72 LAKHS BEING SUPPRESSION OF SALE CONSIDERATION OF LAND SOLD TO S HRI JITENDRA PATEL AND SHRI ASHOK PATEL. WHILE DELETING THE ADDITION THE LD.CIT(A) FAILED TO APPRECIATE THE FACTS AND THE DETAILED REASONING BRO UGHT OUT BY THE AO IN THE ASSESSMENT ORDER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS.3 58 530/- BEING SALE CONSIDERATION OUT OF BOOKS PERTAINING TO SALE OF LA ND TO SMT.USHABEN GANDHI WHICH WAS ADDED ON PROTECTIVE BASIS. THIS G ROUND IS SUBJECT TO THE GROUND TAKEN ON THE ISSUE FOR A.Y.1997-98 17. AT THE TIME OF HEARING BEFORE US BOTH PARTIES AGREE THAT THE GROUND NOS.1 AND 2 OF THE ASSESSEES APPEALS ARE SIMILAR T O GROUND NO.1 IN ASSESSMENT YEAR 1996-97. IN THESE TWO CASES ALSO THE ADDITIO N HAS BEEN MADE FOR THE SALE OF THE LAND ON THE BASIS OF MARKET VALUE OF THE LAN D. WE HAVE ALREADY CONSIDERED THE ARGUMENTS OF BOTH THE SIDES WHILE CO NSIDERING GROUND NO.1 OF THE REVENUES APPEAL IN A.Y.1997-98. FOR THE DETAI LED DISCUSSION IN PARA-8 & 9 WE UPHOLD THE ORDER OF THE CIT(A) IN THIS REGARD AND REJECT GROUND NOS.1 AND 2 OF THE REVENUES APPEAL. ITA.NO.1852 AND 1853/AHD/2003 AND ITA.NO.2959/AHD/2003 -12- 18. GROUND NO.3 OF THE REVENUES APPEAL READS AS UN DER: 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD.CIT(A) ERRED IN DELETING THE DISALLOWANCE OF INT EREST EXPENDITURE OF RS.2 17 245/- OUT OF THE DEVELOPMENT EXPENSES CLAIM ED EVEN THOUGH THE SAID INTEREST EXPENDITURE WAS PERTAINING TO THE AGR ICULTURAL LOAN TAKEN BY THE ASSESSEE FOR CULTIVATION OF LAND. 13. AT THE TIME OF HEARING BEFORE US BOTH THE PART IES AGREED THAT THE GROUND NO.3 IS SIMILAR TO GROUND NO.3 IN A.Y.1997-98. WE HAVE ALREADY CONSIDERED THE ARGUMENTS OF BOTH THE SIDES IN THIS REGARD WHIL E ADJUDICATING THE ASSESSEES APPEAL FOR A.Y.1997-98. FOR THE DETAILED DISCUSSIO N IN PARA-15 WE UPHOLD THE ORDER OF THE CIT(A) IN THIS REGARD AND REJECT THE G ROUND NO.3 OF THE REVENUE. 14. IN THE RESULT THE REVENUES APPEALS ARE DISMIS SED. ORDER PRONOUNCED IN OPEN COURT ON 23 RD APRIL 2010. SD/- SD/- (BHAVESH SAINI) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 23-04-2010 VK* COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER AR ITAT AHMEDABAD