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TMI Blog2012 (9) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... which is stock in trade. Decision in favor of assessee. Addition made on account of tripartite sale – Whether in real estate business tripartite sale on basis of MOU is business income or income from other source - Held that:- Assessee duly account for the income as business income The assessee is into the business of real estate and a tripartite property deal was a business transaction and the difference of earning revenue from MOU has been duly offered as business income. Decision in favor of assessee. - ITA No. 5597/Del/11 - - - Dated:- 20-7-2012 - SHRI R.P. TOLANI AND SHRI B.C. MEENA JJ. Appellant by : Shri R.S. Negi Sr. DR Respondent : Shri K.P. Garg FCA O R D E R PER R.P. TOLANI, J.M:: This is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, the addition was not justified. 3.2. Assessing Officer, referred it to DVO u/s 142A and however, made the addition of ₹ 35,11,000/-, observing as under: The submissions of the A.R. have been examined critically. The agricultural land in NOIDA have been acquired by the Government of U.P. in lieu of compensation etc. paid to farmers. Therefore, the assessee has acquired a valuable right in the investment. The mater has, therefore, rightly been referred to the Valuation Officer in terms of Sec. 142A of the I.T. Act. As per the provisions of Sec. 50C of the I.T. Act the value of consideration as a result of transfer of land building, has to be adopted according to the value determined by the State Government (Stamp Valua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered the addition of the AO and the submissions of the assessee and I find considerable merit in the submission of the assessee. There is no evidence on record to show that there has been any unexplained investment as claimed by the Assessing Officer . The AO has made the addition purely on the basis of circle rate which is apparently not justified without any supporting evidence and most of the case laws are also in favour of the assessee. After considering all the facts and circumstances of the case, I am of the vie that the Assessing Officer is not justified to make the addition and accordingly, the same is deleted. 4. Apropos second ground, brief facts are: The assessee is a partnership firm, engaged in the business of purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of rights held by assessee in the plot. 4.2. Aggrieved, assessee preferred first appeal, where CIT(A) deleted the addition, observing as under: 4.7. I have considered the addition of the AO and the submissions of the assessee and I find considerable merit in the submission of the assessee. It is a common practice to enter into a tripartite agreement when the property is purchased and the same is sold to a third party without getting the property registered in the name of intermediary (i.e. the assessee firm). The assessee has duly declared the entire sale transaction in the P L account as submitted by the assessee and as discussed above. The assessee has also claimed various expenses of ₹ 12,30,846/- and out of which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns u/s sec. 50C have been invoked. (iv) Without invoking sec. 50C and making reference to these provisions against the seller, addition cannot be made in the hands of the assessee. (v) The provision for reference to valuation u/s 142A, reference to sec. 69B for the investment and not for stock in trade; sec. 69B specifically refers to investment and not stock in trade. If the business transactions are taken to be investments, then each and every business transaction will be covered u/s 69B which is against the legislative intent and principles of interpretation as they lead to manifestly unjust result. (vi) The burden to prove that the assessee has acquired the stock in trade at a price more than declared in the books, lied o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... four sellers of the agricultural lands were neither examined nor their statements recorded, nor sec. 50C was invoked against them. Under these circumstances, the addition on the basis of a presumption which according to I.T. Act can oly be raised against seller, cannot be made in the hands of the purchaser. Besides, we find merit in the argument of learned counsel for the assessee that provisions of sec. 142A cannot be applied against a transaction which is stock in trade. Order of CIT(A) is upheld as being on just and proper observation. 10. Apropos the second ground, we do not find any infirmity in the order of CIT(A) who has verified the accounts and held that the profit in respect of this transaction was already entered in the boo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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