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TMI Blog2014 (12) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... ee that the amount be considered to have been paid to the other persons for the services rendered by them for execution of the transaction - the other persons, who have received the differential amount have offered such amount as their incomes and therefore on this count also assessee deserves such a deduction – the plea of the assessee cannot be accepted because the finding of the lower authorities is that the MOUs have been found to be unreliable - There is no material or evidence on record to distract from the finding of the lower authorities. Disallowance on non-existing liability made – Held that:- The alternative plea setup by the assessee to the effect that the amount is be assessed to tax in AY 2010-11 is not justified - the verification exercise carried out by the AO, revealed that there was no legally enforceable liability on the assessee to have paid ₹ 1,05,00,000/- to M/s Manav Developers in the context of the agreement with M/s Manav Promoters Pvt. Ltd. which was cancelled - once, it is found that there was no legal obligation on the part of the assessee to pay such an amount, the consequences have to follow and the amount has been rightly assessed to tax – th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence, it was not correct to hold a view that the consideration mentioned in the sale deed to each vendor was the correct figure. b. There was no change in the total consideration received from the buyer, Sayaji Hotels and the various vendors had paid the taxes on this amount. c. The principle that the registered Agreement is to be given a weightage over the unregistered agreement MOU was not applicable in this context as basically they related to different transactions. d. Because of the MOU, there was an overriding title to the payments made to the other co vendors by the assessee and hence, the same had to be reduced from the consideration mentioned in the sale deed for the assessee. e. The apportionment of the sale consideration was made as per the MOU and was accepted by all the vendors and there was no loss of revenue. f. Alternately, the above amount of ₹ 1,53,88,155/- which was paid to the other co vendors by the assessee constituted an allowable deduction as per Bombay H.C. decision in [214 ITR 1]. 6] Without prejudice, the above amount of ₹ 1,53,88,155/- which was the excess consideration received by the assessee and later distributed amongst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee furnished before the Assessing Officer, three Memorandum of Understandings (MOU), first MOU dated 09.11.2005, second MOU dated 20.10.2006 and third MOU dated 23.11.2006 which were entered between assessee and four other persons. In terms of the said MOU, assessee and other four persons, namely, (i) Anjana Pravin Oswal; (ii) Jayshree Kailas Wani (Venkatesh Developers); (iii) Vicky Shamsunder Bhutada; and, (iv) Lata Manoj Shah were to share the sale proceeds of the said land differently than the shares accruing as per the registered sale-deed. The assessee explained that on the basis of such MOUs assessee was to receive sale consideration of ₹ 15,51,12,845/- only and therefore such an amount was disclosed in the return of income. The Assessing Officer as well as the CIT(A) have differed with the assessee. As per the income-tax authorities, the MOUs which have been relied upon by the assessee are unregistered documents and they could not be relied upon. Secondly, it has also been pointed out by the income-tax authorities that the averments in the registered agreement of sale dated 10.08.2006 established that the buyer i.e. M/s Sayaji Hotels have paid the consideration to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier paras and the same is not repeated for the sake of brevity. 8. We have carefully considered the rival submissions. In our considered opinion, the case setup by the income-tax authorities is based on a registered agreement of sale and the averments contained therein cannot be brushed aside lightly. In the said registered sale agreement, assessee s share of sale consideration is 17,05,01,000/- and the same is liable to be considered as the consideration accruing to the assessee. The MOUs relied upon by the assessee to justify adoption of a different sale consideration, in our view, is of no-consequence, especially because neither the said MOUs are registered and nor their terms and conditions find a mention in the recital of the registered sale agreement. Moreover, the MOUs envisage distribution of sale proceeds with one Mr. Vicky Shamsunder Bhutada, who is not stated to be a co-owner in the registered sale agreement. Apart therefrom, there is no credible explanation furnished by the assessee as to the reason for the difference in the shares in the sale consideration noted in the registered sale agreement and the MOUs. Therefore, considered in its entirety, we find that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Ltd. was cancelled with solatium payment of ₹ 2.25 crores. Therefore, the solatium of ₹ 2.25 crores paid was claimed as an expenditure against the profits earned on the sale of land to Sayaji Hotels. In this context, the Assessing Officer carried out a verification exercise which resulted in the information that a sum of ₹ 1,05,00,000/- was not received by M/s Manav Promoters Pvt. Ltd. at all. It was found that assessee claimed to have paid a sum of ₹ 1,05,00,000/- to M/s Jayshree Kailas Wani on behalf of M/s Manav Promoters Pvt. Ltd., which was not ultimately received by M/s Manva Developers. The claim of the assessee was that out of the total compensation of ₹ 2.25 crores, an amount of ₹ 1.20 crores was paid directly to M/s Manav Developers and balance of ₹ 1.05 crores was paid to Jayshree Kailas Wani for onward payment to M/s Manav Developers. The verification exercise carried out by the Assessing Officer revealed that M/s Manav Developers received only ₹ 1.20 crores and not the balance of ₹ 1.05 crores. The assessee contended that it was under a bonafide belief that the amount paid to Jayshree Kailas Wani was towards comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer, which is not disputed by the assessee, revealed that there was no legally enforceable liability on the assessee to have paid ₹ 1,05,00,000/- to M/s Manav Developers in the context of the agreement with M/s Manav Promoters Pvt. Ltd. which was cancelled. Once, it is found that there was no legal obligation on the part of the assessee to pay such an amount, the consequences have to follow and therefore the said amount has been rightly assessed to tax in the year under consideration. The plea of the assessee would have been justified if the cessation of liability would have happened in the subsequent period. So however, this is a case, where from the beginning there was no liability for the assessee to incur such an expenditure. Accordingly, we hereby affirm the order of the lower authorities in disallowing the claim of ₹ 1,05,00,000/- while computing the profit on sale of land at Wakad. Thus, on this aspect also assessee fails. 15. In the result, appeal of the assessee in ITA No.477/PN/2011 in the case of Shri Jayantilal Tarachand Oswal is dismissed. 16. In so far as in ITA No.476/PN/2011 in the case of Smt. Anjana P. Oswal is concerned, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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