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TMI Blog2015 (2) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... management of the company - whether is in the nature of revenue expenditure or not? - Held that:- Tribunal records a finding of fact that in view of the dispute between the two warring groups of shareholders the business of respondent assessee had suffered. It records that the total sales of the respondent-assessee which was in the range of ₹ 20 to 25 crores per annaum during the predispute period had come down to around ₹ 9 crores in the financial year 1999-2000 when dispute arose and remained in the range of ₹ 10 to 14 crores during the period of litigation between its two groups of shareholders spanning over six years. It also records that after the settlement of dispute in the financial year 2005-06 there was a substantial increase in the sales touching nearly ₹ 18 crores per annum. The impugned order of the Tribunal also notes that after settlement of the dispute new products were launched by the respondent assessee company. All this was evidence of the fact that the dispute between two groups of shareholders had affected the business of the company. The amounts which were paid by the respondent assessee for the purpose of purchase of its shares, to its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided into two issues: (i) Questions 1 and 2 relate to the issuewhether under development agreement dated 16.6.2006 capital gains can be said to have arisen in the subject assessment year to the extent of the value of 18,000 sq.feet of constructed area to be provided by the developer even though the same was not provided for? (ii) While Questions nos.3 to 5 is whether the amounts paid by the respondent-assesee for purchase and subsequent cancellation of the shares belonging to an estranged brother of the person in the management of the company is in the nature of revenue expenditure or not? 4. So far as the 1st issue is concerned, briefly the facts are that the respondent company owned two plots of land namely plot nos.256 and 257. On 16.6.2006 the respondentassessee entered into a development agreement with one M/s Dipti Builders to develop plot no.257 for a consideration of ₹ 16.11 crores and construction of 18,000 sq.ft of built up area free of cost on plot No.256. Thereafter on 5.7.2007 a tripartite agreement was entered into between M/s Dipti Builders, a new buyer and respondents under which both the plots were transferred to the new buyer at a total considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital gains. Moreover, the Tribunal also placed reliance upon decision of Kalpataru Construction Overseas P.Ltd 13 SOT 194 wherein on similar facts the Tribunal had held that where consideration to be received originally was ₹ 1.25 crores but, finally settled at ₹ 1 crores then such a subsequent settling of the consideration of at ₹ 1 crores although arrived at a subsequent year it would relate back to an earlier assessment year. Further, the Tribunal also placed reliance upon the decision of this Court in Commissioner of Income Tax vs Shivsagar Estates 204 ITR 1 to conclude that on the basis of real income theory in the facts of the present case no income on account of 18,000 sq.feet of constructed area has either been accrued or received for it to be brought to tax. 7. Grievance of the revenue is that the decision of this Court in Chaturbhuj Dwarkadas Kapadia (supra) should apply to the present facts. As pointed out by the Tribunal, the issue before the Court in the above case was to determine the year in which the property was transferred for the purpose of capital gains. In this case the issue is what is the consideration received for the transfer of an asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to us no substantial question of law arises to warrant interference with the order of the Tribunal. Thus, question nos.1 and 2 are dismissed. 9. So far as the 2nd issue as raised in question nos. 3 and 5 with regard to the nature of expenditure, the brief facts are that there was a dispute between brothers who together owned the respondentassessee company. As a consequence of differences between the two groups, the dispute reached the Company Law Board as well as the Supreme Court of India. Thereafter, a settlement was arrived at between the two warring groups of shareholders and as per directions of the Company Law Board the assesseecompany was directed to buy 34 % shareholding of one of the warring group and cancel the same. The respondentassessee had claimed before the Assessing Officer that the amount of ₹ 6.81 crores (being the difference between consideration paid and face value of the shares acquired for cancellation) was revenue expenditure. This on the basis that in view of the dispute between its shareholders, the business was adversely affected and therefore, the payment was expected to be incurred for purposes of business. However, the Assessing Officer did ..... X X X X Extracts X X X X X X X X Extracts X X X X
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