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TMI Blog2015 (10) TMI 937X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Thus claim of the assessee what was received by it from M/s. PEP, in excess of what was paid by it, was only a compensation in the capital field falls flat. Letter dt.31.05.2006 written by assessee to M/s. PEP also clearly show that its intent was nothing but to do the business of construction and selling land after development and construction. Thus the amount of ₹ 4.95 crores paid was nothing but an advance for acquiring the stock for its real estate development venture. Instead of getting the developed areas as desired, what assessee received was a sum of ₹ 7.45 crores from M/s. PEP. Surplus in our opinion had all the features of business profit, since assessee’s adventure or foray into real estate development was onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. In this regard we would like to submit as under : 1. We do not have any amount payable to M/s. Vikram Traders as on March 31, 2010 as per our books of accounts. 2. Our PAN is AABCP8096K. We are assessed by DCIT / JCIT Central Circle 1(1), Bangalore Hope this will suffice your requirement. 03. Assessee was put on notice. Reply of the assessee was as under : In connection with this transaction, we submit that an advance of ₹ 4.95 crores was made to M/s. Prestige Developers for purchase of property. The deal did not come through and M/s. Prestige Developers repaid an amount of ₹ 7.45 Crores. The difference was shown as payable to M/s. Prestige Developers in the books. However, on negotiations it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ora (P) Ltd (2009) TIOL-511-ITAT-Bang, and that of Hon ble Calcutta High Court in the case of CIT v. Ashoka Marketing Ltd [(1987) 164 ITR 664]. 06. CIT (A) after considering the submission of the assessee and the business relationship that partners of the assessee firm had with M/s. PEP, held that the surplus was nothing but business receipt in assessee s hands. Reasons given by the CIT (A) are summarised hereunder : (i) Though there was no written agreement between assessee and PEP, the advance of ₹ 4.95 crores paid to M/s. PEP was shown by the assessee under the head Advance to suppliers / creditors in its accounts. (ii) There was nothing to indicate that the cheque for ₹ 2.50 crores received by assessee from M/s PE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he receipt of compensation by virtue of the judgment of Hon ble Delhi High Court in the case of Khanna and Annadhanam v. CIT [(2013) 351 ITR 0110] was receipt of a capital nature. 08. Per contra Ld. DR strongly supported the order of CIT (A). 09. We have perused the orders and heard the rival contentions. Admittedly there was no agreement between assessee and M/s. PEP at any point of time. The only document on which assessee places reliance is a letter dt.31.05.2006, sent by it to M/s. PEP. This letter is reproduced hereunder : 10. There is no communication from M/s. PEP on any of the aspects mentioned in the above letter. Fundamental for a valid contract is either a written or an oral agreement. Above letter is not an agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project. 12. Letter dt.31.05.2006 written by assessee to M/s. PEP also clearly show that its intent was nothing but to do the business of construction and selling land after development and construction. Thus the amount of ₹ 4.95 crores paid was nothing but an advance for acquiring the stock for its real estate development venture. Instead of getting the developed areas as desired, what assessee received was a sum of ₹ 7.45 crores from M/s. PEP. Surplus in our opinion had all the features of business profit, since assessee s adventure or foray into real estate development was only a trading or business venture. The back ground of the transaction, where partners of assessee firm had already done similar business with M/s. PEP ..... X X X X Extracts X X X X X X X X Extracts X X X X
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