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TMI Blog2016 (3) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... et legal entity before entering into any transaction for acquisition of any property. It is a layman statement that the assessee has committed a mistake, out of which, it has incurred the loss, which cannot be accepted in the present case. Since there is no iota of evidence that the assessee firm was involved in the above transaction having paid advance for the purpose of purchase of land, it cannot be said that any loss incurred in the course of business is a business loss or business expenditure. It is nothing but the assessee is trying to enjoy the benefit of section 36(1)(vii) of the Act through back door, which is not permissible under law. As per agreement for sale, it is only a money diversion from the accounts of MAX VALUE HOUSING t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s processed under section 143(1) of the Act and subsequently selected for scrutiny and notice under section 143(2) of the act was issued and served on the assessee on 09.09.2009. After considering the details filed by the AR of the assessee, the Assessing Officer has observed that the assessee has claimed the advance payment made towards purchase of land as bad debt. After considering the submissions of the AR of the assessee, the Assessing Officer has not accepted the claim of bad debt of ₹.82,00,000/- and added back to the income of the assessee. 3. On appeal, after considering the detailed submissions filed by the AR of the assessee, the ld. CIT(A) has directed the Assessing Officer to allow the claim of the assessee either bad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) and prayed that the same should be confirmed. 6. We have heard both sides, perused the materials on record and gone through the orders of authorities below. We have also perused the paper book filed by the assessee. The Assessing Officer made the disallowance for the following reasons: This is the first year the assessee claims to be deviating from the actual business of civil contractors, to property developers. However, the Form 3CD does not reflect a change in the nature of business. Hence, assessee s claim cannot be accepted. In the agreement for sale executed on 27.05.2007, the two parties are K. Karuppaiah and M. Khadeed Ahmed. In the agreement, it has not been mentioned for the firm Max Value Housing and not been sign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ves, executors, administrators and assigns of the OTHER PART. It is very clear from the above that the purchaser is Mr. M. Khadeer Ahmed, son of Mukthar Ahmed, Managing Partner of MAX VALUE HOUSING and not the assessee firm M/s. MAX VALUE HOUSING. Even the twenty rupees non-judicial stamp paper to execute the agreement for sale was purchased for Mr. M. Khadeer Ahmed and not for the assessee firm. Moreover, in the agreement for sale, it is not mentioned that the partner executed the said agreement in his capacity as partner of the assessee firm. Therefore, the proposed purchase was only between Mr. K. Karuppaiah, the VENDOR and Mr. M. Khadeer Ahmed, the PURCHASER. Therefore, it cannot be said that the assessee firm has made any advance p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsence of specific authorization is required in acquisition of capital assset when lakhs of rupees involved. So much so, when lakhs of rupees of public are involved, it is the duty of the assessee to get legal entity before entering into any transaction for acquisition of any property. It is a layman statement that the assessee has committed a mistake, out of which, it has incurred the loss, which cannot be accepted in the present case. Since there is no iota of evidence that the assessee firm was involved in the above transaction having paid advance for the purpose of purchase of land, it cannot be said that any loss incurred in the course of business is a business loss or business expenditure. It is nothing but the assessee is trying to e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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