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TMI Blog2016 (1) TMI 1305X X X X Extracts X X X X X X X X Extracts X X X X ..... ion adopted by the Assessing Officer would not be applicable to the facts and circumstances of the case. This fact is supported by the balance sheet of Inscol which revealed that it has purchased the land inclusive of stamp duty and registration charges. Since, the transaction is inclusive of stamp duty and registration charges, therefore, ld. CIT(Appeals), on proper appreciation of facts and material on record correctly deleted both the additions. Addition on account of advances forfeited by the land owners - Held that:- When the total sale consideration received from Inscol is treated as income in the hands of the assessee, authorities below were not justified in not allowing benefit of forfeited amount as expenditure in the hands of the assessee. Since it was liability of the assessee to bear the expenditure incurred on account of forfeited amount as advance given to the land owners, therefore, it shall have to be allowed as deduction in favour of the assessee. Further, on the same anology, when the Assessing Officer has allowed cost of land i.e. payment made to the land owners as deduction in favour of the assessee in rectification order, there was no reason to disallow the ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Agreement to Sell has been entered into and will bear full responsibility till the registration and CLU of the said land takes place. 5. That the first party shall pay the stamp duty/registration expenses/Miscellaneous and same shall be deducted from the agreed price mentioned in the clause l or sale consideration. 6. The first party shall not be responsible for advances given for purchasing land on behalf of first party in case registration of land is not done or in case of forfeiture of advances. The amount of advances forfeited shall be borne by the second party or deducted from the agreed sale consideration. 7. That is further agreed that the sale consideration of ₹ 60 lakhs per acre includes the CLU & EDC Charges @15 lakhs per acre & the 2nd party shall be responsible for taking CLU. All expenses for getting permission &EDC charges shall be the responsibility of 2nd party & in case of non availability of permission then the 2nd party shall refund @ ₹ 15 lakhs per acres after deducting actual expenses. The actual expenses shall be allowed only after production of necessary evidence. In case of rejection of permission no services charges shall be paid by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven for acquisition of land to the following persons : i) Shri Nirmal Gurdev ₹ 20 lacs ii) Shri Sandeep Singla ₹ 10 lacs iii) Shri Prabhjit Singh ₹ 20 lacs Total ₹ 50 lacs 7. The Assessing Officer asked the assessee to explain the purpose for which the advances were given and to provide the agreements relating to these persons. The assessee had filed one agreement from which Assessing Officer noticed that this agreement related to purchase of property entirely different from the property in respect of which short term capital gain had been declared. The assessee's counsel admitted that the advances were paid to these persons for acquisition of land other than the land for which short term capital gain had been declared. But these lands could not be acquired. The Assessing Officer, therefore, reduced the cost of acquisition by ₹ 50 lacs. The Assessing Officer has also reduced the cost of acquisition by ₹ 4,35,000/- claimed on account of Miscellaneous Expenses at Registrar's Office, since the assessee could not give any details of this expenditure. 8. The assessee challenged these additions before ld. CIT(Appeals) which have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see, therefore, it was income of the assessee. The ld. counsel for the assessee, however, reiterated the submissions made before authorities below and submitted that assessee is a service provider and these expenses included in the value of the land. Copy of the MOU in reference has been filed. Copy of the letter from Director, Town & Country Planning, Haryana dated 03.11.2008 is also filed on record which shows that permission to setting up of an Integrated Healthcare Institute has been rejected. In view of the facts of the case and in the light of the MOU and the letter from Town & Country Planning, Haryana, it is clear that assessee was service provider to Inscol and made available lands to the Inscol at a fixed price which includes the CLU and EDC charges. Since, the Government did not grant CLU, therefore, assessee refunded ₹ 2 Crores to Inscol and has shown as liability in the balance sheet. ₹ 40 lacs was incurred for getting CLU, therefore, ld. CIT(Appeals) was justified in holding that the amount shall have to be reduced from the total receipts received from Inscol. We, therefore, do not find any merit in this ground of appeal of the revenue. The same is accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned in the MOU clearly shows that Assessing Officer was not justified in disallowing Stamp Duty and Registration Charges from the cost of acquisition. The ld. CIT(Appeals), accordingly, deleted both the additions. 15. After hearing rival submissions, we do not find any merit in this ground of appeal of the revenue. The ld. DR relied upon order of the Assessing Officer. The copy of the MOU is filed on record which shows that assessee would be entitled for the amount for sale of the land at fixed price which includes the cost of the land paid to the land owners and stamp duty and registration charges. Therefore, the general proposition adopted by the Assessing Officer would not be applicable to the facts and circumstances of the case. This fact is supported by the balance sheet of Inscol which revealed that it has purchased the land inclusive of stamp duty and registration charges. Since, the transaction is inclusive of stamp duty and registration charges, therefore, ld. CIT(Appeals), on proper appreciation of facts and material on record correctly deleted both the additions. These grounds of appeal of the revenue are accordingly dismissed. 16. In the result, departmental appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a sum of ₹ 50,00,000/-. It is also not in dispute that Inscol could not purchase the land from these land owners and the amounts were forfeited by the land owners. Inscol has debited the assessee's account as the assessee company was responsible for getting the registration done in the name of Inscol. The advance was given for purchase of land on behalf of Inscol and the total consideration received from Inscol has been considered as income. Clause-1 of the MOU in question clearly shows that assessee would be entitled for sale consideration at the fixed price which includes the cost of the land i.e. payment made to the land owners and forfeited amount. Clause-10 of the MOU also provides that Inscol (first party) shall not be responsible for advances given for purchasing land, in case registration of land is not done or in case of forfeiture of the advance amount. The amount of advance forfeited shall be borne by second party i.e. assessee company or deducted from the agreed sale consideration. It would, therefore, clearly show that forfeited amount has been included into the total sale consideration and in case of forfeiture of advance, it shall be borne by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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