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TMI Blog2017 (9) TMI 845X X X X Extracts X X X X X X X X Extracts X X X X ..... deed and MOU as expenditure u/s.48 (i) &(ii) - Held that:- It emerges from assessee’s registered agreement to sale dated 28.07.2008 at page 102 containing clause 9 that the vendee had agreed to purchase the land in the same zone i.e. industrial than commercial on as it is basis. The said vendee further undertook to bear all liabilities/responsibilities of costs and expenses etc. for the purpose getting approval relating to abovestated conversion. Page 106 reveals that the assessee had already received advance payment of ₹ 19,15,38,000/- by the date of agreement to sale forming more than half of the total sale price. It admittedly executed conveyance deed thereafter on 02.04.2009 without even an iota of mention therein about its MOU of the same date wherein it agreed to pay the amount in question of ₹ 2,33,98,605/- in the nature of retention money in case revised permission of conversion of the asset in question from industrial to commercial did not come within 180 days. We therefore see no merit in its contention raised that it had to part with the impugned sum as an obligation in the nature of retention money. Assessee has not been able to prove that the impugned expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the vendee in question as expenditure u/s.48 of the Act, in upholding disallowance of salary and wages pertaining to employees of Packart Press Unit and in holding that section 14A disallowance of ₹ 49,03,488/- is to be added for the purpose of computing books profits; respectively. 3. The Revenue s grievance also appears to have been pleaded in equal number of grounds. It challenges correctness of the lower appellate order inter alia deleting disallowances/addition of expenses aggregating to ₹ 6,84,716/-, capital expenses of ₹ 4,91,318/- relating to replacement or major renovation work, in directing the assessing authority to adopt FMV of assessee s capital asset as on 01.04.1981 to be @ ₹ 550/- per sq.mtr. instead of ₹ 250/- and in deleting Section 14A r.w. Rule 8D disallowance of ₹ 49,03,488/-; as made in assessment order dated 28.03.2013. A combined perusal of the above pleadings makes it clear that some of the issues raised in the instant cross appeals are common. We therefore proceed to decide such corresponding grounds together in succeeding paragraphs. 4. Mr. Soparkar states at the outset in assessee s appeal ITA No.953/Ahd/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y distinguishing facts in the impugned assessment year. We therefore direct the Assessing Officer to adopt cost of acquisition on assessee s capital asset as on 01.04.1981 @ ₹ 980/- per sq.mtr. to be followed by re-computation of capital gains. The assessee partly succeeds in its grievance whereas Revenue s corresponding substantive ground is declined. 8. Next component in assessee s instant substantive ground pleads that both the lower authorities have erred in disallowing its refund money of ₹ 2,33,98,605/- paid back to its vendee on 4/4/09 i.e. within two days from both sale deed and MOU as expenditure u/s.48 (i) (ii) of the Act. Its case is that it had to pay the sum in question back to the vendee as per terms of an MOU between them dated 02.04.2009. The assessee pleaded before Assessing Officer that the said MOU s conditions stipulated payment of the impugned sum in case the land in question would not be converted from industrial to commercial use within a period of 180 days from the date of conveyance deed executed on 02.04.2009. The assessee therefore claimed to have paid the sum in question back to the purchaser. It then adopted the balance sale price of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere with shall be borne and paid by the Purchaser. Thus, the agreement to sale clearly states that for the change of the land from Industrial to Commercial, entire liability was on the purchaser and the appellant was not at all concerned with the same. 4.4.2.1. Further to this, the deed of conveyance was executed on 02.04.2009. The deed clearly mentions that this being executed for the sale consideration of ₹ 33,53,80,000/-. Clause B of the sale deed also states that the representations made under the said agreement to sale dated 28.07.2008 are valid true and correct and are deemed to be repeated herein. Thus, the condition incorporated in the agreement to sale that any change for the land use has to be made by the purchaser on its own cost has been incorporated in the conveyance deed for sale also. The conveyance deed also states the sale consideration is ₹ 33,53,80,000/-. The deed of sale nowhere mentions that a part of such sale consideration will be refunded by the appellant under any condition. Thus, the sale consideration in this case is ₹ 33,53,80,000/- on which capital gain is required to be computed. The deed of conveyance also shows that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of income of the appellant. The appellant was under no obligation to refund such amount to the purchaser as the sale consideration had been fixed by the approval of the company law board and the purchaser had also agreed to such sale consideration as per the agreement to sale executed on 28.07.2008 itself, The purchaser had also paid such amount before the execution of the deed of conveyance and the deed of conveyance did not have any such condition for sale. 4.4.2.3. The sale consideration accruing to the appellant is being computed on the basis of the deed of conveyance and any payment made by the appellant for liability of some other person is not deductible in computation of its income. For this reliance is placed upon the decision in the case of 226 ITR 680(Mad), Kumudam Printers Pvt. Ltd., in which Hon'ble Madras High Court has held as follows: the liability to pay ₹ 1.75 lakhs was not that of the assesseecompany and the assessee-company did not have anything to do with the said liability of the vendor. The payment of the amount by the assesseecompany was only a voluntary and gratuitous payment of the liability of a third party, viz., the vend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d thereafter on 02.04.2009 without even an iota of mention therein about its MOU of the same date wherein it agreed to pay the amount in question of ₹ 2,33,98,605/- in the nature of retention money in case revised permission of conversion of the asset in question from industrial to commercial did not come within 180 days. We therefore see no merit in its contention raised that it had to part with the impugned sum as an obligation in the nature of retention money. 12. Mr. Soparkar refers to assessee s MOU page nos. 90 to 93 followed by impugned payment made to the vendee in question. He states that the above conveyance deed was very much a conditional one to be finalized only after conversion of the industrial land to commercial one. We find that there was no such impediment in registered agreement as well as in registered sale deed. The said registered documents carrying presumption of truth demonstrate just the opposite wherein it was vendee s liability/responsibility to bear for such a conversion. Mr. Soparkar then states that the said conversion did not come making it obligatory for the assessee to part with the impugned refund amount after the agreement in question. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w after affording adequate opportunity of hearing to assessee. This substantive ground is treated as accepted for statistical purposes. 15. The assessee s as well as Revenue s fourth substantive ground raise issue to correctness of Section 14A disallowance of ₹ 49,03,488/- made by the Assessing Officer followed by consequential addition in book profits u/s.115JB of the Act. The CIT(A) deletes the impugned disallowance on the ground that the assessee has not derived any exempt income in the impugned assessment year. He follows hon ble jurisdictional high court s decision in CIT vs. Corrtech Energy Pvt. Ltd. s case in Tax Appeal No. 239 of 2014. The same factual position continues herein as well wherein the Revenue fails to quote any judicial precedent overruling the above legal proposition. We therefore see no reason to interfere in CIT(A) s conclusion deleting the impugned addition. The Revenue s fourth substantive ground is therefore declined whereas assessee s substantive ground is dismissed as rendered infructuous being consequential in nature. Latter s appeal ITA No. 953/Ahd/2016 is therefore partly accepted. 16. The Revenue s second substantive ground assails the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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