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TMI Blog2017 (10) TMI 724X X X X Extracts X X X X X X X X Extracts X X X X ..... for a consideration of Rs. 3,94,24,240-/- in January, 2006. It was submitted that assessee entered into one collaboration agreement on 25.10.2007 with M/s B. B. Overseas Pvt. Ltd. for the development of said land as housing colony and the builder had undertaken to develop the said land and owner i.e. assessee had agreed to place the said land at the complete disposal of the builder. The Ld. AR further submitted that the builder had given a sum of Rs. 1.20 crores as security deposit for the execution of such agreement. The Ld. AR in this respect invited our attention to copy of collaboration agreement with M/s B. B. Overseas Pvt. Ltd. place in P.B. page 26 to 30. The Ld. AR submitted that M/s B. B. Overseas Pvt. Ltd. was a company in which the assessee was beneficial owners of shares to the extent of more than 10% and therefore the authorities below treated the amount received from the company as deemed dividend under the provisions of section 2(22)(e) of the Act. It was submitted that the authorities below did not agree to the contentions of assessee that amount was received in lieu of a business transaction whereby the assessee had offered his land for development of a housing co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts now been filed in the form of notice received by assessee intimating pendency of a ceiling case and further orders by revenue court are public documents which cannot be considered as additional documents and reliance was placed on the Judgment of Jatia Investment Co. Vs. C.I.T. delivered by Calcutta High Court reported in 206 ITR 718 wherein it was held that public documents cannot be treated as additional evidence and it was not correct for the Tribunal to hold that such documents were new evidence. Without prejudice the Ld. AR submitted that in the case of Company M/s B. B. Overseas Pvt. Ltd., the transaction of Rs. 1,20,00,000/- was examined by Assessing Officer and was held to be a business transaction and in this respect our attention was invited to P.B. page 69 to 70, where a copy of assessment order in the case of M/s B. B. Overseas Pvt. Ltd. was placed. The Ld. AR submitted that before the finalization of this assessment in response to a query by Assessing Officer with regard to nature of Rs. 1,20,00,000/-, M/s B. B. Overseas Pvt. Ltd. had stated that the said amount was given as security deposit against collaboration agreement and copy of collaboration agreement was al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction and the assessee was aware of the fact that no construction was permitted and therefore the agreement entered into by assessee with B. B. Overseas Pvt. Ltd. was an afterthought and is only to avoid the imposition of provisions of section 2(22)(e) of the Act. 5. The Ld. DR heavily placed his reliance on the order of authorities below. 6. We have heard the rival parties and have gone though the material placed on record. We find that it is an undisputed fact that assessee was a beneficial owner in the company M/s B. B. Overseas Pvt. Ltd. The only dispute the department is that it has doubted the genuineness of the collaboration agreement which the assessee had entered into with M/s B. B. Overseas Pvt. Ltd. The main reason for disbelieving the genuineness of this collaboration agreement is that the assessee was aware of the fact that he will not be able to carry on any construction activity. In our view this finding of the authorities below is not correct, in view of the fact that assessee would not have spent a huge amount of about Rs. 4 crores for purchasing a land on each he would not be entitled to construct anything. The sale deed executed by the owners of land has c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aware about the dispute only when it was brought to his notice through an advocate and which case was also dismissed as withdrawn. In view of these the view taken by the authorities below that the collaboration agreement was an afterthought is not correct. We further find that in the case of M/s B. B. Overseas Pvt. Ltd. during original assessment proceedings, the Assessing Officer had raised an enquiry regarding the said advance of Rs. 1,20,00,000/- and assessee vide reply dated 1st Nov. 2010 had submitted as under: "The Assessee company paid Rs. 1,20,00,000/- (Rupees one crore twenty lacs only) during the year to Mr. Saket mehra towards security deposit against Collaboration Agreement copy of agreement is enclosed herewith. The amount paid Rs. 1,20,00,000/-(Rupees one crore twenty lacs only) for business purposes of the company, thus section 2(22)(e) is not applicable. As our understanding and correspondence with the owner of the said land, a court case has been made by The State Government of Rajasthan at the Tribunal Court at Ajmer/High Court of Rajasthan under Land Ceiling Act, against the original owners of the land and also a settlement of land at the village level for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Engage Enterprises Pvt Ltd is also remains to be verified leading to reason to believe that it is from unknown source. Further in the report it is mentioned that the assessee had a bank account no.-303420110000187 with Bank of India in which cash deposit has taken place. The sources of such cash deposit remains to be verified to ascertain the veracity of the transaction." We find that during reassessment proceedings, the assessee had replied to this question which is reproduced below: "20. The copy of the questionnaire issued by the assessing officer and reply filed by us during the course of original assessment is enclosed herewith. During the course of original assessment, assessing officer raised specific query on: (1) Rs. 1.20 crores was paid to Mr. Saket Mehra (Shareholder) during the assessment year 2008-09 and asked for applicability of section 2 (22) (e). Following reply filed by the assesse company alongwith the evidence. The Assesse company paid Rs. 1,20,00,000/- (Rupees one crore twenty lacs only) during the year to Mr. Saket Mehra towards security deport against Collaboration Agreement, copy of agreement is enclosed herewith The amount paid Rs. 1,20,00,000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the issue of notice and the reasons recorded before issue of notice dated 19.10.2015. The speaking order against the objection raised was made & forwarded to the assessee. The case was attended by Sh. Suraj Mani, Account of the assessee company time to time and the necessary details were filed, which are placed on record. The source of the funds and genuineness of transactions was asked to be filed. The details filed and verified. The books of accounts alongwith the bills & vouchers were produced for test check. The bills & vouchers along with the books of accounts were checked and found correct." In view of the above facts and circumstances Assessing Officer had accepted the transaction of Rs. 1,20,00,000/- in the hands of B. B. Overseas Pvt. Ltd. as business transaction and therefore not accepting the same transaction in the hands of second party which is assessee is not correct. Therefore we hold that the said transaction of Rs. 1,20,00,000/- was a business transaction and for a business transaction, the addition u/s 2(22)(e) cannot be made as such transactions has been kept out of purview of the section 2(22)(e) vide circular no. 19/2017 dated 12.06.2017. The para 2 & 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cellation dated 10.08.2011 and Amritsar Bench in a recent decision in the case of Sh. Rajan Gupta Vs. Dy. CIT in ITA No. 74/Asr/2016 vide its order dated 14.09.2017 has held that if the amount is returned back the addition cannot be made u/s 2(22)(e) of the Act. The relevant part of the order is reproduced below: "8. Now coming to the Ground No. (b) as it was argued by the Ld. AR and also reflects from the Bank statement that the assessee had received Rs. 10 Lakhs from Sat Agrotech Overseas Pvt. Ltd. and thereafter booked a plot in Jammu and Kashmir Housing Board, however, the same was declined due to one or other reason and finally the deal of the property under question could not be matured, therefore, the earnest money was returned back to the company and even otherwise according to Circular No.19/2017, the CBDT analyzed the settled view of Sec.2(22)(e) of the I.T. Act, therefore, clarified the same as under: "2.1 Some illustrations/examples of trade advances/commercial transactions held to be not covered under section 2(22) (e) of the Act are as follows: i. Advances were made by a company to a sister concern and adjusted against the dues for job work done by the sister ..... X X X X Extracts X X X X X X X X Extracts X X X X
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