9911796707
TMI Blog2018 (1) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O. and as submitted by appellant. I have perused the case laws relied on by A.O. as well as appellant. After careful consideration of facts, submission and contention of both A.O. as well as of appellant, ground wise adjudication is as follows: 5.1. Before adjudication of grounds following facts requires consideration: (1) There is a notarized M.O.U. dated 06.03.2007 between Navratna Township Pvt.Ltd.and appellant to act as facilitator in view of- (I) M/s. Navratna Group is engaged in the activities of purchasing and selling lands, building and construction of such building. (ii) A plotting scheme comprising inter-alia various residential and non-residential building, golf course and a club is proposed by M/s.Navratna Group at land situated at Sanand, and at Vsana lyava for which land had already identified by M/s.Navratna group. Negotiations are already made from land owner but in view of the land in question being agricultural land it will take time to get it converted into non-agricultural land and M/s.Navratna Group is not entitled to purchase agricultural land. (iii) The appellant being agriculturist and can purchase such agricultural land and M/s.Navratna group d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mited(PAN AALCS3683F) for a consideration of Rs. 2,47,23,000, the purchaser paid stamp duty :" Rs. 28,85,300 (1211500 + 1673800). The appellant received Rs. 24,72,3CC vide ch.No.244916 dated 01.10.2009 drawn on HDFC Bank, Navrangpura. (5) The appellant submitted ledger account of land held for Navratna group where apart from appellant share for cost of purchase of Rs. 22,81,211 and share of sale consideration of Rs. 24,72,300, appellant debited share of stamp charges for purchase of Rs. 1,11,802, Regd. expenses of Rs. 22,857 and N.A.charge,s M Bs.50,295 resulting into profit on sale of land at Rs. 6135. (6) A copy of statement recorded by A.O. of Smt.Sejalben Bipinbhai Amin u/s. 131 of the Act dated 01.11.2012. reflect that appellant admitted in reply to Q.No.5 that her name as facilitator was used in dealing of land by Sagar Sanand Infrabuild Pvt. Limited which is a company in which her husband Shri Devang D Shah is one of the directors. She stated categorically that al! the transactions of money are related to company. (7) The appellant submitted a copy of order dated 08.02.2013 u/s.143(3) of the Act for A.Y.2010-11 in the case of Shri Devang Dineshbhai Shah (PAN ADFPS 9924 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and obligations including compliance of legal provisions were to be done by the Navratna Group. (v) The Assessee was also under obligation to sell the said land after its conversion to non-agricultural status to the Navratna Township Pvt Limited or any of its Group Companies. (vi) All the above were mutually understood by way of a memorandum of understanding entered by the Assessee with Navratna Township Pvt Limited in- 2006-07, the copy of which is enclosed vide Annexure -3 for your ready reference. 3.1 In view of the above and taking into consideration the Memorandum of Understanding entered the Assessee was being provided the necessary funds for purchase of land on behalf of Navratna Township Pvt. Limited. The copy of the ledger account is also submitted to Your Good serves vide communication dated 16th January, 2013 and for the sake of convenience the same is not repeated. These funds were utilized in making payment to the farmers for purchase of agricultural land. 3.2 Once the land was purchased from the farmers necessary legal formalities for converting the land into non-agricultural land was carried out by the personnel of the Naviatna Group and after short period al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was to receive a compensation of Rs. 15,000 per conveyance or any other amount as was mutually decided. During the assessment year, a total of seven conveyance deeds were executed and accordingly, the income which had accrued to the Assessee was Rs. 1,05,000/-. Against the same, the assessee has shown income of Rs. 30,771/- only under the head "Capital Gain". The income of Rs. 30,771/- has been computed after considering all the cost and expenses towards the purchase of land on behalf of Navratna Township Pvt. Limited." The A.O. held as follows: "I have duly considered the submission of the assessee. On verification of the MOU filed by the assessee, it is proved that the assessee has acted as a facilitator in the entire transaction for and on behalf of Navratna Group. All the lands have been purchased with the funds provided by Navratna Group to the Assessee which in turn have been used for making payment to the farmers. All the legal work and the verification process have been carried out by Navratna Group. Subsequent to the conversion to non-agricultural, these lands within a very short period have been sold to Sagar Sanand Infrabuild Pvt, Limited, It is also imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... straints The assessee had purchased the agriculture land from the owners of the agricultural land i.e. the farmers on behalf of Navratna Group during the course of business of real estate development of that group for the reason that the Company was unable and legally not eligible to purchase the agricultural land from the farmers in its name till the same was converted into non-agricultural land. On detailed reading of the Memorandum of Understanding together with the submission filed by the assessee, it is seen that the assessee has purchased the land with borrowed funds of Navratna Township Pvt Ltd. on behalf of them which in turn have been used for making payment to the farmers. All the legal work and the verification process have been carried out by Navratna Group. The assessee was also under obligation to sell the said land after its conversion to non- agricultural status to the Navratna Group of Companies. Subsequent to the conversion to non-agricultural, these lands within a very short period have been sold to Sagar Sanand Infrafauild Pvt. Led: a group concern of Navratna Township Private Limited. Upon selling the land the assessee has given hack the money to Navratna Towns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee ought to have shown business income of Rs. 2,01,679/- [1% (1,97,78,400 + 3,89,500)] as against the income of Rs, 30,000/- and accordingly, difference of Rs. 1,71,679,- (2,01,679 - 30,000) is added to the business income of the assessee, Since the assessee has furnished inaccurate particulars of income and thereby concealed his income penalty proceedings u/s.27 1(1 )(c) of the I.T. Act is being initiated." 5.2. Now coming to adjudication of various grounds of appeal as follows: (A) Ground No.1 to 3 are interlinked and against the computation of short term capital gain of Rs. 3606950 by invoking provisions of section 50C of the Act for transaction of land purchase and sale. The A.O. rejected appellant's explanation of being a facilitator of land purchase and sale on behalf of M/s.Navratna Group because both in purchase as well as sale deed related to land, there is no mention about M/s.Navratna Group interest. The A.O. has not considered the MOU entered into between appellant and M/s.Navratna Group as authentic and credible. Further, A.O. invoked the provisions of section 5'OC of the Act in view of stamp duty valuation taken in sale deed. The appellant in the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be added as enhancement of income on this issue. In reference to invocation of section 50C of the Act in the case of appellant, the AO is not justified on the facts of the case. The A.O. of other co-owners also not taken such view. It is therefore addition of Rs. 36,06,948 being 10% share of appellant out of total capital gain of Rs. 3,60,69,489 taking recourse to section 50C is directed to be deleted. The appellant gets relief of Rs. 36,06,948. In conclusion, all these grounds are treated as partly allowed with an enhancement of Rs. 15,000 for appellant's facilitating income accrued and arised in previous year. (B) Ground No.4 is against the initiation of penalty u/s.271(1)(c) of the Act. This issue is now consequential in view of relief granted above. This ground is therefore treated as allowed. (C) Ground No.5 is in respect of charging of interest u/s.234 A, 234B, 234C and 234D of the Act. The same is also consequential in view of relief granted. But, considering the mandatory nature of charging such interest, the AO is directed to levy such interest after giving effect to the relief as well as enhancement of income. This ground is treated as partly allowed." 3. Lear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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