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TMI Blog2015 (4) TMI 1246X X X X Extracts X X X X X X X X Extracts X X X X ..... n the absence of assessee having furnished the details of said shares and establishing the factum of transfer of shares, we reverse the order of CIT(A) and uphold the order of Assessing Officer. - Decided against assessee. Addition of revenue expenditure - acquisition of capital asset - Held that:- The assessee before us has failed to establish its case and where the intention of the assessee was to acquire a capital asset, the payment of advance money of ₹ 25 lakhs being paid on capital account and its forfeiture would result into capital loss and the same cannot be allowed as revenue expenditure.- Decided against assessee. - ITA No.840/PN/2012, CO No.35/PN/2013 - - - Dated:- 29-4-2015 - MS SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER For the Appellant : None For the Respondent : Shri Rajesh Damor ORDER PER SUSHMA CHOWLA, JM: The captioned appeal filed by the Revenue is against the order of CIT(A)-I, Nashik, dated 23.02.2012 relating to assessment year 2009-10 passed under section 143(3) of the Income Tax Act, 1961. The ass essee has also filed Cross Objection against the appeal filed by the Revenue. 2. Both the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the business of the appellant is that of land development including trading in land. 5. The matter was being adjourned from day-to-day at the request of the counsel of the assessee, who on 10.09.2014 withdrew his power of attorney vide letter dated 12.06.2014. Thereafter, the notice was issued to the parties to appear on 01.01.2015. None appeared on behalf of the assessee on 01.01.2015 and the learned Departmental Representative for the Revenue was directed to serve the notice for hearing on 20.04.2015. The said notice was served upon the assessee. However, none appeared on behalf of the assessee on the appointed date of hearing nor any application was moved for adjournment. Hence, we proceed to decide the present appeal after hearing the learned Departmental Representative for the Revenue. 6. The grievance of the Revenue in the appeal filed is against the order of CIT(A) in assessing the income on account of purchase and sale of shares as income from business as against the order of Assessing Officer in assessing the same under the head income from other sources . The grievance of the Revenue in this regard was that the assessee had failed to establish the genuineness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hares are claimed to be transacted is a tainted broker who has been suspended by the BSE for price rigging and other misconducts. 5. The Bombay Stock Exchange has confirmed that assessee is not a registered client of Mahesh Kothari Shares and Stock Brokers (P) Ltd. 6. The Inspector of this Ward had visited the Bombay Stock Exchange to verify whether the transactions mentioned in the contract notes are genuine. The Exchange Official stated that the client is not registered with the broker itself indicate that the transaction is not genuine. 7. It is noticed that assessee had unabsorbed loss under the head shortterm capital loss in respect of a.y. 2001-02. Since the loss could not be carried forward any further assessee has created fictitious income under the head short-term capital gains by colluding with the broker, who has been suspended by the stock exchange for indulging in such malpractices. 8. To give colour of legitimacy to the transaction the broker has paid assessee by cheque. However, as genuineness of the transaction itself has not been established by the assessee, receipt of the payment by cheque from the broker is of no help. 9. Last but not the least, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y investment in the said shares and the said shares were not even delivered to the assessee and the transaction was a speculative transaction and was not off market transaction as claimed by the assessee before authorities below. Our attention was drawn to the exhibit A to the assessment order, under which it was pointed out that no delivery of the shares was taken by the assessee. 12. On perusal of the record, we find that the assessee during the year under consideration had claimed that it had purchased and sold certain shares, on which it had earned short term capital gain of ₹ 65,50,757/-. The date-wise tabulated details of the quantity purchased, scrip-wise and alleged sale of the said shares is furnished in exhibit A attached to the assessment order. The perusal of the said details reflect that the assessee to have purchased and sold the shares within a gap of 1-3 days. The Assessing Officer made certain enquiries during the course of assessment proceedings and the same are being referred to in the Statement of facts filed by the Assessing Officer, which were as under:- 3. In order to ascertain the genuineness of the Contract Notes letter was written to Mahesh Ko ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ombay Stock Exchange, nor he was found at the address. The plea of the assessee on the other hand, was that the sale proceeds were received from the broker through RTGS and were deposited in the bank account of the assessee. However, the assessee except for producing the contract notes, has failed to furnish the details vis- -vis delivery of the shares and their transfer to the demat account or sale through demat account. 14. Under the provisions of section 45 of the Act, it is provided that gain arising on the transfer of a capital asset is to be assessed as capital gain in the hands of the assessee. The term transfer is defined under section 2(47) of the Act, which talks of sale, exchange or relinquishment of an asset along with other modes of transaction, which fall within the umbrella of the transfer. The underlying meaning of the transfer is the handing over of the possession shares by the seller to the assessee and its consequent delivery to the purchaser of the shares. The case of the Assessing Officer was that the assessee had not taken delivery of any shares. The perusal of details annexed in annexure A to the assessment order also reflects the transaction to have hap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or acquiring a Capital asset. Though assessee is into the business of land development, this particular transaction cannot be held to be part of its business activity. Therefore, the amount forfeited for not complying with the terms of the contract is a capital expenditure and cannot be claimed as bad debt permissible as deductable under section 36(1)(vii). In view of the above facts the deduction claimed of ₹ 25,00,000/- on account of bad debts is disallowed and added to the total income. 17. The CIT(A) upheld the order of Assessing Officer holding as under:- 5.4 I have carefully considered the facts of the case, the assessment order and the rival contentions. The issue to be decided is whether the appellant has advanced the amount of ₹ 25,00,000/- for acquiring capital asset or revenue asset i.e. stock in trade. In order to decide the issue, clause No.9 of the agreement to sale the plot dated 7/12/2005 is relevant and hence the same is reproduced below: 9. The VENDOR shall complete all formalities in the Government Offices and Panchayat office and other concerned places to clear the title of the said land and make the said land for the use of the indust ..... X X X X Extracts X X X X X X X X Extracts X X X X
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