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TMI Blog2019 (2) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... see vide letter dated 07/06/2013 requested a copy of sworn statement and the same was given to assessee on 08/08/2013. Assessee filed his return of income on 02/01/2014 admitting a net income of Rs. 4,48,780/-. Accordingly, notices u/s 143(2) and 142(1) were issued and served on the assessee. A sworn statement u/s 131 of the Act was recorded from the assessee on 16/05/2013. At the time of recording the statement, papers impounded during the survey at the premises of Shri Beereddy Jaipal Reddy were shown to the assessee and was asked to explain the transactions contained in those papers. 2.1 Assessee purchased agricultural land admeasuring acres 3.03 guntas in Survey No. 193/VU at Pillalamarri on 05/02/2009 vide registered document No. 1099/2009 from Shri Beereddy Jaipal Reddy for a consideration of Rs. 41.9 lakhs. Similarly, assessee also purchased a land in survey No. 196 from Tadepalli Saidulu for Rs. 9,22,050/- in the name of his wife Smt. Kekkireni Renuka. Since the property was registered in the name of the assessee and the purchase consideration has recorded in the sworn statement given by Shri Beereddy Jaipal Reddy, AO asked for explanation as to why the purchase considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 446 100 48818 By gross loss 4030999 Total 5206717 5206717 Such trading loss should be set off against the income assessed as per Sec.71 of I.T. Act, 1961. (v) Reliance is placed on 1. Hon'ble Gujarat high Court decision in the case of CIT Vs Shilpa Dyeing & Printing Mills Pvt Ltd. 2. Ahmedabad Tribunal decision in the case of M/s.K.R.Automobiles Vs ACIT, Circle-2(1), Baroda. 3. Hon'ble Madras High Court decision in the case of CIT Vs Chensing Ventures. (vi) The assessee entered into an agreement to purchase plot of 600Sqyrds in Survey No.196 in the name of his wife Smt.K.Renuka for a consideration of Rs. 9,22,050/-. However this agreement was not executed and later on was cancelled. Whereas the Assessing Officer considered undisclosed investment of Rs. 9,22,050/- as income based on this unexecuted document. (vii) The assessee offered 8% as income on the agreement value though this document was not executed. viii) The agreement was for 600 Sq.yards where as the land registered in the name of Smt. K. Renuka, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of hearing of the appeal." 7. In AYs 2010-11 and 2011-12 also, the facts and grounds are similar to that of AY 2009-10, except the quantum of additions. 8. Before us, the ld. AR reiterated the submissions as made before ld. CIT(A). Before us, she submitted two alternative ways of treating the trading activities of sale of plots and treatment of undisclosed investment on purchase of property. She submitted that the undisclosed income which is part of purchase cost of land should be allowed to claim as expenditure for the year and the loss incurred by the assessee should be allowed to carry forward to be adjusted in the subsequent years. She submitted alternate methods of treatment in the paper book filed before us. 9. Ld. DR supported the orders of revenue authorities and submitted that new alternatives or new evidence cannot be submitted now. 10. Considered the rival submissions and perused the material on record. We notice that in the survey proceedings at the premises of Shri Beereddy Jaipal Reddy certain documents belonging to the assessee were found. As per the sworn statement of Mr. Jaipal Reddy, assessee has purchased land for Rs. 41.90 lakhs. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Area Rate/Sq.yd. Amount (Rs.) Purchase 14883 288 42,84,667 Sales 1084 288 3,12,192 Normal loss - apportionment (3352 X1084/14883) 244 288 70,272 Closing Stock 10448 373.50 39,02,203 Since the cost of purchase is treated as investment in land, the assessee is allowed to carry forward the unsold value of land as closing stock as determined above. The assessee cannot treat the difference between purchase price and sales price as loss and is also not eligible to carry forward as business loss u/s 71. Accordingly, the grounds raised by the assessee on this issue are partly allowed. AY 2010-11 11. In this AY, the assessee has raised basically two grounds, i.e. ground No. 2, wherein, assessee objects that AO has made addition u/s 69 and not allowed assessee to declare profit @ 8% on purchase cost. In ground No. 3, the assessee objects that he was not allowed to carry forward the business loss. With regard to carry forward of business loss u/s 71, we have already discussed this in earlier year and adjudicated that it cannot be carried forward. 11.1 Coming to disallowance u/s 69, and determining the business profit, we have verified the information submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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