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TMI Blog2019 (10) TMI 1194X X X X Extracts X X X X X X X X Extracts X X X X ..... the jewellery found at the time of search was without any corroborative evidence. Therefore, ground of appeal No.3 against such addition is rejected. Addition u/s 56(2)(vii)(c)(i) - shares were allotted to the assessee without any or valid consideration - HELD THAT:- A loan cannot be considered as a benefit received by the assessee without any consideration. In view of the above, what can be brought to tax is only the lease rental receivable by the assessee for the relevant financial year. The AO is therefore directed to compute the lease rental in the respective relevant A.Ys and bring it to tax. As regards amount as retained towards the TDS brought to tax as income from other sources , the addition to that extent is confirmed. Similarly in the A.Y 2012-13, it is only lease rental that is liable to be taxed. As regards the sale consideration of ₹ 24,17,976 is concerned, the assessee has claimed it to be sale consideration on sale of agricultural land. AO is therefore, directed to verify whether the said land was recorded was agricultural land both at the time of the purchase of the property and also at the time of the sale and if it is found to be recorded as agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sources for the same was said to be out of the amount received from her husband. When asked to furnish the conformation, the assessee could not produce the same and therefore, the AO concluded that the investment is unexplainable and he brought the investment of ₹ 61,81,000/- to tax u/s 69 of the I.T. Act as unexplained investment. 5. Thereafter, he proceeded to consider the nature of income arising from the alleged agricultural land. He observed that in the computation statement for the A.Y under consideration, the assessee has shown agricultural income of ₹ 80,000/-. The assessee was asked to produce the evidence in respect of agricultural income along with the documentary evidence in respect of the ownership of agricultural land. In response to the same, the assessee submitted that her mother-inlaw owned 16.31 acres of mango garden as part of HUF property. Out of the income from the mango garden during the year, (the assessee has received a sum of ₹ 80,000/-) which has been reflected in her return as agricultural income. Observing that the assessee has not adduced an y evidence to prove that the income was received from HUF exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting as under: a) The Lessee has. agreed to pay Lease Rent of ₹ 2,500/- (Rupees Two Thousand Five Hundred Only) per month per acre. b) The Lessee has agreed to pay the lease rent for 99 years in advance at the time of execution of the Lease Deed, amounting to ₹ 13,11,25,500/- (Rupees Thirteen Crores Eleven Lakhs Twenty Five Thousand Five Hundred Only). c) The Lessee further agreed to allot equity shares of M/s. Sai Sudhir Energy Ltd. to the Lessor or to the family members of the Lessor as recommended by Lessor to the extent of number of equity shares opted by the Lessor and adjust the share subscription amount against Lease Rent payable to Lessor. d) If any leftover amount over and above the number of equity shares allotted, the Lessee will pay by way of cash to the Lessor. e) The lessee has agreed to allot 4~0~923 shares at ₹ 10/-- each before 31st March, 2011 and the balance 48,03,922/- shares at ₹ 10/- each after 1st April, 20111 towards least rent. f) The possession of the Land will be handed over to the Lessee immediately after execution of the Lease ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rental income attributable to 99 years lease rental receivable in respect of 44.15 acres of land at Gramadatla Village. 9. The CIT (A) also observed that subsequently on 2.7.2011, another lease deed was prepared whereby the assessee agreed to lease 44.15 acres of land to the same lessor, SSEL, and that the lease deed is registered as document No.1800/2011 with the Sub Registrar, Raidurg. He observed that the lessee company was represented by assessee s husband Shri D. Sreedhar Reddy, who is also a Director in the company and as per the lease for 99 years commencing from 1.4.2011 to 31.03.2110, the terms and conditions are as under: a) The lessee has agreed to pay lease rent of ₹ 24,424/- (₹ 24,424/- (Rupees Twenty Four Thousand Four Hundred and Twenty Four only) per annum. No advance paid. b) The lessee has agreed to pay the lease rent for 99 years in advance at the time of execution of the Lease Deed amounting to ₹ 24,17,976/- (Rupees Twenty Four Lakhs Seventeen Thousand Nine Hundred and Seventy-six only) and the Lessor hereby acknowledge the receipt of the same. c) Income Taxes shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase and sale of land. He, therefore, treated it as business income assessable to tax in the financial year 2011-12 relevant to the A.Y 2012-13 being the year in which the sale was registered. 11. Before the CIT (A), the assessee had stated that if the lease deed dated 16.3.2011 were to be considered, then only the lease rental pertaining to the year in consideration has to be brought to tax and if the transaction is to be considered as sale on 8.7.2011, then the sale consideration alone i.e. 24,17,976/- can be considered as sale consideration. It was also submitted that the land was agricultural land which was situated in the remote area and there was no intention of the assessee to carry on any business activity and it was not a capital asset within the meaning of section 2(14) of the I.T. Act. The CIT (A) considered the issue at length and observed that at the time of execution of the lease deeds dated 16.3.2011 and 17.3.2011, the lease rentals were fixed and subsequently the lease were converted into a sale in the subsequent A.Y. He observed that the assessee has been allotted equity shares worth ₹ 10,67,50,833/- and also ₹ 24,17,976/- towards the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) The learned Commissioner of Income-tax (Appeals) ought to have provided proper opportunity before passing the order enhancing the income for the year under consideration, 4) The learned Commissioner of Income-tax (Appeals) erred in holding that the company Sai Sudhir Energy Limited allotted 96,07,845/- equity shares of the face value of ₹ 10/- each without any consideration when facts show otherwise. 5) The learned Commissioner of Income-tax (Appeals) erred in holding that the provisions of Sec.56(2)(vii)(c)(i) of the I.T.Act are applicable to the facts of the case and further erred in holding that an amount of RsA,80,39,230j- received on 31.03.2011 would form part of the income of the appellant for the assessment year under consideration. The learned Commissioner of Income-tax (Appeals) ought to have seen that the shares were not allotted without any consideration. 6) The learned Commissioner of Income-tax (Appeals) failed to see that the shares were allotted against consideration and the balance in the books of account remained payable by the appellant to Sai Sudhir Energy Limited. ( 7) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to the appellant before a view is taken that the provisions of Sec.56 (2)(vii)(c)(i) of the I.T.Act. are applicable to the value of shares allotted to the appellant particularly when the appellant received shares against consideration. 8) Any other ground or grounds that may be urged at the time of hearing . 13. The learned Counsel for the assessee reiterated the submissions made by the assessee before the authorities below extensively while the learned DR supported the orders of the authorities below. 14. Having regard to the rival contentions and the material on record, we find that there are two additions and the assessee has accepted the additions made under the head income from other sources of the agricultural income declared by the assessee. The first issue is the addition made on account of unexplained investment in Gold Jewellery. We find that during the course of search, the total gold jewellery found in the premises of the assessee was worth ₹ 2,26,26,455/-. In a statement recorded during the course of search, the husband of the assessee offered to admit the additional income of ₹ 1,36,47,165/- to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the I.T. Act is not warranted. He submitted that the sale deed has been executed in the financial year relevant to the A.Y 2012-13 for a sale consideration and therefore, only such sale consideration can be brought to tax in the A.Y 2012-13 and not the amount received by the assessee by way of allotment of shares. He also submitted that on the execution of the sale deed, the amount received by the assessee by way of allotment of shares has been converted into a loan and it is still shown as payable by the books of SSEL. He, therefore, submitted that the amount remained payable by the assessee and thus cannot be treated as business income of the assessee. The learned DR however, supported the orders of the CIT (A). We find that the first lease agreement was entered on 16.03.2011 and it was subsequently modified on the next day i.e. on 17.3.2011. By virtue of both the lease deeds, the lease rental was fixed for 99 years which was agreed to be paid upfront and the consideration was to be paid by way of allotment of equity shares of SSEL and the balance was to be paid to the lessor. We find that pursuant to such an agreement, 48,03,923 shares were allotted to the assessee by 31.03.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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