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TMI Blog2020 (12) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... is also the owner of said property and is 50% Director in M/s Synergy Consultants Pvt. Ltd. A transaction of loan or proposed sale does not depend merely on the terms of the document, but has got to be judged from the intention of the parties and all the circumstances of the case. As per the MOU dated 15/06/2009, the sale was to take place by December, 2012, however, admittedly, the same has not materialised till date. During the period ₹ 3,50,00,000/- was received, out of total consideration of ₹ 4,50,00,000/- from M/s Synergy Consultants Pvt. Ltd. It is unbelievable that, the advance received was adjusted towards cost of said property in a proposed sale, which has not been materialised till date. This argument does not hold waters in the eyes of law. In our view, this is an arranged transaction which cannot be ignored. In a matter of such description, the authorities are entitled to pierce the veil of corporate entity and look at the reality of the transaction. We therefore remand this issue to Ld.AO to consider it afresh in accordance with law. - Decided in favour of assessee for statistical purposes. - ITA No.106/BANG/2020 - - - Dated:- 27-11-2020 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elling expenses of ₹ 52,07,186/- under the facts and in the circumstances of the appellant's case. 5. The learned CIT[A] is not justified in omitting to consider the additional grounds of appeal raised by the appellant in respect of the disallowance of depreciation of ₹ 7,62,135/- under the facts and in the circumstances of the appellant's case. 6. Without prejudice to the right to seek waiver with the Hon'ble CC IT/DC, the appellant denies himself liable to be charged to interest u/s. 234-B of the Act, which under the facts and in the circumstances of the appellant's case and the levy deserves to be cancelled. 7. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs. Brief facts of the case are as under: 2. Assessee filed his return of income for year under consideration on 27/09/2012. The return was processed under section 143(1) of the Act and was selected for scrutiny. Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to finalise the terms with an investor in the company. And that the sum would be repayable, in the event the sale does not materialise before 31/12/2015. 7. Ld.AO also called upon assessee to explain why rent as per fair market value should not be charged in the hands of assessee under the head income from house property. In response to vary, assessee submitted that assessee is using the office space for purpose of his own business being Synergia Bio Sciences and hence there cannot be any notional rent payable or receivable by assessee. 8. Ld. AO thus came to the conclusion that, M/s Synergy Consultants Pvt.Ltd. is a company was enjoying the occupation of office space free of rent and that it has paid substantial advance amounting to ₹ 3,05,70,826/- till 31/03/2012 for purchase of said office premises in accordance with MOU dated 15/06/2009. He also noted that the company paid substantial amount out of total sale consideration amounting to ₹ 4,50,00,000/- and therefore M/s.Synergy Consultants Pvt.Ltd., was held to be possession of property within the mischief of provision to section 2 (47) of the Act read with section 53A of Transfer of Property Act, 1882. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of MOU till 2015 and again it was been extended till 2018, on the ground that the desired investment in company being M/s Synergy Consultants Pvt.Ltd. was not materialised. It is also an admitted fact that, during these period M/s Synergy Consultants Pvt.Ltd. occupied premises without paying any rent to assessee and all these while consideration advance from M/s Synergy Consultants Pvt. Ltd., received was not offered to taxes by assessee. 12. He thus upheld observations of Ld.AO. 13. In respect of the disallowance under section 40 (a) (ia) of the Act, Ld.CIT (A) observed as under: 7.2 Ground of appeal no. 3 is related to the issue of disallowance u/s 40(a)(ia). From the details submitted both before the AO and during the appellate proceedings, it is seen that the payments of ₹ 6,38,090/- were made towards professional charges for development of software and SAP certification and TDS has been deducted thereon. The appellant has submitted that he is the proprietor of Synergia BioSciences, of which Synergia Technosoft is a division. Hence the above expenses which have been claimed on professional charges and on which TDS has been deducted are admissible. The amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court in case of CIT vs Balbir Singh Maini reported in (2017) 398 ITR 531. 19. On the contrary Ld.Sr.DR submitted that, the facts of present case is squarely covered by provisions of section 2(47)(v) of the Act, read with section 53A of transfer of property Act 1882. He submitted that assessee is a Director and 50% of M/s Synergy Consultants Pvt.Ltd. He also submitted that, assessee is the owner of proposed building for sale with Synergy Consultants Pvt. Ltd. and that, the amount that is shown as loan in the accounts of assessee was later on converted into an advance for alleged sale. Our attention was drawn to the agreed sale consideration being ₹ 4,50,000,000/- out of which assessee already received sum of ₹ 3,05,70,826/- as advance. Ld.Sr.DR submitted that, substantial amount of sale consideration have been received by assessee as advance during the year under consideration. 20. Ld.DR in case of CIT Vs. Balbir Singh Maini (Supra), relied on following observations by Hon ble Supreme Court in support:- 22.1 The object of sec.2(42)(vi) of the Act is to bring within tax net a defacto transfer of any immovable property. The expression, enabling the enjo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n our view, a transaction of loan or proposed sale does not depend merely on the terms of the document, but has got to be judged from the intention of the parties and all the circumstances of the case. 23. As per the MOU dated 15/06/2009, the sale was to take place by December, 2012, however, admittedly, the same has not materialised till date. During the period ₹ 3,50,00,000/- was received, out of total consideration of ₹ 4,50,00,000/- from M/s Synergy Consultants Pvt. Ltd. 24. It is unbelievable that, the advance received was adjusted towards cost of said property in a proposed sale, which has not been materialised till date. This argument does not hold waters in the eyes of law. In our view, this is an arranged transaction which cannot be ignored. In a matter of such description, the authorities are entitled to pierce the veil of corporate entity and look at the reality of the transaction. We therefore remand this issue to Ld.AO to consider it afresh in accordance with law. Accordingly these grounds raised by assessee stands allowed for statistical purposes. In the result appeal filed by assessee stands party allowed. Order pronounced in the open co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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