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TMI Blog2022 (5) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... 61,000/-. Therefore, Section 50C of the Income Tax Act was invoked, as if the land was a capital asset of the petitioner company. The Department wanted to include an amount of Rs.2,24,23,500/- [Rs.3,21,61,000 Rs.97,37,500] as income having escaped assessment during 2013 to 2014, it is however not clear which the entire parcel of land was sold or only an extent of land was sold during the previous year for Assessment Year 2013-2014. It is also not clear how the land can be treated as a capital asset of the petitioner company when the land was neither purchased nor sold by the petitioner Company. These aspects are not forthcoming clearly either in the reply of the petitioner or in the orders passed by the respondent earlier on 22.11.2018 which was earlier quashed by an order dated 12.12.2018 or in the impugned orders dated 17.12.2018 disposing objection of the petitioner against reopening of the assessment under Section 148 of the Income Tax Act, 1961 and the consequential assessment order passed on 20.12.2018 impugned in this writ petition. Thus while upholding the impugned order overruling the objection against re-opening the assessment, we are inclined to set aside the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not expressing any view on the merits of the above contentions raised by the learned Senior Counsel for the petitioner, as this Court is inclined to set aside the order dated 22.11.2018 and remit the matter back to the Assessing Officer to pass fresh orders, by considering all the objections raised by the petitioner, through their communications dated 09.11.2018 and 18.11.2018. 7. Accordingly, this writ petition is allowed and the impugned order is set aside. Consequently, the matter is remitted back to the first respondent/Assessing Officer to pass fresh orders after considering the objections raised by the petitioner against the re-opening of the assessment on merits and in accordance with law. No costs. Consequently, connected miscellaneous petition is closed. 4. The dispute pertains to assessment year 2013 to 2014 [Previous year 2012 to 2013]. The petitioner purchased about 150 acres of land for being sold to Zuari Cements Limited for setting up their Cement grinding unit at Solapur, Maharashtra. According to the petitioner, the petitioner had received a sum of Rs.7,08,39,862/- towards land development income and it had expended about Rs.2,98,97,537/- for dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DS and hence the Company had deducted TDS on the net amount. On verification of the MOU, it is seen that there is no agreement between the Company and the parties that the TDS should be borne by the Company. This is not arisen out of any binding contractual obligation. Therefore, this expenditure does not relate to business and hence the amount of Rs.2,48,615/- is disallowed. Additionally, TDS is no an allowable item of expenditure u/s 40(a)(ii). 8. Appearing on behalf of the petitioner, the learned Senior Counsel submits that the exercise taken by the respondents while issuing the impugned notice under Section 148 of the Income Tax Act, 1961 on 17.01.2018 is without jurisdiction as it is motivated on account of the change of opinion and contrary to the decision of the Delhi Court made in the case of CIT Vs. Kelvinator of India Limited reported in [2002] 256 ITR 1 (Del), as affirmed by the Hon'ble Supreme Court in [2010] 320 ITR 561 (SC). 9. Explaining the background of the case, the learned Senior Counsel would also submit that the petitioner is primarily engaged in clearing and forwarding operation and had an occasion to enter into an agreement with Zuari Cement Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be dismissed. 13. As far as the challenge to the impugned assessment order under Section 143(3) r/w Section 147 of the Income Tax Act, 1956 vide order dated 20.12.2018 in W.P.No.356 of 2019 is concerned, it is submitted by the learned counsel for the respondent submits that the petitioner has an alternate remedy before the Appellate Authority under Section 246A of the Act and therefore, the Writ Petition is liable to be dismissed. It is further submitted that the petitioner had wrongly treated the land purchased for being sold to Zuari Cement Limited as business asset to wrongly claim business expenses. 14. It is further submitted that the original scrutiny assessment made under Section 143(3) of the Income Tax Act by the respondent on 27.03.2016 proceeded on the assumption that the petitioner had acquired the properties from various persons as a business asset for being sold to Zuari Cement Limited and therefore, the scope of enquiry at that point of time pursuant to the notice under Section 142(1) of the Act was confined to the extent of business expenditure that can be allowed, where there was no TDS by the petitioner. 15. It is therefore submitted that the entire scr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I) 2, Pune. It is mentioned that Shri.Dattatray Ramkrushna Shete, Director of M/s.Fairmacs Shipping and Transport Services Pvt Ltd has sold property for Rs.97,37,500/- on 23.07.2012. During the course of verification, it is noted that the given transaction is signed by him in the capacity director of the company. On perusal of the financials of the company, the said transaction has been duly considered in the income of the above mentioned company. As per the financials, the assessee considered Rs.97,37,500/- as sales consideration on account of sale of immovable property to the Zuari Cement on 23.07.2012. However, the market value of the property was Rs.3,21,61,000/-. In this case, as market value of the given property sold was more than the amount on which the property has been sold by the assessee, the provisions of Sec.50C of the Income Tax Act, 1961 is applicable. 20. By way of rejoinder, learned Senior Counsel for the petitioner submits that the total consideration received from the transaction is Rs.7,08,39,852/- and that the petitioner was following mercantile system of accounting and booked the receivables and expenses during the relevant assessment year as was expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entered into an agreement for sale of land to Mrs.Zuari Cement Limited for setting up a cement plant in Solapur, Maharashtra. One of the copy of the sale deed, dated 23.07.2012, which has been enclosed along with the typed set of documents shows that the lands were purchased in the name of Mr.Dattatreya Ramkrishna Shete, the Director of the petitioner company whose occupation has been declared as Agriculturist in the sale deed. The petitioner company could not directly purchase the agricultural lands and therefore, the lands were perhaps purchased in the name of the individual Mr.Dattatreya Ramkrishna Shete, the Director of the petitioner company. 26. Different parcels of lands were purchased by the said Director as an Agriculturist and thereafter sold/transferred to Zuari Cements Limited. It is not clear that how the funds of the petitioner could have been used to finance the purchase by its Director. The sale is also by the said Director in his individual capacity as an Agriculturist on 30.07.2011 to Zuari Cements Limited. However, the income from the land development cost has been shown as Rs.7,08,39,862/- during the previous year. Further, a sum of Rs.2,98,97,357/- has been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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