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TMI Blog2022 (7) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... rror in the order of the Assessing Officer passed under Section 143(3) of the Act on this issue as alleged by the learned PCIT calling for revision under Section 263 of the Act. We accordingly cancel the impugned order passed by the learned PCIT u/s 263 to the extent it revises the order of the Assessing Officer passed under Section 143(3) of the Act on the issue of assessee s claim for deduction on account of land vacation compensation charges. We, however, uphold the said order passed u/s 263 of the Act on the issue of the claim of the assessee for credit of TDS as the same was wrongly allowed by the Assessing Officer in the assessment order passed under Section 143(3) of the Act as agreed even by the learned Counsel for the assessee at the time of hearing before us. Appeal of the assessee is partly allowed. - ITA No. 338/Ahd/2020 - - - Dated:- 15-7-2022 - Shri P.M. Jagtap, Vice-President And Shri T.R. Senthil Kumar, Judicial Member For the Assessee : Shri Suresh Gandhi, AR For the Revenue : Shri Vijay Kumar Jaiswal, CIT-DR ORDER PER P.M. JAGTAP, VICE-PRESIDENT : This appeal filed by the assessee is directed against the order of the learned Princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... piece of land with all planted trees, plant . machinery etc. You had claimed the full expenditure as revenue expenses and charged it to P L account. Further, it is noticed that you had sold only one plot of land situated at Revenue Survey No.324/1 during the year, however you had claimed the entire expenditure of Rs.10 crore as land vacation charges. 3. Further, on perusal of registered deed no. AHD-II-ASL/8189 of 2014 dated 27/10/2014 by which such part of land parcel is sold during the F.Y. 2014-15, it can be ascertained that you had sold only open plot of land to the buyer and in whole registered deed there is no mention of any constructed portion being sold off. It is further noticed that the photographs of said property being part of the registered deed make it clear that possession of vacant plot is handed over to the purchaser of the property. Therefore, you had not sold any factory premises, plant and machinery etc. on the plot of land and only open plot of land had been sold. In view of these facts that the full amount of expenditure made as 'compensation expenses for vacation of land' was required to be capitalized and included in the valuation of the clo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as land vacant compensation charges and in support of this claim, the assessee had filed during the course of assessment proceedings u/s 143(3) of the Act, a copy of notarized agreement dated 08.10.2014 executed with M/s. Bosch Rexroth India Limited to which said land vacant compensation charges were paid. b) M/s. Bosch Rexroth India Limited was enjoying leasehold rights over the land situated at Vinzol at Survey No.324/1 as per lease deed dated 30th July, 1997 for a period of 99 years and it had also made investments in various office-cum-factory premises along with fixtures and machineries within the leased premises and also planted many trees for creating greenery. c) The assessee-company was the sole legal owner of the leased premises since it had purchased the impugned land In the financial year 2007- 08 relevant to A.Y.2008-09. d) The assessee-company informed M/s. Bosch Rexroth India Limited that it was desirous of selling the leased premises to other prospective buyers and it requested this company to vacate the leased premises by terminating the lease agreement and also agreed not to demolish buildings in the leased premises. In consideration thereof, an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was not found acceptable by the learned PCIT for the following reasons given in his impugned order:- 1) In the profit loss account for the financial year ending on 31.03.2015, the assessee-company has credited a sum of Rs.22,50,00,000/- under the head Revenue from operations and no other income has been reported. Further, in the immediately preceding year ending on 31.03,2014, there were no such receipts credited in the accounts but only expenses were debited which resulted in trading loss in the books of accounts for the A.Y.2014-15. 2) In the chart of depreciation, the assessee-company has not shown any immovable property either the land or land together with the factory building, plant machinery etc. and therefore, it is required to be held that the land in question together with the superstructure on the said land was not an asset on which the assessee had claimed the depreciation. 3) In note no. 13 of the accounts, the assessee has shown the opening and closing value of the land at Vatva-Vinzol for Rs.20,44,53,594/- as on 31.03.2015 as against the closing value of Rs.24,08,78,755/- as on 31.03.2014. This shows that the assessee-company has reduced the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000/- (Rupees Ten Crores). f) In clause 2 of the said agreement, it has been agreed that the assessee-company would immediately pay the amount of Rs.1,50,00,000/- leaving balance of Rs.8,50,00,000/- to be paid through 12 post dated cheques which would be encashed on 75th day from the effective date i.e. 8th October, 2014. 7) During the course of assessment proceedings, the assessee has filed letter dated 30.11.2017 wherein it has been stated that the land belonging to SLM Maneklal Industries Ltd. was purchased in auction and the cost of the said land has been shown as stock in trade. However, no details and documents have either been called for from the assessee-company and stood verified by the A.O. so as to prove that the assessee-company had become the owner of the said land together with other costs incurred for construction of roads, common land, compound, land filling, internal compound walls of the developed lots, water pipelines etc. 8) It has been contended by the assessee that it had purchased the land/plot during financial year ending on 31.03.2008. However, no evidences have been found to be called for and examined by the A.O. so as to ascertain the own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e receipt of the compensation received by M/s Bosch Rexroth India Ltd. and the accounting treatment given in its books of accounts i.e. whether as revenue receipts or capital receipts and the A.O. ought to have intimated the concerned A.O. for taking appropriate action at his end. vi) If the land in question had been taken in possession with super structure thereon, plant machinery, fixture furniture etc., the assessee must have incurred the expenses for demolishing the super structure being office and factory shed, discarding of plant machinery, removing of furniture fixture and selling the entire debris and obsolete items of furniture, fixture, plant machinery etc. and have offered the revenue receipts on such disposal. The A.O. has not inquired into this logical issue also. 3.5 Since the Assessing Officer, according to the learned PCIT, had failed to make necessary inquiries on the above issues which he ought to have done in the facts and circumstances of the case, the order passed by the Assessing Officer under Section 143(3) of the Act was held to be erroneous as well as prejudicial to the interest of the Revenue by the learned PCIT on the issue of assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate the said land and release the leasehold rights for a consideration. He submitted that M/s. Bosch Rexroth India Ltd. accordingly agreed to vacate the land for a consideration of Rs.10 crores and the said vacation charges were claimed as deduction by the assessee for the year under consideration. He submitted that the Assessing Officer, however, duly examined this claim of the assessee and found on such examination that since the assessee had sold only the land at Vinzol admeasuring 40,087 sq. mtrs., he allowed the deduction claimed by the assessee on account of land vacation compensation charges paid to M/s. Bosch Rexroth India Ltd. proportionately to the extent they were pertaining to the land at Vinzol sold by the assessee during the year under consideration admeasuring 40,087 sq. mtrs. and disallowed the balance amount of Rs.2,00,92,889/- which was pertaining to the land at Vatva admeasuring 10,080 sq. mtrs. which was retained by the assessee. He contended that this issue was duly examined by the Assessing Officer and after making the necessary inquires, the claim of the assessee was allowed partly and the balance amount of Rs.2,00,92,889/- was disallowed. He contended that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crores paid by the assessee-company to M/s. Bosch Rexroth India Ltd. for vacating the land were claimed by the assessee-company as a deduction in the return of income filed for the year under consideration. As is evident from the written submissions filed by the assessee during the course of assessment proceedings vide letters dated 04.10.2017, 24.11.2017, 01.12.2017 and 05.12.2107, this claim of the assessee was examined by the Assessing Officer. In this regard, various details and documents were filed by the assessee before the Assessing Officer including the agreement for vacating and handover entered into with M/s. Bosch Rexroth India Ltd. and on perusal of the same, it was noted by the Assessing Officer in the assessment order passed under Section 143(3) of the Act that M/s. Bosch Rexroth India Ltd. was having lease of the land situated at situated at Vinzol bearing Survey No.324/1 admeasuring 40,087 sq. mtrs. and the land situated at Vatva bearing Survey No. 1037 admeasuring 10,080 sq. mtrs. which was purchased by the assessee in the year 2008 from M/s SLM Maneklal Industries Limited. The indenture of lease deed between M/s. SLM Maneklal Industries Limited and M/s. Bosch Rex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relation to Leased Premises. D. The Company has informed Bosch Rexroth that it is desirous of selling the Leased Premises to prospective buyers; E. The Company has further informed Bosch Rexroth that in consideration for Bosch Rexroth handing over of the Leased Premises along with the Buildings therein, Bosch Rexroth shall be compensated for all investments done by it in the Leased Premises to raise the land value of the Leased Premises. F. At the request of the Company., without prejudice to any of its rights in future, Bosch Rexroth has agreed to vacate the Leased Premises by terminating the Lease Agreement and also agrees not to demolish the Buildings in the Leased Premises in consideration for the compensation to be paid by the Company as per the terms and conditions contained hereunder. 6.1 On perusal of the said agreement, the Assessing Officer noted in the assessment order that the compensation of Rs.10 crores was paid by the assessee to M/s. Bosch Rexroth India Ltd. for vacating the land situated at Vinzol bearing Survey No.324/1 admeasuring 40,087 sq. mtrs. and the land situated at Vatva bearing Survey No. 1037 admeasuring 10,080 sq. mtrs. He also gath ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l position which the learned PCIT wanted the Assessing Officer to ascertain by making inquiry was clearly evident from the details and documents already filed by the assessee during the course of assessment proceedings including the agreement for vacating and handover, we are of the view that it is not a case where the Assessing Officer can be said to have passed the order under Section 143(3) of the Act without inquiries or verification which should have been made in the facts and circumstances of the case as envisaged in Explanation 2(a) to Section 263 of the Act. In our opinion, there was thus no error in the order of the Assessing Officer passed under Section 143(3) of the Act on this issue as alleged by the learned PCIT calling for revision under Section 263 of the Act. We accordingly cancel the impugned order passed by the learned PCIT under Section 263 of the Act to the extent it revises the order of the Assessing Officer passed under Section 143(3) of the Act on the issue of assessee s claim for deduction on account of land vacation compensation charges. We, however, uphold the said order passed under Section 263 of the Act on the issue of the claim of the assessee for cred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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