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TMI Blog2017 (7) TMI 1465X X X X Extracts X X X X X X X X Extracts X X X X ..... to be interpreted liberally when the payment is genuine and the payee is identifiable. In this case, there is no doubt regarding the payee and payer and the CIT(A) also has given a finding that the payee in the case of Siri Constructions has admitted the amount in their returns. As in the case of Sri Lakshmi Satyanarayana Oil Mill [ 2014 (8) TMI 486 - ANDHRA PRADESH HIGH COURT] held that the provision must be interpreted liberally and the assessees cannot be subjected to undue rigor. Therefore, in the instant case, the payments are said to be genuine and the payees are identifiable and the recipients have admitted the receipts in the income. Therefore, we do not find any infirmity in the order of the Ld. CIT(A) and the same is upheld and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40A(3) of the Act. The assessee filed the return of income declaring total income of Rs.5,43,600/-. During the course of assessment proceedings, the assessing officer found that the assessee has purchased 5.35 acres of land at P. Mallavaram village Tallarevu Mandal vide document no.2071/2007 dated 26.5.2007 from Sri Manyala Indira Malleswari and others for a consideration of Rs.60,18,600 and got it developed through M/s. Sree Constructions by incurring an expenditure of Rs.51,00,000/- and thereafter, sold it to M/s. Reliance Industries Ltd for a consideration of Rs.1,13,56,000/- vide document No.2347/2007 dated 11.6.2007. The assessee has admitted an amount of Rs.3,73,000/- being excess consideration received over and above the purchase pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made u/s 40A(3) of the Act. 5.0 Aggrieved by the order of CIT(A), the revenue is in appeal before us. Appearing for the revenue, the Ld. D.R. argued that the assessee has made the payment of Rs.26,50,000/- towards purchase of the land and the balance of Rs.51.00 lakhs was paid to M/s. Siri Constructions, which is the related company of the assessee. Therefore, the Ld. D.R. argued that the payment made for purchase of the land and the payment made to the developer for the development of the land is squarely hit by the provisions of section 40A(3) of the Act and the A.O., has rightly made the addition. The intention of the legislature in inserting the provisions of section 40A(3) of the Act was to prevent the misuse of the provisions and to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislature for inserting section 40A(3) of the Act is to pluck the loophole of tax evasion by making the payments in cash. Once it is established that the payment is genuine and the recipient has admitted the payment in their income return, the purpose of 40A(3) of the Act is complied with. Therefore, the courts have held in such circumstances the rigor of the provisions needs to be interpreted liberally when the payment is genuine and the payee is identifiable. In this case, there is no doubt regarding the payee and payer and the Ld. CIT(A) also has given a finding that the payee in the case of Siri Constructions has admitted the amount in their returns. Hon ble A.P. High Court in the case of Sri Lakshmi Satyanarayana Oil Mill Vs. CIT (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee intended to develop and transfer the scheduled land and only for that purpose she approached the contractor to develop the land by leveling it by filling with mud and gravel Thus, it clearly shows that with the intention of selling the land only. 10. The Ld. CIT(A) held the transaction as business income as per the discussion made in the para No.8 of the CIT(A) order, which is extracted as under: 8. From the perusal of the details filed it is seen that the assessee has filed the impugned GPA cum sale agreement dated 265.2007. The same was sold to M/s.Reliance Industries Ltd on 11,6.2007 vide Doc. No.2347/2007. A perusal of the sale agreement dt. 26.5.2007, it is seen that the assessee had originally entered into an agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed. The impugned land already being agricultural land need not be filled with black mud and red gravel to make it fit for agricultural activity. Thus the contention that the land was acquired with the intention to do agricultural activity is without any basis. The material on record already suggest that as the company, M/s.Reliance Industries Ltd was looking to procure land in the said area which was paying fancy amounts for the agricultural land in the area, the assessee has entered into the venture to make profit from the transaction. Therefore, I find that the AO is justified in holding that the transaction is in the nature of 'adventure in the nature of trade' and in assessing the income from the impugned transaction as incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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