9911796707
TMI Blog2024 (6) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... our considered opinion the conveyance deed dated 21-04-2017 was executed by the promoters in favor of the assessee company merely for completing its promise/contract entered by the promoters on behalf of company before incorporation and in the process the assessee company paid stamp duty as applicable on the date. As such the original transaction of purchase of land by the assessee company in the given facts and circumstances was 15-07-2016 from the farmers for a consideration which was higher than the value on which stamp duty paid. Accordingly, we hereby hold that the lower authority in the given facts and circumstances erred in invoking the provision of section 56(2)(x)(B) of the Act based on stamp duty paid on conveyance deed executed on 21-04-2017. Therefore we set aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Ground of appeal of the assessee is hereby allowed. - Shri Waseem Ahmed, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Assessee : Shri Mehul Ranpura, AR For the Revenue : Shri V.J Boricha, Sr. DR ORDER PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal filed by the assessee has been directed aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 Sq. mts. and 8273 Sq. mts. for consideration of Rs. 28,61,000/- and 15,31,000/- respectively vide purchase deed dated 15-07-2016. 5. Subsequently, after the conversion of land into non-agricultural and incorporation of the assessee company (10-03-2017), the impugned land was transferred to the assessee company (except for 543. Sq. mts.) vide conveyance deed dated 21-04-2017 at Rs. 49 Lakh on a cost-to-cost basis. Hence, the assessee was the beneficial owner right from the purchase of land by the promoter and legal owner after execution of conveyance deed. 6. The assessee further stated that the stamp value of the agricultural land when the promotors purchased the land in their name was Rs. 34,56,904/- which did not change, but stamp duty on the date conveyance deed in favor of the assessee company paid on higher value (Rs. 109,31,292) as the land on that date was converted into non-agricultural land. The assessee accordingly contended that there was no violation of provision of section 56(2)(x)(B) of the Act because the agricultural land purchased by the assessee company as a beneficial owner in the previous year 2016-17. The assessee in support of the above contention furnished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transferred to the company for Rupees 49 lac vide conveyance deed dated (21/4) / 2017 The stamp duty was paid as per prevailing jantri rates It had been stated that jantri value for agricultural land was 34,56,904/- but the value of non-agricultural land as per the jantri of the sub registrar was 1,09,32,653/- 5.6 The contention of the taxpayer is that the MoU was signed on 03/6/2016 prior to the purchase of land on 15/7/2016 and transferred to the company on (21/4) / 2017 and that the provision of section 56 (2) (x) inserted from (1/4) / 201 are not applicable in its case. The applicant has emphasized on the date of agreement/MoU and subsequent payment made by promoters by cheques to reiterate its claim regarding non-applicability of the provisions. 5.7 However, after careful consideration of the facts the following points emerge. - (i) the company was incorporated on 10/3/2017 Prior to this date any MOU or agreement undertaken by the company or anyone representing the company cannot have any legal sanctity. The AO has correctly treated the same as a self-serving document (ii) The property purchased by the promoters and the one purchased by the company cannot be considered as one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ters of the assessee company executed a conveyance deed of land in favor of the company dated 21-04-2017 for the consideration of Rs. 49 Lakh whereas the stamp duty on the same was paid at the value of Rs. 1,09,31,292/- only. Thus, the difference between the amount was treated as income in accordance with the provisions of section 56(2)(x)(B) of the Act. However, the learned AR for assessee contended that property in dispute was agricultural property purchased in the immediate previous year i.e. on 15-07-2016 in the name of promoters of the assessee company for the purpose of factory/manufacturing plant. As such company was yet to be incorporated therefore the promoter purchased the impugned land for setting up manufacturing facility of proposed company and once the assessee company got incorporated on 10th March 2017, immediately the conveyance deed was executed in the favor of the assessee company. Therefore, the stamp duty value for the purpose of section 56(2)(x)(B) of the Act should be taken as per the date of original purchase dated 15-07-2016. Thus, the question before us arise can the promoter of the assessee purchase or hold property in the name of the proposed company whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the promotors decided to enter the business of manufacturing of pipes and fittings for this purpose they got incorporated the assessee company. For the manufacturing business of pipes and fittings, they required suitable land to set up a manufacturing plant. They found such suitable land, but the assessee company was not yet incorporated and considering the fact that land was agricultural land, they mutually decided to purchase the land in the name 2 promotors. It was agreed between them that once the proposed company (i.e. assessee company) gets incorporated and the land converted into NA land, then the land will be transferred in the name of the company. To This effect an MOU dated 30-06-2016 was entered among the promotors which is available on pages 11 to 19 of the paper book. At this juncture, it is also important to highlight that the AO doubted the validity of this MOU on the reasoning MOU was entered before the incorporation of the company then how the assessee company entered such MOU. We note that the AO misunderstood the content of the MOU as such assessee company is not the party of the MOU. The impugned MOU entered between the 3 promotors where they agreed for purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
