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TMI Blog2001 (3) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee-company sold its 50% share to Mrs. Usha Chadha in properly No. S-264, Greater Kailash New Delhi for a consideration of Rs. 4,25,000. In terms of the sale deed it was stipulated that Mrs. Usha Chadha would pay Rs. 2,25,000 at the time of registration of the property and the balance of Rs. 2,00,000 in 10 annual instalments. At the time of registration of the property in favour of Mrs. Usha Chadha the Sub-Registrar objected to the condition of payment of balance price in instalments and accordingly a cheque of Rs. 2,00,000 was tendered by Mrs. Usha Chadha - the purchaser - by way of payment of balance amount to meet the objections of the Sub-Registrar. The Company, however, did not realise the cheque in view of Board's Resolution dated 20-9-1982, in which the assessee-company decided to realise the amount in 10 annual instalments. Mrs. Usha Chadha expired in July, 1983 and her legal heirs paid a sum of Rs. 1,10,000 only in satisfaction of the amount of Rs. 2,00,000 due. The balance amount of Rs. 90,000 was written off as being irrecoverable. 3. From the above facts, the Commissioner came to the conclusion that the amount of Rs. 90,000 outstanding from Mrs. Usha Chadha, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the property S-264,Greater Kailash, New Delhi was jointly purchased by the assessee-company and Mrs. Usha Chadha on 12-1-1981 and each of them was having 50% share. The above property has been shown under the head fixed assets in the Balance Sheet of the assessee-company for the assessment year 1982-83 and depreciation has been claimed in the books of account. Thus it was pleaded by Sh. Kanwal, Ld. DR that the property has not been shown as a trading item from which it can be inferred that its sale had taken place in normal course of business of the assessee. It was submitted that the assessee has been showing income from this property under the head 'House Property Income' and as such the alleged loss of Rs. 90,000 cannot be considered as a business loss and the CIT was perfectly justified in directing the Assessing Officer not to allow this claim of Rs. 90,000 to the assessee in the computation of income for the assessment year 1985-86. 6. We have considered the rival submissions. The undisputed facts are that the assessee-company along with Smt. Usha Chadha, who had earlier been a Director of the assessee-company as well as M/s. Jagatjit Industries Ltd . purchased 50% s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Per S. Grover, Judicial Member---I have gone through the proposed order of my learned brother Shri R.K. Bali but find myself unable to agree that the addition of Rs. 90,000 made by the learned Commissioner of Income-tax, Jalandhar, here in after referred as the CIT, should be retained and the appeal dismissed. 9. Considering the peculiar nature of the case, I would like to state the facts. 10. This second appeal relates to the assessment year 1985-86 and contests the order dated 20-1-1989 for which the hearing was closed on 3-11-1988, passed by the CIT by invoking his powers under section 263 of the Income-tax Act, 1961, hereinafter referred as the Act, in which addition of Rs. 90,000 came to be made over and above the assessment framed by the Assessing Officer. 11. The appellant is an Investment Company and one of the objects in B-Part of the Object clause of the Memorandum of Association is to deal with movable and immovable property. 12. The Transaction, in question, took place in accounting year, relevant to the assessment year 1983-84, when the assessee on 20/22-9-1982 sold its 50% share in property No. S-264, Greater Kailash, New Delhi to Smt. Usha Chadha for Rs. 4, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mp sum payment of Rs. 1,10,000 in lieu of Rs. 2,00,000 receivable over 10 years in 10 equal annual instalments and the said Act represented a sound business decision as net present value of aforesaid amount of Rs. 2,00,000 receivable over the period of 10 years by assuming rate of interest to be 15 % would have been Rs. 1,00,380 as is evident from the Chart filed at page 16 of the Paper Book against which the appellant has accepted Rs. 1,10,000. 17. Thus no benefit has been passed out by the Company during the year under appeal. On the other hand, it has realised its future payment, which came under clouds of uncertainty on account of death of Smt. Usha Chadha. Therefore, it cannot be said that the subsequent act of the Company in accepting, Rs. 1,10,000 in lieu of Rs. 2,00,000 receivable over a period of 10 years was not a normal business transaction. 18. Main stress laid down by the CIT in his order passed under section 263 of the Act was on [he fact that Smt. Usha Chadha was a Director of the holding Company which also is uncalled for as she had resigned from the Directorship of M/s. Jagatjit Industries Ltd. which is the holding Company w.e.f. 1-9-1976 and also she was not t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -9-1976 respectively. On 20/22-9-1982, the assessee-company sold its 50% share to Mrs. Usha Chadha in property No. S.264, Greater Kailash, New Delhi for a consideration of Rs. 4,25,000. In terms of the sale deed it was stipulated that Mrs. Usha Chadha would pay Rs. 2,25,000 at the time of registration of the property and the balance of Rs. 2,00,000 in 10 annual instalments. At the time of registration of the property in favour of Mrs. Usha Chadha, the Sub-Registrar objected to the condition of payment of balance price in instalments and accordingly a cheque of Rs. 2,00,000 was tendered by Mrs. Usha Chadha the purchaser by way of payment of balance amount to meet the objections of the Sub-Registrar. The company, however, did no realise the cheque in view of Board's Resolution dated 20-9-1982 in which the assessee-company decided to realise the amount in 10 annual instalments. Mrs. Usha Chadha expired in July, 1983 and her legal heirs paid a sum of Rs. 1,10,000 only in satisfaction of the amount of Rs. 2,00,000 due. The balance amount of Rs. 90,000 was written off as being irrecoverable. 2. The Commissioner examined the details and came to the conclusion that the amount of Rs. 90,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner was fully justified in directing the Assessing Officer not to allow the claim of the deduction of Rs. 90,000 either as a bad debt or as a business loss. 4. On the other hand the learned Judicial Member held that the transaction as business transaction was accepted in the assessment year 1983-84. Therefore, any off-shoot of the said transaction in the accounting year relevant to the assessment year 1985-86 which resulted in a loss of Rs. 90,000 on account of short recovery when the company accepted, vide Board's resolution dated 10-5-1984 a lump sum payment of Rs. 1,10,000 from the legal heir of Smt. Usha Chadha who died in July, 1983 in lieu of Rs. 2 lacs payable in 10 years in the equal annual instalment of Rs. 20,000 each cannot be viewed in different perspective and the same has to be accepted. Therefore, the short recovery of Rs. 90,000 is allowable as trading/business loss which was done by the Assessing Officer. The learned Judicial Member also found that the amount of Rs. 2 lacs shown as recoverable from Smt. Usha Chadha in the books of account for the accounting years ending 31-12-1982 and 31-12-1983 was accepted by the revenue. The assessee-company however, accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the entire amount by accepting Rs. 1,10,000 and claimed the balance of Rs. 90,000 as bad debt or as business loss. in such a case, the learned Accountant Member has lightly recorded a finding that the claim was not a genuine claim and cannot be considered as normal business transaction. There is, therefore, no informity in the order of the learned Accountant Member and the same is liable to be upheld. 7. On careful consideration of the rival submissions in the light of the material on record, I am of the view that the view taken by the learned Accountant Member is fully supported by the facts of the case and the findings are in order. The facts are not disputed. Coming now to the terms of the payment for the immovable property, the assessee was to receive Rs. 4,25,000 from Smt. Usha Chadha for the sale of 5096 share of the property to her. To enable the registration of the sale deed, a sum of Rs. 2,25,000 was paid by cash and Rs. 2 lacs by cheque. After the registration of the sale deed, the Board of Directors further resolved Lo realise Rs. 2 lacs in 10 equal annual instalments of Rs. 20,000 each. Even this resolution was not complied with and the assessee commuted the said a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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