IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH : SMC : NEW DELHI
BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER
ITA No.1732/Del/2015
Assessment Year : 2011-12
DCIT, Vs. Manas Infratech Pvt. Ltd.,
Central Circle-26, C-4, 1st Floor,
New Delhi. Malviya Nagar,
New Delhi.
PAN: AAFCM1419B
CO No.232/Del/2015
(ITA No.1732/Del/2015)
Assessment Year : 2011-12
Manas Infratech Pvt. Ltd., Vs. DCIT,
C-4, 1st Floor, Central Circle-26,
Malviya Nagar, New Delhi.
New Delhi.
PAN: AAFCM1419B
(Appellant) (Respondent)
Assessee by : Shri Gaurav Goel, CA
Department by : Shri Amrit Lal, DR
Date of Hearing : 23.09.2015
Date of Pronouncement: 24.09.2015
ORDER
This appeal by the Revenue and the Cross Objection by the assessee
arise out of the order passed by the CIT(A) on 21.1.2015 in relation to the
Assessment Year 2011-12.
ITA No.1732/Del/2015 2
CO No.232/Del/2015
2. The only issue raised by the Revenue in its appeal is against the
deletion of reduction of Rs.49,66,000/- from the cost of land.
3. Briefly stated, the facts of the case are that the assessee company is
engaged in the business of real estate. On perusal of the balance sheet filed
by the assessee, it was noticed by the AO that the value of inventories stood
increased from Rs.25.79 crore in the preceding year to Rs.30.32 crore. On
being called upon to justify such increase, the assessee furnished details of
additions. On going through such details, it was observed that the assessee
company purchased land at Taluka Vengrula, District Sindhudurg,
Maharashtra. The cost of land was Rs.2.97 crore and compensation
towards relinquishment of rights was paid at Rs.1.02 crore along with
commission and brokerage. On having a look at the details of
compensation paid for relinquishment of rights, it was noticed that a sum of
Rs.53 lac was paid to M/s Milestone Vinimay Pvt. Ltd. Besides that a sum
of Rs.49,66,000/- was shown to have been paid as compensation to one
Mrs. Ralkar Smita Dattatraya. On being called upon to substantiate the
payment of such compensation, the assessee furnished a copy of
Memorandum of Understanding, as per which the assessee paid this sum to
Mrs. Ralker Smita Dattatraya. As per this MOU, Mrs. Ralkar Smita
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Dattatraya had purchased the land under consideration from Mr. Vishnu
Ralkar and advanced a sum of Rs.10 lac. It was with a view to relinquish
her rights that she was paid a compensation of Rs.49.66 lac by the assessee.
The AO noticed that Mrs. Ralkar Smita Dattatraya is wife of Mr. Vishnu
Ralkar Dattatraya. Notice u/s 133(6) was issued to Mr. Vishnu. In his
reply, Mr. Vishnu did not refer to Mrs. Ralkar Smita Dattatraya. The AO
observed that the so-called agreement between Mrs. Ralkar Smita
Dattatraya and Mrs. Vishnu Ralkar was dated 24.8.2010, whereas Mr.
Vishnu Ralkar along with other co-owner, i.e., Mrs. Priya Surender had
already made an agreement with Mr. Lindon Alves on 1.10.2008 for sale of
land which, in turn, was purchased by the assessee from M/s
MilestoneVinimay Pvt. Ltd./Mr. Lindon. The AO, therefore, came to hold
that there was no genuine agreement between Mrs. Ralkar Smita Dattatraya
and Mr. Vishnu. He, therefore, reduced the sum of Rs.49.66 lac from the
cost of land appearing as inventory in the assessee's books of account
without making any corresponding addition to the total income. In other
words, the returned income as well as the assessed income stood at a loss of
Rs.1,13,090/-. The ld. CIT(A) got convinced with the submissions
advanced on behalf of the assessee and held that the amount of
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compensation paid to Mrs. Ralkar Smita Dattatraya should be included in
the value of inventory. The Revenue is aggrieved against this finding.
4. I have heard the rival submissions and perused the relevant material
on record. There is no dispute on the fact that the assessee purchased this
land from Mr. Lindon who was consolidating lands on behalf of M/s
Milestone Vinimay Pvt. Ltd. There is further no dispute that the assessee
did pay consideration and also compensation for relinquishment of rights.
All other payments made by the assessee have been accepted as genuine
except for a sum of Rs.49.66 lac, which the assessee paid to Mrs. Smita
Ralkar, as a compensation for relinquishment of her right that was created
on account of transaction between husband and wife and later on a dispute
arose between the two and the assessee could get clear title only after
making the said payment. In order to support the payment to Mrs. Smita
Ralkar, the assessee furnished a copy of MOU entered into with her, whose
veracity has not been challenged by the AO. The dispute rotates around the
point that the right of Mrs. Smita Ralkar was created in the land in the year
2010, whereas agreement to sell such land to Mr. Lindon was executed in
the year 2008. I agree that there is difference in the dates, but, the fact of
the matter is that the assessee purchased this land on 10.8.2010 from M/s
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CO No.232/Del/2015
Milestone Vinimay Pvt. Ltd. and the dispute between Mr. Vishnu and Mrs.
Smita Ralkar was prior to that. Be that as it may, the fact remains that the
assessee did make a payment of Rs.49.66 lac to Mrs. Smita Ralkar as a
compensation for relinquishment of her right in the property, which was
created because of some agreement between her and Shri Vishnu, who
happens to be one of the co-owners selling the property in question. Since
the genuineness of the payment has not been denied and the assessee has
also supported the claim of payment by means of a MOU with the lady, I
the view taken by the ld. CIT(A).
5. The Cross Objection filed by the assessee is simply in support of the
impugned order.
6. In the result, the appeal of the Revenue is dismissed and the CO is
also dismissed as having become infructuous.
The decision was pronounced in the open court on 24th September,
2015.
Sd/-
(R.S. SYAL)
ACCOUNTANT MEMBER
Dated: 24th September, 2015.
dk
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CO No.232/Del/2015
Copy forwarded to
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Dy. Registrar, ITAT, New Delhi
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