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DCIT,Central Circle-26,New Delhi. Vs. Manas Infratech Pvt. Ltd.,C-4, 1st Floor,Malviya Nagar,New Delhi.
September, 28th 2015
             DELHI BENCH : SMC : NEW DELHI

                         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.

     (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

     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
                                                             ITA No.1732/Del/2015   3
                                                               CO No.232/Del/2015

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
                                                              ITA No.1732/Del/2015   4
                                                                CO No.232/Del/2015

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
                                                             ITA No.1732/Del/2015   5
                                                               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 ITA No.1732/Del/2015 6 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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