Tribunal upholds Assessing Officer's findings on land sale to Maruti Suzuki, confirms tax liability.

The Tribunal upheld the Assessing Officer's findings in a case involving the sale of land to M/s. Maruti Suzuki India Limited, determining the liability for Long Term Capital Gain in the assessment year 2011-2012. Additionally, the Tribunal confirmed the additions under Section 41(1) of the Income Tax Act, disallowance of depreciation, and disallowance of commission expenses. The appeal filed by the assessee was dismissed, affirming the AO's decisions on all issues.

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Issues Involved:
1. Sale of land and its exigibility to Long Term Capital Gain (LTCG) in assessment year 2011-2012.
2. Addition of Rs. 1,42,266 under Section 41(1) of the Income Tax Act.
3. Disallowance of depreciation of Rs. 2,28,470.
4. Disallowance of commission expenses of Rs. 18,55,605.

Detailed Analysis:

1. Sale of Land and Long Term Capital Gain (LTCG):
The primary issue was whether the sale of land to M/s. Maruti Suzuki India Limited (MSIL) was exigible to LTCG in the assessment year 2011-2012. The assessee had entered into a sale agreement on 10.11.2010 and received Rs. 8.50 crore as part payment. The Assessing Officer (AO) concluded that the conditions of Section 53A of the Transfer of Property Act, 1882, and Section 2(47)(v) of the Income Tax Act were fulfilled, thus making the assessee liable for LTCG in the assessment year 2011-2012.

The CIT(A) upheld the AO's view, noting that the assessee had handed over physical possession of the property to MSIL, thereby transferring absolute control. The Tribunal also supported this view, emphasizing that the sale agreement's clauses indicated the transfer of possession and control to MSIL. The Tribunal cited the Hon'ble Supreme Court's conditions for transfer under Section 53A and the Kerala High Court's ruling in the case of Harbour View, which supported the AO's decision. Consequently, the Tribunal dismissed the assessee's appeal on this issue, confirming the liability for LTCG in the assessment year 2011-2012.

2. Addition of Rs. 1,42,266 under Section 41(1):
The AO added Rs. 1,42,266 to the income under Section 41(1) of the Income Tax Act, noting that the liability ceased to exist during the financial year 2010-11, as accepted by the assessee. The CIT(A) confirmed this addition, agreeing with the AO's observation. The Tribunal upheld this decision, noting that the issue was conceded before the AO and no serious contention was raised by the assessee. Therefore, the addition of Rs. 1,42,266 was confirmed.

3. Disallowance of Depreciation of Rs. 2,28,470:
The AO disallowed the depreciation claim of Rs. 2,28,470 for plant and machinery, stating that the Written Down Value (WDV) of the block of assets became NIL after computing the short-term capital loss under Section 50 of the Income Tax Act. The CIT(A) upheld this disallowance, agreeing that the WDV of the block of assets was NIL. The Tribunal confirmed this view, stating that the disallowance of depreciation was correct since the WDV was NIL.

4. Disallowance of Commission Expenses of Rs. 18,55,605:
The AO disallowed the commission expenses of Rs. 18,55,605, noting that the commission was not paid during the relevant assessment year and no evidence was provided for the payment. The CIT(A) confirmed this disallowance, agreeing that the assessee did not furnish any evidence for the commission payment. The Tribunal upheld this decision, stating that the assessee failed to produce any evidence of incurring commission expenditure during the relevant assessment year. Therefore, the disallowance of commission expenses was confirmed.

Conclusion:
The Tribunal dismissed the appeal filed by the assessee, confirming the AO's decisions on all issues. The order was pronounced on 04th September 2019.

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