TaxTMI 
TaxTMI 
TaxTMI 
2011 (8) TMI 469
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.... in the books of the joint venture." 3. Briefly stated, assessee company is engaged in the business of real estate, which has filed its return of income declaring loss of Rs. 575. It has purchased land for development of residential and commercial properties at various places which includes Katni, Hardwar, Anantapur, Chandigarh, Bengusarai, etc. Part of these properties purchased in earlier years and during the year under consideration were transferred to a joint venture company formed with M/s. Sahara (India) Commercial Corporation Ltd. (SICCL) along other group concerns. In the books of account assessee shown that these properties are transferred to the joint venture at the same cost price. The A.O. noticed that the lands were purchased on the loan taken from SICCL along with a few entities and transferred to the joint venture with other entities at the cost price. The lands were transferred to the joint venture was treated as capital contribution by the amount of land cost. The capital account of assessee has been credited in the joint venture. The A.O. noticed that the entire exercise undertaken by the assessee in purchase of land and transfer to the joint venture is a sham an....
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.... conclusion that the addition made by the A.O. cannot be sustained. Apart from that he also held that the value recorded in the books of the joint venture is the same as that of recorded by the assessee in the books of account and, therefore, addition under section 45(3) cannot be made. For these reasons, vide his detailed order, he deleted the additions, hence, Revenue is aggrieved. 6. Drawing our attention to the orders of the A.O. and the CIT(A) the learned D.R. submitted that the CIT(A) erred in deleting the addition made under section 69B as assessee could not explain the variations in prices properly. He has filed a written submission in this regard explaining the facts and relying on the orders of the A.O. 7. The learned counsel referred to the facts and submitted that the A.O. undertaken the exercise to examine the purchase of properties and entering into the joint venture and he discussed the issue that assessee's transactions are sham and bogus vide his discussion upto para 21. Then he referred to the working in page 33 of the order and how the A.O. arrived at the difference at Rs. 60,57,27,667, which was subsequently restricted to Rs. 1,61,95,917. It was the submission....
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....e and as a tool for tax evasion and assessee company is a mere name lender to all the transactions routed through SICCL. That issue was not before us for consideration eventhough the A.O. elaborately discussed from paras 12 to 21, those observations are irrelevant to the additions made under section 69B and 45(3). The Revenue is aggrieved on the deletion of the two additions under section 69B and 45(3). 9. Coming to the addition under section 69B we notice that the A.O. has not made out any case for making the addition under section 69B. The provisions of section 69B are as under: - "69B. Where in any financial year the assessee has made investments or is found to be the owner of any bullion, jewellery or other valuable article, and the Assessing Officer finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income, and the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the excess amount may be dee....
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....ntribution. Looking into the facts of the case in its entirety we agree with the findings of the CIT(A) that the A.O. has not found any material, whatsoever, so as to invoke the provisions of section 69B. The findings of the CIT(A) on this issue are as under: - "2.16 Looking to the facts of the case in its entirety, I find that the A.O. has not found any material, whatsoever, so as to invoke the provisions of section 69B of the I.T. Act. The appellant has purchased land alongwith other entities at different intervals during the year at various prices. These prices are determined on various factors. The forces of market conditions and the phenomena of demand & supply would be a determinative factor in fixing the price of the land at the same place during different time. A land which is purchased, say at Rs.1,00,000 per acre, 3 to 4 months ago at a place, may cost more after 3 to 4 months later. Due to rapid development of infrastructure and coming of big projects even in tier 2 & 3 cities of the country, the land prices are going steadily up. The land prices cannot be stagnant. This phenomena in the appreciation of land prices fully justifies the purchase of land by the appellant a....
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....fits or gains arising from the transfer of a capital asset by a person to a firm or other association of persons or body of individuals (not being a company or a co-operative society) in which he is or becomes a partner or member, by way of capital contribution or otherwise, shall be chargeable to tax as his income of the previous year in which such transfer takes place and, for the purposes of section 48, the amount recorded in the books of account of the firm, association or body as the value of the capital asset shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset." 14. A plain reading of the said provision would reveal that the profits or gains arising from the transfer of a capital asset to another entity by way of capital contribution or otherwise shall be chargeable to tax. The profit or gain would arise only when the transfer has been made at a price which is more than the cost price and the difference between the cost price and amount at which transfer has taken place can be charged under section 45(3). In the instant case the purchase price of land as recorded in the transferor's book and recorded....