TaxTMI 
TaxTMI 
2012 (3) TMI 325
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....f Rs.44,28,000/- on the ground that provisions of Section 36(1)(vii) read with Section 36(2) of the Act were not satisfied as the amount had not been taken into account in computing income of the earlier years. It was noted that this amount was paid to M/s Gulmohar Estate Limited for purchase of property/plots at Gurgaon but this amount was neither refunded nor the property/plot was sold. The Assessing Officer held as under: "From the facts of the case it is clear that the said written-off amount loss of capital in nature. The claimed advance was given to M/s Gulmohar Estrate for the purchase of property in Gurgaon in July, 1990 and assessee could not provide an iota of evidence in spite of various opportunities given, that this amount an advanced for purchase of stack-in-trade or in ordinary course of business. In fact the assessee has investments in properties also which is evident from its balance sheet (Plot in Gurgaon). Even in the assessment year under consideration the assessee has shown Long Term Capital Gain on the sale of flat at HUDA. Therefore, it is allowable as business loss also. Though, assessee has not made any such class business loss either in the return of in....
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....n the form of land, agricultural land, flats and basement and building under construction. The assessee was, thus, in the business of purchasing and sale of real estate and in the construction and development of properties and flats. The assessee has also received advances from flat owners against the flats to be sold to them, which has been shown under the head "current liabilities and provisions". The amount of Rs.44,28,000/- receivable from M/s. Gulmohar Estate Ltd. paid towards purchase of flats were shown under the head "loans and advances" in the balance sheet as on 31.03.1991. The audited accounts for the year under consideration have been carefully perused by us. The assessee has shown rent and other income at Rs.4,34,29,879.62, details of which are as under:- SCHEDULE-7 As on 31.03.04 As on 31.03.03 RENT & OTHER INCOME Rent 9,660,581.00 14,195,194.00 Interest & Dividend Income 9,104,009.45 7,381,696.59 Car Parking and Other Income 1,883,354.95 1,664,238.00 Sale of Flats (Heritage City) 21,815,908.00 52,566,480.00 Profit on Sale of Plot (Huda) 966,026.22 -- 43,429,879.62 ....
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....any was the promoter and developer of New Delhi House and Mercantile House at New Delhi. The assessee is also the promoter and developer of Heritage City at Gurgaon, in respect of which the profit has been shown under the head "business or profession". During the year 1990-91, the asessee company entered into an agreement with M/s. Gulmohar Estate Ltd for the purchase of three properties at Garden Estate, Gurgaon for the total consideration of Rs.44,28,000/- as per the agreement dated 27.07.1990. The assessee made the total payment to M/s Gulmohar Estate Ltd. in the year 1990-91. Inspite of making full payment, no physical possession was handed over by the purchaser to the assessee. Since no physical possession was received by the assessee, the property proposed to be purchased by the assessee were not shown as stock in trade in the books of assessee as per the normal accounting practice. The assessee had debited the amount of Rs.44,28,000/- in the books of accounts and shown under the head "loans and advances". Thereafter, in the year 2003-04, M/s. Gulmohar Estage Ltd. locked their offices and it was found that the property purchased by the assessee were fraudulently sold to so....
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...."6.3 It may also be mentioned here that the appellant has not claimed such written off as business loss either in the return of income filed or during the course of assessment proceedings or appellate proceedings before me that the advance was made for the purchase of stock in trade or the amount was advanced in the ordinary course of business. It is also observed from the Assessment Order that appellant has made investment in properties and has shown long term capital gain on sale of such property. In view of these facts, appellant's claim that he amount written off may be treated as business loss is also rejected." From the said observation of the ld. CIT(A), we find that the ld. CIT(A) was of the view the assessee failed to produce any evidence that the advance was made for the purpose of stock in trade or the amount was advanced in the ordinary course of business, which in our considered opinion, is not correct in the light of the submissions of the assessee made before the ld. CIT(A), which has been reproduced by the ld. CIT(A) in his order at para 5 of his order. In the aforesaid submission made before the ld. CIT(A), the assessee categorically stated that the assessee was....