TaxTMI 
TaxTMI 
2012 (12) TMI 564
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....alary of Rs. 26 Lakhs from the said company. During the course of assessment proceedings the AO on perusal of the balance sheet of Sri Abhijit Patil noted that he has received a loan of Rs. 1 Crore from KIPL. From the various details furnished by the assessee the AO noted that the company KIPL has reserves to the tune of Rs. 2,04,75,496. He therefore asked the assessee to explain as to why the provisions of section 2(22)(e) should not be applicable to him. 4. The assessee vide his reply dated 24-12-2008 submitted as under : "the assessee entered into an agreement on 07-11-2006 with Karnala Infrastructure Pvt. Ltd. to give services of acquisition of about 10 acres of contiguous land at Palaspe, Taluka Panvel, development thereof and transferring the same in the name of the company for their construction project. During the year, the assessee received Rs. 100 lacs as advance as per the contract. Copy of the agreement is produced for your kind reference. Assessee started negotiating with various farmers for acquisition of land and till 31-03-2007 Rs. 8.00 lacs were given as advance to the farmers. As the advance was received from the company was for giving services as per the contra....
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....Rs.55,192/-. On perusal of other bank account of the assessee (Account No. 222 with KNS Bank) the AO observed that during the year advances of Rs. 29,50,523/- was given, the details of which are under : Date Amount advanced Credit balance with bank Purpose of advance 25-08-06 9,64,580 1,97,162 Aswad Petroleum 20-10-06 6,66,060 1,42,48,28 Do 15-02-07 25,79,800 35,86,148 Do 23-03-07 2,19,633 23,95,342 Do 23-03-07 3,20,450 27,15,792 Do 28-03-07 32,00,000 92,778 Do 79,50,523 9. In this background the AO examined the real purpose of advance taken from KIPL amounting to Rs. 1 Crore. The assessee had earlier submitted that advance was taken for the purchase of land in the name of Abhijit patil which was subsequently to be converted to Non-Agricultural land and then to be transferred in the name of the company. From the various details furnished by the assessee the AO observed that the payments made to the farmers are as under : Date Particulars Amount Balance A.Y. 2006-07 02-09-2005 Cash 1,24,000 1,24,000 08-09-2005 Cheque to AP Bhoir 6,50,000 7,74,000 A.Y. 2007-08 08-06-06 Paid to Anat Bhoir 2,00,000 9,74,000 26-10-06 Mahadev Bhoir 6,00,000 15,74,000 ....
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....ring of about 10 acres at Village Palaspe, Taluke Panvel, District Raigad. As per the MOU dated 07-11-2006, the land to be acquired for the above company was Agricultural land and due to restrictions placed under land revenue laws the same could not be directly purchased in the name of the company. It was submitted that since the assessee was owning a small portion of the land in his personal capacity, therefore, taking into account all factors into consideration he was ideally placed to acquire the said land for and on behalf of the company. As per the MOU he was supposed to acquire the land from the farmers after necessary permissions/sanctions from the land revenue authorities and after NA permission to transfer the said 10 acres or thereabouts land in the name of the company for the consideration of Rs. 3 Crore. Accordingly, he had received an advance of Rs. 1 Crore. Subsequently a further sum of Rs. 1 Crore was received by the assessee from the company during the assessment year 2008-09. Since he was unable to acquire the entire 10 acres of contiguous piece of land at the designated area, the MOU entered into between him and the company was terminated and the entire sum of Rs....
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....fit declared by the assessee on account of sale of land at Akurli which has been shown under the head "Income from Business/Profession". Referring to the following decisions he submitted that trade advance is outside the purview of section 2(22)(e) of the I.T. Act. 1. CIT Vs. Nagindas M. Kapadia reported in 177 ITR 393 (Bom.) 2. CIT Vs. Rajkumar reported in 318 ITR 464 (2009) (Delhi) 3. CIT Vs. Creative Dyeing & Printing (P) Ltd. reported in 318 ITR 476 4. N.H. Securities Ltd. Vs. DCIT reported in 11 SOT 302 (2007) (Mumbai) 5. Smt. Nigam Chawla Vs. ITO reported in 28 SOT 503 (Delhi) (2009) 6. Jhamu U. Sughand Vs. DCIT reported in 99 ITD (Mumbai) (2006) 7. DCIT Vs. Lakra Brothers reported in 106 TTJ (Chd.) (2007) 8. ACIT Vs. Global Agencies (P) Ltd. reported in 1 SOT 510 (Delhi) (2004) He submitted that in the case of the assessee the transaction has not yet been completed, therefore, invoking the provisions of sec. 2(22)(e) is not justified. 13. In his alternate contention he submitted that the matter may be restored to the file of the AO since the lower authorities have not commented upon the transaction and the company has not been examined. Therefore, in the interest o....