TaxTMI 
TaxTMI 
2016 (4) TMI 344
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....facts of the case. The order of ld. CIT (A) in this regard deserves to be set aside and addition made by the ld. AO deserves to be deleted. 2. The assessee is in real estate business. He filed his return on 21.09.2010 disclosing income at Rs. 8,29,26,530/-. The case was scrutinized under section 153A/143(3) of the IT Act. Both the grounds of the assessee are against confirming addition of Rs. 99,50.794/- on account of deemed dividend under section 2(22)(e) of the IT Act. The AO observed that assessee is a Director in company M/s. Ashish Buildcon Pvt. Ltd. The assessee is having shareholding more than 10% in the said company. It is noticed that assessee company had paid Rs. 1,22,55,000/- as advance to the assessee in the current account through which day to day transactions were being carried out. The assessee was having accumulated reserve and surplus to the tune of Rs. 99,50,794/-. The AO further observed that M/s. Ashish Buildcon Pvt. Ltd is not a company in which the publics are substantially interested. The company had shown advances to the assessee. The AO gave reasonable opportunity of being heard to the assessee on this issue which was replied by the assessee also. After ....
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....assessee could not get 90B approval by 15.03.2010, then this Agreement to Sale would be deemed to be cancelled and these amounts will be returned back. The ld. CIT (A) presumed that the Ikrarnama was cancelled because sanction under section 90B could not be obtained by Shri Ashok Kumar Agarwal, the seller by 15.03.2010. She also asked the appellant to supply any correspondence undertaken by the appellant for getting the conversion of this land as required by the Ikrarnama. The assessee admitted before her vide letter dated 28.08.2014 that at the time of entering into the Agreement with the company conversion of land under 90B proceedings was not possible because JDA was not accepting applications for conversion of agricultural land, therefore no correspondence was made by the appellant. Thus even at the time of signing this Ikrarnama, the assessee in his individual capacity and as a Director of the company knew very well that the use of land was not going to be converted under 90B by 15.03.2010, to that extent this Ikrarnama is void ab-initio. She held that Ikrarnama is nothing but an after thought to justify the loans taken by him from the company as advances for land to escape th....
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....kundray K. Shah (2007) 290 ITR 433 (SC). Accordingly she confirmed the addition. 4. Now assessee is before us. 5. The ld. A/R submitted that assessee has explained before the AO by letter dated 22.03.2013 that whatever transactions took place between the assessee and the company are for Agreement to Sale of land. When the 90B proceedings could not be got from JDA, the agreement was cancelled and amount was refunded to the company. The assessee is a regular dealer in the land and company is also dealer in the land. The advance transaction is normal business transaction and same cannot be treated as a deemed dividend. He also relied upon Hon'ble Delhi High Court decision in case of CIT vs. Creative Dyeing and Printing Pvt Ltd. (supra) before the AO. The ld. A/R also filed copy of Agreement to Sale executed between assessee and the company before the AO. He has drawn our attention to pages 71 to 76 of paper book which is Agreement to Sale dated 22.07.2009 of Khasra Nos. 105, 106, 115, 123, 124, 147, 148, 149, 151 & 156 total 10 Khasras having area of 3.05 hectors at village Ajayrajpura, Tehsil Sanganer, wherein the assessee has 1/3rd share. The assessee as well as company are en....
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....umbers of formalities are required to be completed to get registry in the name of purchaser. Further, it was observed that during the course of search Agreement to Sale was not found, it is submitted by the ld. A/R that assessments for the A.Y 2004-05, 05-06, 06-07 and 07-08 were scrutinized under section 143(3) of the IT Act. During the course of assessment proceedings, number of evidence of agreement to sale was given to the AO which has been accepted. Further, observations of the ld. CIT (A) that assessee knew the fact that the land could not be converted as a non agricultural. It is submitted that JDA had published Notification on 10.11.2009 and restricted the 90B for a minimum of 25 acre. Thereafter this limit was further reduced to 10 hectares. The ld. A/R referred the Draft Master Plan approved by the JDA and argued that this was the reason for not getting the 90B approval. When land had not got registered in the name of the company, therefore, it could not be included in the closing stock of the company. The balance as on 31.03.2010 was Nil, therefore, this amount has also not been reflected under the head 'Advance' recoverable in cash or in kind. The case law referred by t....