TaxTMI 
TaxTMI 
2017 (4) TMI 408
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....b) without appreciating the fact that the assessee company has not furnished any justification and evidence for treating the payment made to two directors on different footing than the other tenants for surrendering the rights for development" . 2. "On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 1, 16,00,000/- made by the A.O. on account of undisclosed income on sale of undisclosed additional area of 2750 sq ft to Lokhandwala Kataria Builders". 2. We have gone through the orders of the authorities below and found that in the scrutiny assessment framed u/s.143(3), AO made addition of Rs. 1,31,00,000/- u/s.40A(2)(b). By the impugned order CIT(A) deleted the same after observing as....
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....tly the said two tenants - each of them a sum of Rs. 68,00,000/- aggregating to Rs. 1,36,00,000/- and A.O. has deducted Rs. 2,50,000/- for each tenant and made the addition of Rs. 1,31,00,000/- without any basis and factual aspect. 1.6 Hence, in view of the above facts, it is clear that the case of the appellant for making these payments is not hit by the provisions of Section 40(A)(2b). Hence, the A.O. is directed to delete the addition / disallowance of Rs. 1,31,00,000/-. Hence, this ground of appeal is allowed. 3. Addition of Rs. 1,16,00,000/- made by AO on account of sale value of undisclosed area of 2750 sq.ft was deleted by CIT(A) after observing as under:- The Ld. Counsel has further submitted as follows: Undisclosed inco....
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..... Hence, this ground of appeal is allowed. 4. Against the above order of CIT(A), revenue is in further appeal before us. We have considered rival contentions and found from record that AO has made addition of Rs. 1,31,00,000/- on the plea that assessee has given this amount to its two Directors, therefore, covered by provisions of Section 40A(2b) of the IT Act, accordingly, he disallowed the same. From the record, we found that the assessee is a Private Limited company and engaged in the business of buying and selling of immoveable properties, During the relevant Assessment Year, the assessee has debited the development expenses amounting to Rs. 3,06,87,851/ -. During the relevant Assessment Year, Mr. A.M. Lala and Mr. Z. M. Lala have su....
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.... that the initially the assessee has entered into a Memorandum of Understanding with Lokhandioala Kataria Constructions Private Limited by virtue of Memorandum of Understanding dated 28.9.2001 and pursuant to the said Memorandum of Understanding, the assessee has submitted the Form 37-1 as required under the provisions of Section 269UC of the Income Tax Act, 1961, a copy of Form No. 37-I, duly filled in and signed by the parties hereto along with the Memorandum of Understanding were fixed before lower authorities. The learned Assessing Officer in his finding himself stated that "It was further discovered that to settle the 69 tenants, the assessee had incurred a total expenses of Rs. 1,71,19,700/(including the cost of the property and other....
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..... as per the said Memorandum of Understanding, the permanent alternate accommodation is to be granted to the tenants by the Developers, which is more particularly mentioned in Clause No. 10 of the said Memorandum of Understanding. 6. We found that the assessee has paid compensation of Rs. 68,00,000/- each to two shareholders- directors for surrendering their tenancy rights. Both the directors were entitled to receive area of 675 square feet in the redeveloped property but instead opted for receiving area of 225 square feet. The AO has observed that the other 69 tenants were paid compensation of Rs. 2.50,000/- for surrendering their tenancy rights and based on the same arrived at the conclusion that the payments made to the said sharehold....
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.... the other tenants and they stand on different footing. 7. We found that assessee has made payment to these two Directors. Since they were tenants holding tenancy right in respect of commercial shop and also holding possession of large area of land appurtenant thereto - behind the commercial shop, it was the sole and absolute responsibility of the indenting developers to settle with the tenants, provide the compensation to the tenants for vacating the premises. Since the amount was paid as a commercial consideration and nothing was brought on record by the AO to the effect that amount so paid was higher than the fair market value, the CIT(A) has deleted the same after recording detailed finding at para 1.5 of his appellate order. The fin....