TaxTMI 
TaxTMI 
2019 (10) TMI 1194
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.... covered u/s 132 on the said date. Consequent to search and seizure operation, a notice u/s 153C, dated 29.11.2012 was issued to the assessee calling for return of income for the A.Ys 2006-07 to 2011-12. In response to the said notice, the assessee filed her return of income u/s 153C for the A.Y 2011-12on 24.12.2013 admitting an income of Rs. 1,73,460/- and also filed the relevant details before the AO. The AO observed that during the relevant financial year, the assessee has sold agricultural land admeasuring 44.15 acres situated at Gramadatla Village, T. Veerapuram Panchayat, Rayadurga Mandal, Anantapur District by entering into a long term lease for 99 years with M/s. Sai Sudhir Energy Ltd and received a consideration of Rs. 10,67,53,833/- and that the said amount is claimed as not taxable since the asset sold is an agricultural land. 4. On verifying the material seized and the details submitted, the AO observed that the assessee had purchased these lands, which are claimed to be agricultural in nature, for a consideration of Rs. 61,81,000/- and the sources for the same was said to be out of the amount received from her husband. When asked to furnish the conformation, the ass....
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....l consideration of Rs. 61,81,000/-. The assessee then entered into a lease agreement dated 16.3.2011 with M/s. Sai Sudhir Energy Ltd (SSEL in short) for a lease rent of Rs. 2000/- per month per acre for a period of 99 years and the terms and conditions of the lease agreement are as under: "9.1 The assessee acquired 44.15 acres of land at Gramadatla Village, T.Veerapuram Panchayat in Anantapur District from six vendors after executing registered sale deeds dt. 17/01/2011 for a total consideration of Rs. 61,81,000/-. This property is the same property that is discussed earlier in this order at para No. 7 above. The assessee then entered into a lease agreement dt.16/03/2011 with SS EL. A copy of this lease deed is available in the paper book from page 263 to 265. In this agreement, where the lessee SSEL is represented by its Chief Operating Officer Sri P. Udaya Sankar, the consideration agreed for the lease is reduced to writing as under: "a) The Lessee has. agreed to pay Lease Rent of Rs. 2,500/- (Rupees Two Thousand Five Hundred Only) per month per acre. b) The Lessee has agreed to pay the lease rent for 99 years in advance at the time of executio....
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....il 2011 towards lease rent on a written application by the Lessor. e) Income Taxes shall be deducted from the total consideration and will be debited to the lessor at applicable rates. f) The possession of the Land will be handed over to the Lessee immediately after execution of the Lease Deed i.e. before March 31,2011". 8. In keeping with the above agreements, the lessee company, SSEL allotted 48,03,923 shares with a face value of Rs. 10/- valued at Rs. 4,80,39,230/- on 28.03.2011 and was allotted the remaining 48,03,923 shares valued at Rs. 4,80,39,230/- on 2.4.2011. An amount of Rs. 1,06,75,383/- was also retained towards TDS. Thus, the CIT (A) concluded that the assessee has received Rs. 1,06,75,383/- in what was recorded as advance of the rental income attributable to 99 years lease rental receivable in respect of 44.15 acres of land at Gramadatla Village. 9. The CIT (A) also observed that subsequently on 2.7.2011, another lease deed was prepared whereby the assessee agreed to lease 44.15 acres of land to the same lessor, SSEL, and that the lease deed is registered as document No.1800/2011 with the Sub Registrar, Raidurg. He observed that the lessee com....
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....time of sale and since the land is not within the specified distance, the land was not a capital asset in terms of section 2(14) of the I.T. Act. It was also submitted that the assessee was not in the business of purchase and sale of land and therefore, the sale of land should not be treated as a business activity i.e. the real estate activity and that there was no capital gain that was liable to tax. The AO did not agree with the contention of the assessee and observed that the assessee had purchased the land in January, 2011 and sold the same in July, 2011, i.e. within a short span of six months and therefore, there was a profit motive in the activity of purchase and sale of land. He, therefore, treated it as business income assessable to tax in the financial year 2011-12 relevant to the A.Y 2012-13 being the year in which the sale was registered. 11. Before the CIT (A), the assessee had stated that if the lease deed dated 16.3.2011 were to be considered, then only the lease rental pertaining to the year in consideration has to be brought to tax and if the transaction is to be considered as sale on 8.7.2011, then the sale consideration alone i.e. 24,17,976/- can be considered ....
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....lowing the extent on gold jewellery in the hands of the assessee and her family members. Against the addition confirmed by the CIT (A), the assessee is also in appeal before us. Therefore, the grounds of appeal for the A.Y 2011-12 and the ground of appeal for the A.Y 2012-13 are given below: A.Y 2011-12 "1 The order of the learned CIT (A) is erroneous both on facts and in law. 2) The learned Commissioner of Income-tax (Appeals) erred in directing the Assessing Officer to enhance the income for the assessment year 2011-12. 3) The learned Commissioner of Income-tax (Appeals) ought to have provided proper opportunity before passing the order enhancing the income for the year under consideration, 4) The learned Commissioner of Income-tax (Appeals) erred in holding that the company Sai Sudhir Energy Limited allotted 96,07,845/- equity shares of the face value of Rs. 10/- each without any consideration when facts show otherwise. 5) The learned Commissioner of Income-tax (Appeals) erred in holding that the provisions of Sec.56(2)(vii)(c)(i) of the I.T.Act are applicable to the facts of the case and further erred in holding that an amount of ....
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.... share was received by the appellant without consideration. 6) The learned Commissioner of Income-tax (Appeals) failed to see that the shares were allotted against consideration and the balance in the books of account remained payable by the appellant to Sai Sudhir Energy Limited. 7) The learned Commissioner of Income-tax (Appeals) ought to have provided opportunity to the appellant before a view is taken that the provisions of Sec.56 (2)(vii)(c)(i) of the I.T.Act. are applicable to the value of shares allotted to the appellant particularly when the appellant received shares against consideration. 8) Any other ground or grounds that may be urged at the time of hearing". 13. The learned Counsel for the assessee reiterated the submissions made by the assessee before the authorities below extensively while the learned DR supported the orders of the authorities below. 14. Having regard to the rival contentions and the material on record, we find that there are two additions and the assessee has accepted the additions made under the head "income from other sources" of the agricultural income declared by the assessee. The first issue is the addition made ....
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....unsel for the assessee submitted that the shares were allotted to the assessee on the execution of the lease deed and therefore, at the time of allotment of shares, it cannot be stated that they were allotted without any or valid consideration. Therefore, addition u/s 56(2)(vii)(c)(i) of the I.T. Act is not warranted. He submitted that the sale deed has been executed in the financial year relevant to the A.Y 2012-13 for a sale consideration and therefore, only such sale consideration can be brought to tax in the A.Y 2012-13 and not the amount received by the assessee by way of allotment of shares. He also submitted that on the execution of the sale deed, the amount received by the assessee by way of allotment of shares has been converted into a loan and it is still shown as payable by the books of SSEL. He, therefore, submitted that the amount remained payable by the assessee and thus cannot be treated as "business income" of the assessee. The learned DR however, supported the orders of the CIT (A). We find that the first lease agreement was entered on 16.03.2011 and it was subsequently modified on the next day i.e. on 17.3.2011. By virtue of both the lease deeds, the lease rental ....