TaxTMI 
TaxTMI 
2021 (4) TMI 1189
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....arch, 2020 to 31st December, 2020 vide Notification and Bill no. 116 of 2020 and published by Gazette of India Order no. 63 dated 29. 09. 2020 of the taxation and other laws (Relaxation and Management of Certain Provisions) Act, 2020 of Order No. 38 of 2020 at chapter II and prayed that the delay be condoned. Moreover he also submitted that due to the prevailing Covid- 19 Pandemic situation, the offices of the assessee as well as the Government were not functioning, which was the cause of delay. The ld. Counsel did not raise any objection. Therefore, we condone the delay and dispose of the appeal on merit. 3. The assessee is a partnership firm which is engaged in the business of real estate. The original partnership firm consisted of 18 partners, out of which 10 partners retired on 27.05. 2012. The assessee-firm filed its e- return of income for the assessment year 2013- 14 on 30.07.2013 declaring its taxable income of Rs. 12,21,75, 410/-. The case was selected for scrutiny assessment. The Assessing Officer completed the assessment under section 143(3) of the Act on 31. 03.2016 determining the total income of the assessee at Rs. 22, 30,85, 410/-, inter alia, making an addition o....
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....in the remand report and on the facts of the case". 5. The CIT (D.R.) Mr. John Vincent explained the facts of the case as brought out by the Assessing Officer, as well as the CIT(Appeals) and submitted that the assessee's claim that it had entered into different agreements for purchases of plots of land, during the year under consideration, with six different persons and had given them earnest money as advance for such purchase of land in accordance with the agreements and due to non-payment of balance consideration by the assessee within time, in all the cases and non-fulfilment of the terms and conditions of the contracts for purchases of land, the earnest money paid was forfeited by the sellers. As per the ld. CIT, DR, the agreement clause, that in the event of failure on the part of assessee to pay the balance amount of consideration by due date resulting into business loss is totally unbelievable. He referred to the assessment order and submitted that the Assessing Officer has rightly concluded that the deals entered into by the assessee were not a bonafide one or part of the business activity of the firm. He pointed out that the agreement for sale was entered into on 04. 0....
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....ounds of disallowance are brought out by the Assessing Officer in the remand report, copy of which is extracted by the ld. CIT(Appeals) in his order and that the basis of disallowance was factually and legally incorrect. He submitted that the sole ground on which the disallowance is made is that the assessee had entered into these agreements, without making solid provisions to raise funds by due dates and hence it does not make any sense for a firm engaged in commercial venture to enter into these agreements. He drew attention to the Bench to the order of the ld. CIT(Appeals) and supported the same. He vehemently contended that the Assessing Officer has not doubted the genuineness of the agreement of sales nor he has been made any enquiry or investigation with the sellers of the land or with the arbitrators who had given the arbitration award, and only based on the Assessing Officer's perception, that the loss was disallowed. He vehemently contended that the Assessing Officer does not have any iota of evidence to controvert the documentary evidences filed by the assessee in support of its claim. He submitted that the fact of payment of earnest money to the parties, who are nowhere ....
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....s payable by 31 s t Jan. 2013. Since the t ime was not extended the parties appointed Arbitrator to decide the i ssue. The last instalment is also payable by 18. 2. 2013. The said instalment also could not be paid. Finally, the Arbitrator beard for the parties and an award was given in favour of the seller that the earnest money shall stand forfeited by the seller. The said award was accepted by the assessee since there was no chance of arrangement of the money, not only that by that t ime the properly market also started coming down and the assessee r ightly felt that it was hot the t ime to entered into construction business. The copy of the agreement, the reference to the Arbitrator and t i le Arbitration award is enclosed herewith for ready reference. The AO has disallowed the claim of the forfeiture of the amount of Rs. 9, 92, 00, 000 /- only on the ground that the assessee should not have entered into the agreement of purchase of land without making arrangement for the balance amount payable by 18. 2. 2013. Since according to him it does not make any sense for a firm to be engaged in commercial venture. It may be submitted that the assessee had in its balance sheet a....
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....will finance and that they tried to arrange finances for this deal. There is no evidence to controvert this submission. The arbitrator has given a finding of fact that the value of the property declined between the period 04. 01.2013 to 18. 02. 2013. The Assessing Officer has not found any evidence to controvert these findings of the arbitrator. Genuineness of this agreement to sale cannot be disputed by the Assessing Officer unless he examined the sellers of the land and unless he collects evidence to show that these are manipulated agreements which are arranged in connivance with other parties, for financial gain of the assessee and others involve in the events. The Assessing Officer observed in his remand report as follows:- "It is crystal clear that without making solid provision to raise fund to due date the assessee firm agreed to pay balance value of land i.e. Rs. 49,66,25, 000 /- by 18.02.2013. It does not make any sense for a firm engaged in commercial venture. So, the amount of loss claimed by the assessee is not allowed and added to the total income of the assessee". This observation cannot lead into a conclusion that the agreements are bogus. The fact tha....
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....ails demonstrated that these commission agents have disclosed the amount in question as their income by filing the return of income. Nothing is brought on record by the Assessing Officer to dislodge the claim of the assessee or to show that the money paid as commission has come back to the assessee. Thereafter the ld. CIT(Appeals) relied on the judgment of the Hon'ble Jurisdictional High Court in the case of Alpha Hydronics Pvt. Limited in ITA No. 549 of 2004 and allowed the claim of the assessee. We find no infirmity in the order of the ld. CIT(Appeals). 16. In the result, the appeal of the Revenue is dismissed. 17. Now we take up the Cross Objection being C. O. No. 8/ KOL/ 2021 filed by the assessee on the following grounds:- "(1) For that the ld. CIT(Appeals) should have held that the capital gain declared u/ s 45 (4) was not at all taxable since the partners who contributed the land in the partnership at the time of jointing the firm took it back at the time of retirement at the same value. (2) For that the ld. CIT(A) was fully justified in deleting the addition on account of loss in business and the commission payment following the findings in the reman....