TaxTMI 
TaxTMI 
TaxTMI 
2021 (7) TMI 274
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.... of the Act. The AO. had received information from Enforcement Directorate, New Delhi that one of the directors of the assessee company named Shri Naveen P. Patil had informed that a sum of Rs. 3.00 crores given by him to the assessee company had been forfeited by the assessee company. Shri Naveen P. Patil had claimed set off of above said Rs. 3.00 crores against his income declared under the head "Income from other sources". Accordingly, the A.O. has taken the view that the amount of Rs. 3 crores forfeited by the assessee represents income of the assessee and the same has not been declared in the return of income. Hence, the A.O. has reopened the assessment. 4. Before the AO, the assessee submitted that Mr. Naveen P. Patil is one of the shareholders and Directors of the assessee company who had initially advanced a loan of Rs. 3.77 crores to it in the financial year 2006-07. Since the assessee company could not repay the above said loan, it was agreed that the assessee company would sell its property located at Narain Manzil, Barakhamba Road, New Delhi for a consideration of Rs. 9 crores. In this regard, an agreement for sale was executed on 29.8.2008, as per which Shri Naveen P ....
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....d loans only in its books of accounts. Accordingly, the AO took the view that the above said forfeited amount is a benefit accrued to the assessee and same would fall within the purview of sec. 28(iv) of the Act. Accordingly he held that the impugned amount of Rs. 3 crores is assessable as income of the assessee u/s. 28(iv) of the Act. In this regard, the A.O. placed his reliance on the decision rendered by Hon'ble Madras High Court in the case of CIT Vs. Ramaniyam Homes Pvt. Ltd. (2016) 68 Taxmann.com 289. Accordingly, he assessed the above amount u/s. 28(iv) of the Act. 6. The Ld. CIT(A) observed that neither the assessee nor Shri Naveen P. Patil had furnished the details of project for which Shri Naveen P. Patil had given the sum of Rs. 3.77 crores to the assessee company. He further noticed that, as per the agreement to sale dated 29.8.2008, Shri Naveen P. Patil shall complete his part of the contract on or before 31.12.2009, i.e. Shri Naveen P. Patil shall pay balance value of purchase's consideration to the assessee by 31.12.2009. The Ld. CIT(A) further noticed that the assessee has leased out the property, which is sought to be sold to Shri Naveen P. Patil, in Febru....
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....ssee for sale of its property, by virtue of agreement for sale entered between parties. Since the buyer of property Shri Naveen P. Patil could not purchase the property by paying the remaining amount, the amount of Rs. 3 crores was forfeited by the assessee in terms of agreement for sale. He further submitted that there is no reason to suspect the agreement for sale entered between the parties. He further submitted that the treatment given by Shri Naveen P. Patil in his return of income would not determine the nature of transaction in the hands of the assessee. Accordingly, he submitted that the amount of Rs. 3 crores forfeited by the assessee would go to reduce the cost of property as per provisions of section 51 of the Act. Accordingly, he submitted that the addition made by the tax authorities should be deleted. 9. The Ld. D.R., on the contrary, supported the order passed by Ld. CIT(A). He further invited our attention to the clause 11 of the agreement for sale dated 29.8.2008. The said clause provided a right to the purchaser to recover advance money paid, if the vendor fails to comply with all or any of the conditions of the agreement. He submitted that the buyer Shri Naveen ....
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....e of waiver of loan by the creditor and it has been held that the provisions of section 28(iv) of the Act is not applicable. In the present case, Rs. 3 crores represented advance money forfeited by the assessee and the same also represents cash received on forfeiture of advance money. In this view of the matter, the provisions of section 28(iv) of the Act is not applicable to the facts of the present case. 13. We notice that the tax authorities have taken the view that the agreement for sale entered by the assessee with Naveen P. Patil is a colourable device. However, we notice that the assessing officer has not brought any material on record in support of this view. In our view, the only fact that has induced the tax authorities to tax this amount in the hands of the assessee is that Shri Naveen P. Patil has treated the forfeited amount of Rs. 3 crores as his loss and set off the same against his income. Accordingly, the AO has taken the view that the impugned amount of Rs. 3.00 crores is liable to be taxed in the hands of the assessee. It is always not necessary that the nature of payment and nature of receipt should be the same. For example, if a car dealer sells a car, the sal....