TaxTMI 
TaxTMI 
2021 (9) TMI 106
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....ated 20.01.2011, passed by the Income Tax Appellate Tribunal, Chennai "D" Bench, in I.T.A.No.744/Mds/2010, for the Assessment Year 2007-08. 2.The appeal was admitted on 02.09.2014 on the following substantial questions of law : "1.Whether on the facts and circumstances of the case, the Tribunal was right in law in holding that the price for the land purchased and paid to the Director was not excessive while comparing with the fair market value of the land which was Rs. 1.36 Lakhs per cent? 2.Whether on the facts and circumstances of the case, the Tribunal was right in law in holding that long term capital gain is not leviable on the lands sold and the provisions of Section 40A(2)(b) are not applicable? 3.Whethe....
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....per cent. Therefore, the Assessing Officer held that the assessee company has incurred expenditure in respect of the payment which has been made to the Directors and the expenditure is excessive and unreasonable and therefore, invoked the provisions of Section 40A(2)(b) of the Act and completed the assessment vide order dated 30.10.2009. 4.Aggrieved by the same, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals)-III, Chennai ("CIT(A)" for brevity). So far as the correctness of the order passed by the Assessing Officer invoking Section 40A(2)(b) of the Act is concerned, the CIT(A) granted the relief to the assessee, however, the CIT(A) directed the Assessing Officer to allow the expenditure on purchase of lan....
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....ed the entire facts in a very elaborate manner and found that the assessee had paid a sum of Rs. 3 Lakhs per cent for the land purchased from its Directors, which was sold to third parties during the year under consideration at the rate of Rs. 1.36 Lakhs per cent, however, in the subsequent years, it was sold @ Rs. 2.72 Lakhs per cent and thereafter, at Rs. 6.36 Lakhs per cent. Thus, taking into consideration the totality of the circumstances and that the decision taken by the assessee was a business decision and taking note of the latest sale price, the assessee had a substantial gain of Rs. 19 Crores, the CIT(A) granted relief to the assessee. However, the CIT(A) directed the Assessing Officer to allow the expenditure @ Rs. 2,75,000/- per....
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....f the assessee company and close relative of the other Directors. On facts, the Hon'ble Division Bench found that the provisions of Section 40A(2) of the Act would stand attracted. In the instant case, the assessee has been able to show that the decision for purchase of land @ Rs. 3 Lakhs per cent was a prudent business decision, as the assessee was able to earn substantial profit on account of the sale of the land to various third parties at much higher price @ Rs. 6.36 Lakhs per cent. Therefore, we find that the decision is distinguishable on facts. 11.Reliance has been placed on the decision of the Division Bench of this Court in the case of Vaduganathan Talkies vs. Income Tax Officer, Non-Corporate Ward 20(5), Chennai-34 reported....