TaxTMI 
TaxTMI 
2024 (6) TMI 461
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssuing notice under section 143(2) of the Act. It was noticed by the AO from the ITS data that the assessee company has purchased land property vide conveyance deed dated 21st April 2017 for Rs. 49 lakhs but the stamp value of the same was Rs. 1,09,31,292/- only. 4. As per the assessee company, in the previous year 2016-17, the promotors joined hands together to carry out the business of manufacturing pipes and fittings for which they decided to incorporate the assessee (incorporated w.e.f. 10- 03-2017). In the meantime, the promoters were looking for suitable land property for the purpose of factory premises and they found one such land property at village Amreli bearing revenue survey No. 128/1/P7 and 128/1/P8 admeasuring 15489 Sq. mts. and 8273 Sq. mts. respectively. The impugned land was agricultural land and due to the restriction placed on purchase of agricultural land upon the company, the promoters namely Shri Bhavesh Depani and Shri Vipul Bhimani decided to purchase the impugned agricultural land in their name. To this effect, the promotors of the assessee company entered MOU dated 03-06-2016 wherein it was agreed that the above-mentioned promotors will purchase the impug....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tor/shareholder and the assessee company are independent persons and distinct from each other therefore transactions entered by the assessee company and the shareholder/directors shall be considered independently. The AO further found that the assessee company was incorporated on 10-03-2017 whereas the impugned MOU was entered on 03-06-2016. Hence on the date of the MOU, the assessee company was not in existence and could not be part of the MOU. Therefore, the story of the assessee regarding purchase of land as beneficial owner is an afterthought. Thus, the AO treated the difference in the stamp value and purchase consideration for Rs. 60,31,292/- (1,09,31,292 - 49,00,000) as income of the assessee under the provision of section 56(2)(x)(B) of the Act and added the same to the total income of the assessee. 8. Subsequently the Ld. CIT(A) vide order dated 07-12-2021 confirmed the addition made by the AO by observing as under: 5.5 The main contention of the appellant company is that the promoters had purchases the agricultural land in question, in their names on 15/07/2016 in pursuance to an MoU dated 03/06/2016 between the company and promoters. The promoters had paid Rs.43,92,000....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the company has been undertaken for inadequate consideration. The claim of the appellant that the promoters had made the payment by cheques does not come to the aid of the appellant's stand because the property that had been purchased by the promoters was an agricultural land in July 2016, whereas the property bought by the company on (21/4) / 2016 was a non-agricultural land. 5.8 In view of the above discussions, the action of the assessing officer is upheld and the grounds two and three raised by the appellant are rejected. 9. Being aggrieved by the order of the learned CIT(A) the assessee is in appeal before us. 10. The learned AR before us filed a paper book running from pages 1 to 171 and contended that the purpose of acquiring the agricultural land was for the purpose of the company only which is evident from the MOU. According to the learned AR there is a prohibition for acquiring the agricultural land by the company and therefore the promoters had to acquire the piece of land for the company only in their names. Furthermore, at the relevant time, the company was not in existence. But later, the stamp duty value of the land got changed due to agriculture land being ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r to accomplish the idea floated, bringing the company into legal existence and ensuring successful running in future, may enter into some contract on behalf of the prospective company which generally called as pre-incorporation contract. It is pertinent to note that a problem regarding the validity of pre-incorporation contracts and binding of the same may arise. This problem has been dealt by the provision of section 15(h) and 19(e) of the Specific Relief Act 1963 which reads as under: 15. Who may obtain specific performance.-Except as otherwise provided by this Chapter, the specific performance of a contract may be obtained by- ********* (h) when the promoters of a company have, before its incorporation, entered into a contract for the purposes of the company, and such contract is warranted by the terms of the incorporation, the company: Provided that the company has accepted the contract and has communicated such acceptance to the other party to the contract. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 19. Relief against parties and persons claiming under them by subsequent title.- Except as otherwise provided by this Chapter, specific performance of a contract....