TaxTMI 
TaxTMI 
2026 (1) TMI 689
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.... Revenue and assessee concern some common grounds, for the purposes of convenience, the same were heard and are being adjudicated by this common order. CO No.42/Del/2025 for AY 2015-16 3. The assessee through its impugned Cross Objection contested the order of ld. CIT(A) for confirming legal validity of the proceedings under section 147 r.w.s. 148 of the Act. As the challenge of the assessee hits the very foundation of the assessment order for AY 2015-16, we have chosen to examine the same first. The assessee has raised the following grounds of appeal:-- 1. That on the facts and circumstances of the case and in law, Commissioner of Income-tax (Appeals) ["CIT(A)"] vide order dated 28.08.2024, erred in upholding the initiation of reassessment proceedings under section 147 of the Income-tax Act, 1961 ("the Act") to be valid in the present case, without appreciating that the same was without jurisdiction, void ab initio and bad in law. 1.1 That on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the initiation of reassessment proceedings as valid without appreciating that the notice under section 148 of the Act was issued by Addi....
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....ent. The certified true copy of the reasons recorded was supplied to the Appellant by the learned Addl. CIT vide letter dated 20.05.2019. Meanwhile, vide order dated 03.10.2019, the case was transferred to the Assistant Commissioner of Income-tax, Circle-53(1), Delhi who passed the impugned re-assessment order after completion of assessment proceedings. The Appellant/assessee vide letter dated 02.12.2019 had objected to the reassessment proceedings on the premise that the Joint Commissioner or Additional Commissioner could not be the Assessing Officer under section 2(7A) of the Act unless specifically directed under section 120(4)(b) of the Act to perform the functions of an AO and in the case of the Appellant, no such directions had been issued and the case had merely been transferred to the learned Addl. CIT under section 127 of the Act. It was also contested that the reasons recorded were unsigned, undated and without any stamp or seal of the office and therefore, such unsigned and undated reasons could not be taken as valid reasons in the eyes of law. The objections raised by the appellant were disposed of by the AO vide order dated 06.12.2019. The ld. CIT(A) after considering ....
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.... facts and circumstances of the case Ld. CIT(A) is justified in deleting the Addition of Rs. 20,43,125/- on account addition u/s 14A of the I T Act where the assessee earned exempt income of Rs. 42,98,616/- in the form of dividend on investment made in shares amounting to Rs. 21,13,00,309/- during the year under consideration? 4. Whether on the facts and circumstances of the case Ld. CIT(A) is justified in deleting the 5. Addition of Rs. 1,72,18,791/- as non genuine transaction on account of short term capital loss? 9. The first issue raised by the Revenue in its appeal vide ITA No.5031/Del/2024 vide ground of appeal no.2 and in its appeal vide ITA No.5029/Del/2024 vide ground of appeal no.6 is regarding the action of the ld. AO in making an addition under section 2(22)(e) of the Act. It is pertinent to point out that no distinguishment of facts has been pointed out by the appellant Revenue on this issue. For the purposes of this order, we will consider figures for AY 2015-16 taking as the lead year. As per brief factual matrix of the case, during the course of assessment proceedings, it was found by the ld. AO that the appellant was holding 50% shares in M/s Q....
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....nsel for the assessee reiterated the argument taken before the ld. First Appellate Authority. Through a voluminous paper book, the ld. Counsel took us through extracts of accounts, financial, etc to allude that the impugned transactions between the assessee and the Quantum did not fall within the mischief of section 2(22)(e) of the Act. It was primarily stressed that the debit credit entries between the assessee and the quantum represented regular transactions towards sale purchase of shares and not for any loans and advances. 11. Per Contra, the ld. DR vehemently argued in favour of the ld. AO while assailing the relief accorded by the ld. CIT(A) as excessive and unwarranted. 12. We have heard rival submissions in the light of material placed on record. Section 2(22)(e) of the Act postulates a deeming provision of deemed dividend in the event of an assessee holding substantial interest in a company and wherein transactions of loans and advances are undertaken. In the present case, the assessee holds 50% shares of Quantum and thus satisfies the first limb of Section 2(22)(e) of the Act. The question that however comes is as to whether the transactions reflected by way of debi....
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....empt under section 10(34) of the Act. The ld. AO noted that the assessee made investment in shares of about Rs. 21,13,00,309/- but no expenditure was shown nor was any disallowance made under section 14A of the Act. The ld. AO postulated that the earning of dividend income without any corresponding expenses is unimaginable and hence concluded that there must be some expenses claimed by the assessee in its proprietary concern M/s Variety Book Depot. Accordingly, addition of Rs. 20,43,125/- was made under section 14A of the Act. 15. The assessee pleaded before the CIT(A) that no addition under section 14A was liable in its case. Placing reliance upon the balance sheet of M/s Variety Book Depot as on 31.03.2015, it was demonstrated that there was no share investment in the impugned entity and that therefore there cannot be any case for making any disallowance under section 14A of the Act. It was also submitted that the entire sale purchase of shares for the assessee was done by the Quantum who were remunerated for their services. The ld. CIT(A) concurred with the pleadings of the assessee and deleted addition. 16. The ld. DR vehemently argued in favour of the ld. AO. 17. We h....
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....er mention was made that assessee had paid Rs. 4,12,29,741/- to DLF and wanted name of Ms. Hemlata to be included in records as nominee of the assessee. The ld. AO observed that there was no mention of sale of the said property. The ld. AO also noted that in Form 26AS, TDS of Rs. 3,01,338/- was shown against total amount of Rs. 3,08,33,825/-. Consequently, the ld. AO concluded that the claim of loss is a sham transaction and in reality, a fictitious transaction under taken with the ulterior motive of reducing tax liability. He therefore made the impugned addition of addition of Rs. 1,72,18,791/- being the Short-Term Capital Loss claimed in respect of sale of said property. 19. The ld. CIT(A) deleted the addition made by the ld. AO holding as under:- "......72. The assessment order, arguments of the appellant and the various agreements furnished by the appellant has been perused. 73. It is also a matter of record evident from the document that the circle rate of the property was below the sale consideration. Therefore, the provisions of section 50C was not applied by the Assessing Officer. Therefore, the Assessing Officer could not have disturbed the sale consid....
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....eged. 79. In view of the above discussion, it is evident that there was no legal provision invoking which the Assessing Officer would have disturbed the sale consideration of the transaction. 80. There is no evidence brought on record to establish that the sale consideration was more than the disclosed amount. There is no evidence to suggest that the appellant had taken a consideration in cash from the buyer of the property. Therefore, the short-term capital, could not be disallowed. 81. In view of the above, disallowance of short-term capital loss of Rs. 1,72,18,79 deleted....." 20. The ld. Counsel for the assessee Shri Ajay Vohra, placed total reliance upon the order of the ld. CIT(A). It was reiterated that the decision of deleting the disallowance of Short Term Capital Loss is based upon correct understanding and interpretation of the facts of the case and does not require any intervention at this stage on the matter. 21. The ld. CIT-DR, Ms. Amisha S. Gupt, vehemently argued in favour of the order of the ld. AO. It was submitted that the ld. CIT(A) has totally misread the facts and the evidence on record and therefore the relief accorded is exce....
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.... nor the complete list alongwith genuineness of liabilities supplied during the course of assessment proceeding? 3. Whether on the facts and circumstances of the case Ld. CIT(A) is justified in deleting the Addition of Rs. 2,00,00,000/- on account of Unexplained cash deposit in bank accounts u/s 68 of the Act during the year under consideration? 4. Whether on the facts and circumstances of the case Ld. CIT(A) is justified in deleting the Addition of Rs. 7,45,42,538/- on account of disallowance of commission paid to K.P. R. Nair? 5. Whether on the facts and circumstances of the case Ld. CIT(A) is justified in deleting the Addition of Rs. 50,98,87,154 /- on account of disallowance of commission, reduction in share of co-sharer and disallowance of Short Term Capital? 6. Whether on the facts and circumstances of the case Ld. CIT(A) is justified in deleting the Addition of Rs. 1,75,00,000 /- on account of deemed dividend from Quantum Securities under provisions of section 2(22)(e) of the IT Act? 7. Whether on the facts and circumstances of the case Ld. CIT(A) is justified in treating the two persons namely Sh. Ramesh Chander Kalra and Sh. San....
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....aving sundry creditors. The AO had requested assessee to file a list of sundry creditors, in response to which list of top 38 creditors, where amounts exceeded to Rs. 5 lakhs, was filed aggregating to Rs. 10,80,33,926/-. The ld. AO observed that list/address of all the sundry creditors aggregating to Rs. 19,39,90,362/-. was not filed leading to suspicion of the genuineness of the purchases purport to have been made from the alleged sundry creditors. It was noted that in the absence of identity and genuineness of sundry creditors to the extent of Rs. 8,56,56,436/-, 25% thereof were deemed as unverifiable and the AO proceeded to make addition of Rs. 2,14,14,109/- under section 41(1) of the Act. The ld. CIT(A) concurred with the findings of the assessee that provisions of section 41(1) were non-maintainable in this case. The assessee had argued that no addition under section 41(1) can be made by doubting identity and genuineness of sundry creditors and that to by making an ad hoc estimated addition. Reliance was placed upon the decision of Hon'ble jurisdictional High Court in the case of Jain Export Pvt. Ltd. 35 taxmann.com 540 as well as other pronouncements covering the subject incl....
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....here was sufficient cash in hand in its books and that the same was done probably towards expenditure/investments in real estate where introduction of cash was normal activity. Thus, the sources of the cash was doubted. The ld. AO rejecting the books of accounts of the assessee under section 145 of the Act, on this account proceeded to make the impugned addition of Rs. 2 Crores as unexplained deposit under section 68 of the Act. Before the ld. CIT(A), the assessee premised that there is no law which prohibits withdrawal of cash beyond a prescribed limit. It was argued that the addition qua cash expenditure/investments in real estate, was purely based upon conjectures and surmises of the ld. AO. On the issue of rejection of books of accounts under section 148, the assessee had urged that firstly the same was done without pointing any specific defects therein and also without giving the assessee any opportunity to explain and/or reconcile the differences. It was also stated that the rejection of books of accounts was untenable since the ld. AO did not assume any jurisdiction under section 144 of the Act. the assessee has also premised that section 68 was not applicable in its case si....
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....e properties. For a clear understanding of the facts of the case we deem it necessary to reproduce the brief factual matrix narrated by the ld. CIT(A) on pages 4 to 6 of his order "......5.3 The Brief background for making additions/disallowance by the AO of this issue is as under:- ".....5.3.1 Appellant had entered into agreement dated 20.03.2010 with one Ms. Rajamma S. Madden for purchase of property at 11A, Prithvi Raj Road, New Delhi for a consideration of Rs. 71 crores. As per the agreement to sale, appellant paid Rs. 10 Cr. as an advance by way of banking transactions. As per the agreement, the balance amount of Rs. 61Cr was to be paid later at the time of execution of sale deed. 5.3.2 There were several conditions in the impugned agreement (para 6) dated 20.03.2010, which the Appellant had to undertake at its own cost for: * Get tenant evicted; * Convert leasehold property to freehold * Settle cases related to unauthorized construction * Get building plans sanctioned from NDMC 5.3.3 Appellant also entered into a brokerage agreement dated 20.03.2010 with Sh. K.P.R Nair [who was the broker & also nephew of....
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....hemselves in the agreed ratio of MOU dt. 22/03/2010 and part-ways, the Appellant & co-sharers decided to sell the same to a 3md party and thereafter, distribute the overall net profit amongst themselves. 5.3.11 When after several months the Appellant & co-shares were not able to find any suitable 3rd party buyer, they sold the Jor Bagh property to a company M/s Book Wise India Pvt. Ltd (which is an associate enterprise of the Appellant) at Rs. 31.50 crores (near above the circle rate). This resulted into short-term capital loss of Rs. 43.5 cr for all parties on this transfer. 5.3.12 The computation of income submitted by the Appellant in respect of these two transactions, is as under: Property no. 11A, Prithvi Raj Road, New Delhi Sale consideration 173,00,00,000 less - Cost of acquisition : (-) 79,69,59,876 Purchase cost 71,00,00,000 Freehold conversion charges 1,24,17,338 Brokerage & Misc. expenses 7,45,42,538 93,30,40,124 Less - Share of co-owners : (-) 46,65,20,062 Capital Gains offered by Appellant in his ITR 46,65,20,062 Property no. 115/112, Jor Bagh, New Del....
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....) [E] (249,020,062) Capital Gain from Prithvi Raj Road [F] 684,020,062 II Jori Bagh Property Sales Consideration [G] 315,000,000 less Cost of acquisition [H] (750,000,000) Capital Loss from Jori Bagh Property* [I] (435,000,000) Net Capital Gain from above 2 properties 249,020,062 III IREO Property Sales Consideration [J] 12,910,953 less Cost of acquisition [K] (13,255,569) Capital Loss from IREO ** [L] (344,616) Returned Capital Gain on properties as per Income-tax return (reconciliation) 248,675,446 II. Secondly, AO has held that the sale of Jor Bagh Property for Rs. 31.50 cr. to M/s Book Wise India Pvt. Ltd. and consequent claim of short-term capital loss of Rs. 43.50 cr., wa....
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....ual sharing of cost, sale proceed and consequent gain/ loss is prima facie incorrect and concocted story. T ascertain the truth and genuineness of assessee's claim of co-opting of co-sharer and equal sharing of profit & loss not only in respect of Prithvi Raj Property but also Jor Bagh Property, enquires were made from the co-sharer and summon u/s 131 were issued to them on 11.12.2018 for personal deposition of 14.12.2018. Accordingly, Sh. Sanjeev Verma and Sh. Ramesh Chander Kalra were examined on Oath and their statement were recorded in which they affirmed that they have joined Sh. Om Prakash Arora through MoU dated 20.03.2010 in respect of Prithvi Raj Road Property. Initially when this transaction was entered, Sh. Om. Prakash Arora told them that beside the payment of Rs. 5 Cr., no further payment would be required to be made as this property will be sold on Baiyana and they will get profit of Rs. 2-3 Cr within a span of 6 months by each of them. e) This fact was also confirmed by Sh. Ramesh Chander Kalra when he was examined on Oathu/s 131 and as to the cost of Prithvi Raj Property he replied the same that the Prithvi Raj Property cost this Rs. 100 Cr. They also s....
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.... xxxxxxx c) On the analysis of above, it is inferred:- * This certificate cum confirmation is signed by all the co-owner as late as in Nov' 2018 but it doesn't contain any working as to the computation of Capital Gain from any property neither Prithvi Raj Road Property nor Jor Bagh Road property. * It talk about the transaction and profit from Prithvi Raj Property and no reference to the Jor Bagh Property. It talk about accounting for and looking into all expenses incurred by Sh. O.P. Arora but no reference to the loss from sale of Jor Bagh Property. 35. The findings of Ld CIT (A) on this issue are given on pages 11 to 14 of his order as extracted herein below:- "....6.4.1 Thus, the two co-sharers paid their part of consideration to the appellant. The Assessing Officer has not brought out any evidence on record to establish that there was no co-sharer in the property. From perusal of the assessment order, it is seen that the Assessing Officer has held that they were only minority shareholder in the property whereas in the agreement dated 22.03.2010, it is evident that they (Shri Ramesh Chandra Kalra and Shri Sanjeev Verma we....
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....ith the First party till transactions are fully completed. That this MOU is final and binding upon the parties their legal heirs successors, legal representatives etc. 5. That this transaction taken place in New Delhi and as such New Delhi courts shall have exclusive jurisdiction to entertain any dispute between the first party and second party." 6.4.3 Thus, the appellant was given the sole right to sale the property to anyone. The sale of property to Shri Harish Ahuja has not been disputed by the two co-sharers. The following document was before the Assessing Officer also: 6.4.4 In the above document, the two co-sharers have confirmed receipt of their share of money amounting to Rs. 124510031/- each. During the course of assessment proceedings also, the two co-sharers in their statement under oath (page no.14 and 15 of the assessment order) have confirmed having received the amount from the appellant being their share of profit. 6.4.5 In his assessment order also, the Assessing Officer has allowed the deduction of Rs. 24,90,20,062/°(Rs.12,45,10,031 X 2). When the Assessing Officer has allowed the deduction on account of payment to t....
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.... of this Mo cannot be relied upon. This signifies that this agreement is an afterthought between the two parties just to link the deals and to make ground for the claiming the Short Term Capital Loss on sale/ transfer of this property at lower rate. c) Both these MoU for agreement to sale are neither registered nor they were notarized by any Notary Public. d) Both the agreement alleged to have entered on the same date i.e. 03.03.2014, the MoU for agreement to sale for Prithvi Raj Road do not contain any reference or not to mention any condition related to the Jor Bagh Property which claim to be a quintessential of the sale of Prithvi Raj Road Property. Therefore the claim of the assessee that the Jor Bagh Property is intricately linked Prithvi Raj Road property sale is camouflage to discredit to sale price of Jor Bagh Property which is a concocted story to derive unwarranted inference to discount the sale price Jor Bagh Property and liable to be rejected. e) It may mentioned as per the property consultant, article published in IndiaToday, in October 2012, the consultant inter alia observed that the price of Jor Bagh Property is much higher than that of Pr....
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.... The Hon'ble Supreme Court in Vodafone International (dated 20 January 2012) considered its decisions in the matters of McDowell reported in (1985) 3 SCC 230, Azadi Bachao reported in (2004) 10 SC 1 and the Mathuram Agarwal reported in (1999) 8 SC 667 and concluded that where the transaction is not genuine but a colourable device there could be no question of tax planning. Supreme Court makes it very clear that a colourable device cannot be a part of tax planning. k) Therefore where a transaction is sham and not genuine as in the present case then it cannot be considered to be a part of tax planning or legitimate avoidance of tax liability. The Supreme Court in fact concluded that there is no conflict between its decisions in the matter of McDowell (supra), Azadi Bachao (supra) and Mathuram Agarwal (supra). l) In the present case the purchase and sale of Jor Bagh Property, so as to take short term capital loss was found as a matter of fact as a premeditated artifice to claim the Short Term Capital Loss, therefore the same is treated as sham and the consequent short term capital loss in the hand of assessee and his efforts to spread among the co-sharer is rejec....
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....rate for Prithvi Raj Road property by determining at near to the circle rate at Rs. 173 cr. And for Jor Bagh Property at the market rate ignoring the circle rate valuation of the property. As the law stand u/s 50C of the I.T Act, the sale consideration has to be taken at value at which stamp duty has been paid, no adjustment could be made. These two properties sale transactions have been done Simultaneously but not conditional to one another. Though in the Mou alleged to be entered for sale of Jor Bagh property, the assessee has made a clause for interlinking the two-transactien conditional to each other but it is being done just to camfledge the tax provision and pedice the taxable capital gain." 7.3.6 The Assessing Officer was himself convinced that the addition invoking provisions of section 50C could not have been made in the case. Therefore, the Assessing Officer could not have disturbed the sale consideration if the income/loss is assessed under the head capital gains. 7.3.7 If the transactions were treated as business transaction by the appellant, in that case, there was powers with the Assessing Officer to disturb the consideration received or paid. As per....
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....s agreed to purchase the property from the FIRST PARTY solely on the condition that the SECOND PARTY, who is the owner of rights in the residential property bearing no. 11A, Prithvi Raj Road, New Delhi ("Prithvi Raj Road Property"), has agreed to sell Prithvi Raj Road Property to the FIRST PARTY for which purposes a separate Memorandum of Understanding has been executed between the parties today. * Clause 3 That it is agreed between the parties that a further Memorandum of understanding/Agreement for sale shall be executed between the parties specifying the date(s) of payments of the sale consideration to be made by SECOND PARTY to the FIRST PARTY and specifying the date(s) manner of execution of transfer agreements etc. once the probate of the Last Testament and will concerning the Prithvi Raj property has been granted by the appropriate courts of law.' 7.3.13 It is matter of fact that the appellant had to pay Rs. 61 Cr to the 23 people, who were the legal heir of late Ms. Rajamma S. Madden, only then the appellant could have acquired the property and then sale it. The appellant could realize Rs. 61 Crore only when the condition laid down by Shri Harish Ahuja....
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....sc. expenses'. Summary of these expenditures are as under: Particulars Amount (in Rs. ) Commission to KPR Nair as Brokerage for 11A Prithviraj Road 7,10,00,000 Advertisement expenses towards for sale of property 11A Prithviraj Road in different newspaper from time to time 16,12,604 Expenses at Prithviraj Road for Security Guards paid to M/s Principal Security & Allied Services Pvt. Ltd. 18,02,624 Expenses at Prithviraj Road for Security Guards paid to M/s Sharp Global group 1,27,310 Total Payment made by Appellant & co-shares 7,45,42,538 Expenditure claimed by Appellant (50%) 3,72,71,269 8.2. AO enquired about commission paid to Sh. K.P.R. Nair and directed Appellant to furnish evidences in support of commission paid to Sh. K.P.R Nair along with his confirmation and ITR to prove the genuineness of the expenditure claimed. 8.3. Appellant furnished the agreement entered with Mr. K.P.R Nair along with details of payments made (which were through banking channel) and bank statements to verify these payments. 8.4 AO has held that the Appellant failed to file any evidence and confirmation from Sh. K.P.R Nair in resp....
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.... the same time he was to receive part sale consideration as recipient of Estate of Ms. Rajamma S. Madden and also as attorney to Ms. Rajamma S. Madden, erstwhile owner of Prithvi Raj Road Property. However in the absence of confirmation on the part of recipient the exact nature of expenditure incurred is not proved hence the expenditure of Rs. 7,45,42,538/-alleged to be paid to Sh. K.P.R Nair is disallowed from the cost and not be included while computing the Capital Gain in respect of Prithvi Raj Road Property. xxxxxxxxxxxxxxxxxx 9. In the instant case, the Assessing Officer has only discussed the issue of commission paid to Shri K.P.R Nair but has disallowed other items of claim without any discussion. The appellant had claimed an amount of Rs. 7,10,00,000/- as having been paid to Shri Nair. However, the additional disallowance of Rs. 35,42,538/- has been made without any discussion as to how the other items of claim are not allowable. It appears that the disallowance of Rs. 35,42,538/- was erroneously made and therefore, the same is deleted. Accordingly, the appellant gets relief of Rs. 35,42,538/-. 9.1 In this case, the payment made to Shri K.P.R Nair is no....
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....teps for completion of the said requirements and generally to do all other acts deeds, matters, and things on behalf of the Vendor as envisaged herein. The vendor hereby agrees and undertakes not to revoke or cancel the said attorney without first obtaining prior written consent of the vendee. However, the execution of the said attorney deed shall not absolve the vendor from preforming her obligations in terms hereof. Further, the vendor also agrees and undertakes to come personally as and when required/asked for by the government authority including at the time of final payment, execution and registration of sale deed and completion of the deal." 9.5. Further, in the agreement dated 20.03.2010 between the appellant and Shri K.P.R. Nair, there are references of various services to be performed by Shri Nair in respect of the impugned property. Apparently, the services mentioned in the agreement has actually been carried out. Some of these services mentioned and carried out are as under:- a. Introduction of the appellant to Ms. Rajamma S. Madden (clause 2). b. Completion of all terms and conditions and obligation discussed in the agreement to sell dated 20.....
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....ion, the addition of Rs. 7,10,00,000/- is deleted. Thus, the amount of Rs. 7,45,42,538/- (Rs.7,10,00,000/- + Rs. 35,42,538/-) is deleted........." 38. The Revenue is in appeal contesting the grant of above relief accorded through order of the ld. CIT(A) extracted herein above. The Ld. CIT DR Ms Asmi Gupt fiercely argued that the relief given by the Ld First Appellate Authority is excessive, unwarranted and untenable as the same is based upon in correct and inappropriate appreciation of the facts on record. It was argued that the ld. CIT(A) has misread the order of ld. AO in the light of facts available on records. She submitted that the claims made by the assessee dwell around schematic planning of tax evasion attempted through a web of agreements and MOUs so as to avoid true incidence of taxation arising from sale purchase of immovable properties. 39. The ld. Counsel for the assessee, Shri Ajay Vohra, vehemently argued in favour of the order of the Ld. CIT(A) by reiterating his arguments, reliance upon case laws taken before the ld. First Appellate Authority in the light of evidences produced, copies of which were produced before us through a paper book. It was submitted tha....
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....therefore be accepted. It is immaterial as to whether the payments were covered by some agreements or routed through some banking channels. The onus is upon the assessee and its parties to satisfy and comply with statutory notices of the ld. AO qua justification of expenses claimed. The relief accorded by the ld. CIT(A) therefore cannot be sustained. 41. As regards the next issue of reduction in share of co-sharers whereby the ld. AO made the addition by computing the entire gain on the property as taxable in the hands of the appellant only and by not allowing 50% gains as attributable to the co-sharers, we have noted that the relief is not based on true appreciation of facts. The ld. AO in his assessment order, relevant part extracted hereinabove, has clearly pointed out the deficiencies in the agreements so as to allude that the same were engineered to be used as devices for tax avoidance. The ld. AO has thus pointed out that firstly the agreement per se contained inherent inconsistencies and shortcomings, the two co-sharers in their sworn statements before the ld. AO had categorically submitted that they had little say on the matter and that they were themselves kept in dark ....
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....f tax planning while concluding that the impugned transactions were sham transactions and lacking any legitimacy is correct. We have also noted that the sale of Jorbagh property for Rs. 31,50,00,000/- so as to give rise to the impugned loss of Rs. 43,50,00,000/- has been rightly noted by the ld. AO as a created and imaginary loss. The impugned property was sold by the assessee to a company namely M/s Bookwise India Pvt. Ltd., in which he alongwith his wife is a shareholder. In fact the sale of one of the floors of the constructed/redeveloped floors of Jorbagh property by M/s Bookwise India Pvt. Ltd. to Shri Anuj Kalra S/o Shri Ramesh Chandra Kalra, one of the co-sharers adds credence to the theory that the entire transactions were engineered to suit specific interest. 43. On this matter we place full reliance upon the decision of Hon'ble Supreme Court in the case of MacDowell and Company Limited vs The Commercial Tax Officer 1986 AIR 649 wherein the Hon'ble Apex held that tax planning may be legitimate provided it is within the frame work of law, colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid ....
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...., or liberally, nor whether the transaction is not unreal and not prohibited by the statute, but whether the transaction is a device to avoid tax, and whether the transaction is such that the judicial process may accord its approval to it. A hint of this approach is to be found in the judgment of Desai, J. in Wood Polymer Ltd. v. Bengal Hotels Limited(1) where the learned judge refused to accord sanction to the amalgamation of companies as it would lead to avoidance of tax. It is neither fair nor desirable to expect the legislature to intervene and take care of every device and scheme to avoid taxation. It is upto the Court to take stock to determine the nature of the new and sophisticated legal devices to avoid tax and consider whether the situation created by the devices could be related to the existing legislation with the aid of 'emerging' techniques of interpretation as was done in Ramsay, Burma Oil and Dawson, to expose the devices for what they really are and to refuse to give judicial benediction....". The conclusions drawn by the ld. CIT(A) therefore cannot be accepted. 44. Accordingly, we are of the view that the relief allowed by ld. CIT(A) of Rs. 50,98,87,154/-....