1756 of 2014, by which, the High Court has dismissed the said appeal preferred by 1 44 the Revenue, thereby confirming the order passed by the Income Tax Appellate Tribunal, “G” Bench, Mumbai (hereinafter referred to as the ITAT) by which the addition made by the Assessing Officer (AO) of Rs. The agreement dated 06.05.2008 was also furnished to the assessee along with the notice. In response, the assessee vide letter dated 04.10.2011 stated that the transaction was duly offered to tax in AY 2008-09 reflecting a consideration of Rs. 06.05.2008, so this transaction falls under the A.Y. 06.05.2008, you had claimed to had received the entire sale proceeds of Rs. 30.05.2008, you had claimed to have revised the value from Rs. In this regard please furnish the basis thereof with supporting documentary evidences. In view of the above, it is proposed to treat the transaction for this year and to add the sale proceeds of Rs. The CIT (A) also discarded the submissions made by the assessee that transfer of development rights were made in FY 2008-09 pursuant to the MOU dated 27.12.2007.
5,24,27,354/- during FY 2007-08 on the basis of MOU dated 27.12.2007 and the said amount of the income has already been declared in the AY 2008-09 i.e., FY 2007-08 8 44 and therefore, such income cannot be declared in AY 2009-10 i.e. Shri Balbir Singh, learned ASG appearing on behalf of the Revenue has vehemently submitted that the High Court has failed to appreciate that the order of the ITAT was perverse and contrary to facts on record. 15,94,06,500/- from a development agreement on 31.03.2008 and the said entry was reversed on the same day by passing a rectification entry on 31.03.2008 itself. 12 44 4.1 It is further submitted by Shri Balbir Singh, learned ASG, that the ITAT failed to take into account the fact that the entry made and reflected in the Ledger Account of the assessee as on 31.03.2008 was on account of a third party i.e., SICCL and that too for a total of Rs.
Further, the ITAT did not even question the factum of refund of differential amount of Rs.
However, the ITAT in its order, after examining the opening and closing balance for the year 1996-97 upto 2007-08 held that in multiple years there was inventory shown in the Balance Sheet and since subsequent assessment orders were made under Section 143(3) of the Income Tax Act, without 14 44 disputing the claim of assessee, held that the transaction in question is sale of stock in trade. 4 It is further submitted by Shri Balbir Singh, learned ASG, that the High Court has failed to examine the inherent contradiction in the 16 44 order of the ITAT and that the claim was allowed by the Tribunal, contrary to the records produced before the Assessing Officer. 6
Making the above submissions, it is prayed that the present appeal be allowed and the order passed by the ITAT as well as the High Court be set aside and the order of the Assessing Officer be restored.
It is submitted that the assessee is engaged in the business of building and development of properties since the year 1999-2000. b)
For the year ending 31/03/2006 the assessee disclosed inventories at Rs 8.66 crores 20 44 c)
For the year ending 31/03/2007 there was no change and the same figure of Rs 8.66 crores was disclosed. The assessee was holding 50.16 acres of land, out of which 27.44 acres of land was the subject matter of the aforesaid MOU dated 27/12/2007. 4 Shri Bagaria, learned Senior Advocate has also taken us to the following further facts recorded and findings given by the ITAT: – 23 44 a) The aforesaid 50.16 acres of land was acquired by the assessee in the financial year 1996-97. 9,53,06,475/- and the tribunal gave a definite finding that “the above inventory represents the cost of 50.16 acres of land out of which 27.44 acres has been sold vide Memorandum of Understanding dated 27/12/2007”.
e) For financial years 2003-04 and 2004-05 (year ending 31/03/2004 and 31/03/2005), inventories were shown at Rs 8.58 crores and Rs 8.66 crores respectively. 5,24,27,354/- and cost of the said land was shown at Rs 5,21,37,454/- 27 44
The facts relating to MOU dated 27/12/2007, necessary entries being made in the books of accounts on 02/01/2008, debiting the account of KCH and crediting the account of SICCL, mistake in the development agreement dated 06/05/2008 and its being corrected by the said registered deed of rectification were also mentioned. It is submitted that ultimately the Tribunal concluded the issues as under: – a) The impugned transaction related to transfer of stock in trade and that the assessee had been showing “stock in trade/inventories” year after year in its balance sheets and its contention was accepted by the assessing officer and twice the assessments were completed under Section 143(3). d) Perusal of balance sheets of the assessee since 1999-2000 clearly 31 44 showed that the assessee had been showing work in progress/inventories year after year and apportioned the cost in proportion to the part of the land transferred and the cost of the land was as per the cost shown in the Return of Income for assessment year 2008-09. 32 44 5.6 It is submitted that the above findings recorded by the ITAT which were upheld by the High Court are pure findings of facts and therefore, no substantial question of law arises in the matter. The amount mentioned in the Deed of Rectification, rectifying the mistake in the Development Agreement also mentioned the 34 44 same consideration and the said Deed of Rectification was duly registered with the Sub-Registrar, Vasai with whom the Development Agreement was also registered. 8
It is further submitted that with regard to the nature of business of the assessee, the income tax officer proceeded as if there must be regular transactions of purchase and sale 35 44 every year.
Commissioner of Income Tax, Hyderabad) wherein it was held inter alia that, “no doubt, this was only a single venture; but even a single venture may be regarded as in the nature of trade or business.” As regards the applicability of Section 50C of Income Tax Act, it is submitted that when the land in question was held by and transferred by the assessee as stock in trade and not as capital asset, Section 50C could have no application at all. It appears that the AO specifically recorded the findings 38 44 on examining the balance sheets for the AY 2006-07 to 2009-10 that there was not even a single sale during all these years and that there were negligible expenses and the transaction in question was the only transaction i.e., transfer of development rights in respect of land and consequently, it was held that the transaction was one of transfer of capital assets and not one of transfer of stock in trade. However, the ITAT after examining the opening and closing balance for the AY 1996-97 to 2007-08 observed that in multiple years, inventory was shown in the balance sheet, without discussing the claim of the assessee and held that the transaction in question is sale of stock in trade.
Case Title: COMMISSIONER OF INCOME TAX 8 MUMBAI Vs. GLOWSHINE BUILDERS AND DEVELOPERS PVT. LTD. MANAGING DIRECTOR (2023 INSC 492)
Case Number: C.A. No.-002565-002565 / 2022
