The Commissioner Of Income Tax,Chennai v. M/S. True Value Homes (India) Pvt. Ltdtvh Triveni,21-Cv Raman Road,Alwarpet, Chennai – 600 018

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HON'BLE MR. JUSTICE M.DURAISWAMYAND THE HON'BLE MRS.JUSTICE T.V.THAMILSELVI The Commissioner of Income Tax,Chennai.... Appellant v. M/s. True Value Homes (India) Pvt. LtdTVH Triveni,21-CV Raman Road,Alwarpet, Chennai – 600 018. ... Respondent Appeal preferred under Section 260A of the Income Tax Act,1961, against the order of the Income Tax Appellate Tribunal,Madras, "D" Bench, dated 18.03.2013 in I.T.A.No.1324/Mds/2011for the Assessment Year 2007-08. against the order of the Commissioner of Income Tax (Appeals)-III, Chennai dated 15/04/2011 in ITA No.640/09-10/A-III, PANNo.AAACT7955Q for the Assessment Year 2007-2008 and against theorder of the Additional Commissioner of Income Tax, CompanyRange III, Chennai dated 24/12/2019 in GIR No./PAN No.AAACT7955Qfor the Assessment Year 2007-2008. Challenging the order passed in I.T.A.No.1324/Mds/2011 inrespect of the Assessment Year 2007-08 on the file of theIncome Tax Appellate Tribunal, Chennai, ''D'' Bench (forbrevity, the Tribunal), the Revenue has filed the above appeal. 2.1 The assessee is a company engaged in the business ofbuilders and promoters of residential flats.. The assessee filed https://hcservices.ecourts.gov.in/hcservices/ its return of income for the assessment year 2007-08 admittingtotal income of Rs.7,70,49,470/-. The Assessing Officerdetermined the total income of Rs.19,68,09,740/- in theassessment order passed under section 143(3) of the Act. Thetaxable income has been determined by the assessing authority ata higher level by making additions on account of short termcapital gains. 2.1 The assessee is a company engaged in the business ofbuilders and promoters of residential flats.. The assessee filed https://hcservices.ecourts.gov.in/hcservices/ its return of income for the assessment year 2007-08 admittingtotal income of Rs.7,70,49,470/-. The Assessing Officerdetermined the total income of Rs.19,68,09,740/- in theassessment order passed under section 143(3) of the Act. Thetaxable income has been determined by the assessing authority ata higher level by making additions on account of short termcapital gains. 2.2 The assessee company had promoted a residential projectabout 45 kms. away from Chennai on Old Mahabalipuram Road.The assessee had identified about 25 acres of land to set upthe project. The task of identifying and purchasing the landfrom different land owners was entrusted by the assessee to oneMr..Rajagopalan and the said Rajagopalan managed to procure14.79 acres of land in favour of the assessee company. Theassessee company purchased the entire 14.79 acres for a totalconsideration of Rs.4,41,38,500/-. The land was registeredfor a sum of Rs.1,38,82,000/-. But, the assessee had to pay anamount of Rs.1,86,61,000/- to the land owners over and abovethe guideline value. The land owners insisted that they couldsell the land only at market price, therefore, in addition tothe guideline value paid by the assessee and shown in theregistered document, the assesssee also paid Rs.1,86,61,000/- asconsideration outside the document. Further, the assesseecould evict the unauthorised occupants after paying thecompensation of Rs.1,15,95,500/-. Ultimately, the purchasecost int eh hands of the the assessee worked out tors.4,41,38,500/- for purchase of 14.79 acres of land. 2.3 In order to execute the project in its original plan,the assessee also had to acquire a further extent of 2.96 acaresof land. The total project was sold to M/s. MPC for aconsideration of Rs.21,27,31,250/- A sum of Rs.9.79 cores waspaid by M/s. MPC directly to M/s. Wondertech Software Pvty.Ltd., Shri Chakkubai and Shri Dhanapal, The said amount waspaid as consideration for the execution of the sale deed bythe assessee for a consideration of Rs.21,27,31,250/-However, the Assessing Officer did not accept all thesefigures while computing the short term capital gains asexplained by the assessee. The Assessing Officer acceptedthe guideline value of Rs.1,38,82,000/- as the cost ofacquisition the assessee. He disallowed the amount paid by theassessee in addition to the document value amount ofRs.1,86,61,000/- and also disallowed the compensation ofRs.1,15,95,500/- paid by the assessee to vacate the unauthorizedoccupants. The Assessing Officer also declined to givededuction for Rs.9.79 crores, directly paid by M/s. MPC to thethree parties for acquiring 2.96 acres of land and adopted theentire sum of Rs.21,27,31,250/- as sale consideration. In thesecircumstances, the Assessing Officer determined the short termcapital gain at Rs.16.71.16.850- as against Rs.,6,98,26,550/-declared by the assessee. 2.4 On appeal, the Commissioner of Income Tax (Appeals)allowed all the cost factors explained by the assessee anddisallowed those cash payments made by the assessee byinvoking section 40A(3) of the Act. The Assessing Officer hasalso made an addition of Rs.2,18,96,985/- towards retentionmoney. On appeal, the Commissioner of Income Tax (Appeals)deleted the said addition made by the assessing Officer towardsretention money. 2.5 Aggrieved over the order passed by theCommissioner of Income Tax (Appeals) , the Revenue has filed anappeal before the Income Tax Appellate Tribunal, and theTribunal. dismissed the appeal and confirmed the order of theCommissioner of Income Tax (Appeals). Challenging the orderpassed by the Income Tax Appellate Tribunal, the Revenue hasfiled the above appeal. 2.5 Aggrieved over the order passed by theCommissioner of Income Tax (Appeals) , the Revenue has filed anappeal before the Income Tax Appellate Tribunal, and theTribunal. dismissed the appeal and confirmed the order of theCommissioner of Income Tax (Appeals). Challenging the orderpassed by the Income Tax Appellate Tribunal, the Revenue hasfiled the above appeal. 3.The appeal was admitted on the following substantialquestions of law: “ (i) Whether on the facts and circumstancesof the case, the Tribunal was right in holdingthat the disallowance made on account of shortterm capital gains charged on account of slumpsale are not proper even though the assesseecould not produce any documentary evidence?(ii) Whether on the facts and circumstancesof the case, the Tribunal was right in holdingthat the retention money withheld is to beallowed even though the liability on account ofit had nto crystallized during the presentassessment year?" 4. When the appeal is taken up for hearing, Mr.M.Swaminathan, learned Senior Standing Counsel appearing forthe appellant fairly submitted that the 2nd question of lawraised in the above appeal is covered by the decisions ofthe Hon'ble Division Bench of this court reported in 2012(122)Taxmann.com 284(Madras) [Commissioner of Income Tax, Chennai v.Voltech Projects (P) Ltd.] wherein the Division Bench ofthis Court held as follows:- " ... 5. The short order passed by the co-ordinate Bench is quoted below for readyreference:-" The respondent-assessee is engaged in contractbusiness and in the memo of income, it hadclaimed deduction of the amounts retained by itsclients as per the contracts. According to theassessee, as the amounts were not received, theycannot be considered as part of income for theimpugned assessment year. The original authority, while considering the decision of this Court inCommissioner of Income Tax v. Ignifluid Boilers(P) Ltd., [(2006) 283 ITR 295)], was of the viewthat since the issue was pending before theSupreme Court and that such a claim is ofrecurring nature, declined to extend the benefitto the assessee. The Commissioner of Income Tax(Appeals), however, laying emphasis on thedecision of this Court in Ignifluid Boilers (P)Ltd., case (supra), allowed the appeal of theassessee and the department's appeal before theTribunal was dismissed holding that the decisionof the jurisdictional High Court is binding onthe Tribunal and therefore there was no reason todiffer with the findings of the Commissioner ofIncome Tax (Appeals). The said order of theTribunal is under challenge before us. 2. When the matter was taken up for admission,the learned counsel for the appellant fairlypointed out that the Special Leave Petitionpreferred by the department in C.C.No.4879 of2006 against the decision of this Court inIgnifluid Boilers (P) Ltd., case was dismissed bythe Supreme Court by order dated 17.7.2006. 3. Since the issue raised in this appeal hadalready been decided against the department bythe Supreme Court in C.C.No.4879 of 2006 dated17.7.2006 (Commissioner of Income Tax v. M/sIgnified Boilers India Ltd.) and in C.C.No.9463of 2006 dated 12.12.2006 (Commissioner of IncomeTax v. East Coast Constructions & Order dt30.7.2020 in TCA 693 of 2019 CIT v . VoltechProjects Pvt. Ltd.Industries Limited), noquestion of law arises for consideration.Accordingly, the tax case appeal is dismissed." 6. The contraversy involved in the presentappeal is covered by the said judgment.Respectfully following the said view of thecoordinate Bench, we dismiss the present appealof the Department and answer the questions infavour of the assessee and against the Revenue.No order to costs." 6. The contraversy involved in the presentappeal is covered by the said judgment.Respectfully following the said view of thecoordinate Bench, we dismiss the present appealof the Department and answer the questions infavour of the assessee and against the Revenue.No order to costs." 5. So far as the 1st question of law is concerned, on acareful consideration of the materials available on record, itcould be seen that the revenue has not specifically doubted the https://hcservices.ecourts.gov.in/hcservices/ transaction and therefore, the Tribunal has come to theconclusion that the order passed by the Commissioner of IncomeTax (Appeals) is proper and that of the Assessing Officer iserroneous. The payments made by Shri Chakkubai and ShriDhanapal, as part of cost of acquisition, after having foundthat the entire consideration has been considered in the handsof the assessee company. While passing the assessment order,the Assessing Officer had erroneously left out some of theentires which necessitated the Commissioner of Income Tax(Appeals) to interfere with the assessment order. Theorder passed by the Commissioner of Income Tax (Appeals) isjust and proper. Considering all these aspects, the Tribunalhas rightly confirmed the order passed by the Commissioner ofIncome Tax (Appeals). 6. In these circumstances, we do not find any ground muchless any substantial question of law to interfere with the orderpassed by the Tribunal. In view of the Judgment reported in2012(122) Taxmann.com 284(Madras) [citeda supra] , the 2ndquestion of law is decided in favour of the assessee and againstthe Revenue. Hence, the Tax Case Appeal is liable to bedismissed. Accordingly, the same is dismissed. No costs. Sd/- Assistant Registrar //True Copy// Sub Assistant Registrar RjTo1.The Income Tax Appellate Tribunal, Chennai, ''D'' Bench. 2.The Commissioner of Income Tax, Chennai. 3.The Commissioner of Income Tax(Appeals)-III,Chennai.4.The Additional Commissioner of Income TaxCompany Range II, Chennai-34.+1 cc to M/s.M.Swaminathan, Senior Counsel, Sr.No. 13492 SMI(CO)RMP(15/04/2021) T.C.A.No. 788 of 2013