PR. COMMISSIONER OF INCOME TAX (CENTRAL)-2 vs. M/S SANSKAR HOMES PVT. LTD.,

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ITA - 50 / 2023HC Delhi25 January 20233 pages
For Petitioner: ZOHEB HOSSAIN
AI SummaryPartly Allowed

What did the High Court hold?

The ITAT held that the Vasant Vihar property was always intended to be held as an investment, supported by its inclusion in the balance sheet before the search. The proceeds from its sale were offered as short-term capital gains.

What were the facts?

The Revenue appealed against the ITAT's decision regarding the disallowance of Rs. 7,73,74,500 paid in cash for immovable properties. The AO disallowed the expenditure under Section 40A(3) assuming the properties were stock-in-trade.

What were the issues?

Whether cash payments for immovable properties, treated as stock-in-trade by the AO, are disallowable under Section 40A(3). Whether the intention of holding the property as investment or stock-in-trade.

Which sections of the Income-tax Act were involved?

Section 40A(3)

AI-generated summary — verify with the full judgment below

$~ 26 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 50/2023 and CM APPL. 3668/2023

PR. COMMISSIONER OF INCOME TAX (CENTRAL)-2

..... Appellant Through: Mr Zoheb Hossain, Sr. Standing Counsel with Mr Vipul Agarwal, Jr. Standing Counsel.

versus

M/S SANSKAR HOMES PVT. LTD.,

..... Respondent

Through: None.

CORAM:

HON'BLE MR JUSTICE RAJIV SHAKDHER

HON'BLE MS JUSTICE TARA VITASTA GANJU

O R D E R %

25.01.2023 [Physical Hearing/Hybrid Hearing (as per request)] 1. This appeal concerns Assessment Year (AY) 2010-11. 2. The short issue which arises for consideration, even according to Mr Zoheb Hossain, who appears on behalf of the appellant/revenue, is: whether Rs.7,73,74,500/-, paid in cash by the respondent/assessee towards purchase of immovable properties described as D-95, Anand Niketan, New Delhi [hereafter referred to as, “Anand Niketan property”] and F-60, Poorvi Marg, Vasant Vihar, New Delhi (first and second floor) [hereafter referred to as, “Vasant Vihar property”] can be disallowed under Section 40A(3) of the Income Tax Act,1961 [in short, “the Act”]? 3. According to Mr Hossain, in assessment order dated 26.03.2013 (a hard copy of which has been placed before us), the rationale which has been employed by the AO is, since the intention of the respondent/assessee, from ITA 50/2023

page 1 of 3

This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/03/2026 at 14:16:39

the very beginning, was to treat the aforementioned immovable properties as stock-in-trade, expenditure incurred qua the same could be disallowed under Section 40A(3) of the Act. 4. The Income Tax Appellate Tribunal [in short, “Tribunal”] via the impugned order dated 07.03.2019, has inter alia, held, by adverting to the Vasant Vihar property, that the intention of the respondent/assessee was always to hold the same as investment. 5. The record also seems to suggest that the respondent/assessee held the Vasant Vihar property as an investment, since it appeared in Schedule G appended to the balance sheet ending on 31.03.2009. 5.1. Inter alia, the Tribunal also observed that the said balance sheet could not have been doctored, as the search in this case was conducted on 07.08.2010, which was after the date when the balance sheet was prepared i.e., 10.07.2009. 6. Besides this, it appears that Vasant Vihar property was sold in AY 2011-12 and AY 2013-14, and the proceeds received from the sale were offered for tax as short term capital gains. 7. Mr Hossain says that, inadvertently, the correct assessment order has not been placed on record. As noted above, we have been shown a hard copy of the assessment order dated 26.03.2013. 7.1. Mr Hossain will place the same on record. 8. Mr Hossain will also return with instructions as to what was the final outcome of the appeals filed by the respondent/assessee concerning the AY 2011-12 and AY 2013-14.

ITA 50/2023

page 2 of 3 This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/03/2026 at 14:16:39

9.

List the appeal on 27.02.2023.

RAJIV SHAKDHER, J

TARA VITASTA GANJU, J

JANUARY 25, 2023 / tr

Click here to check corrigendum, if any

ITA 50/2023

page 3 of 3

This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/03/2026 at 14:16:39

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