M/S. U.K. PAINTS INDIA PVT. LTD.,NEW DELHI vs. ACIT, NEW DELHI

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ITA 2376/DEL/2017Status: DisposedITAT Delhi20 April 2023AY 2007-08107 pages

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Sumati Dayal v. CIT
214 ITR 801 · 1995 · SC
1,964 citing

Income Tax Appellate Tribunal, DELHIBENCH ‘G’, NEW DELHI

Before: Sh. Saktijit DeyDr. B. R. R. Kumar

For Appellant: Adv. &

For Respondent: DR CO No. 64/Del/2020

Hearing: 20.01.2023Pronounced: 20.04.2023

The present appeals and Cross Objections have been filed by assessees and the Revenue against separate orders of ld. CIT(A)-24, New Delhi. The appeals deal with unaccounted interest payment by M/s Vatika Ltd. to M/s UK Paints, M/s Span India Pvt. Ltd., M/s SEH Realtors Pvt. Ltd. and M/s Scorpio Research & Consultants Pvt. Ltd. in case of Jaipur Project and NH8 Project. In addition, the other issues pertains to cash receipts, addition u/s 69A on account of cash received on booking of plots by M/s Vatika Ltd.

2. A search & survey operation was conducted by Investigation Wing in the case of Sh. K.S. Dhingra, Sh. G.S. Dhingra & others on 16.09.2011. On the basis of the seized documents, the revenue alleged that the assessee, M/s Vatika Ltd. has entered into a loan agreement with group entities of Dhingra group, Shahi Exports group and Span India group which has been camouflaged as sale-purchase of property transaction. A search and seizure u/s 132 and survey action u/s 133A were carried out on the premises of Vatika Group on 16.01.2013. During the search and survey operation, various incriminating documents pertaining to Vatika Group were alleged to have been found and seized.

The case of the assessee company was re-opened u/s 147/148 of the Income Tax Act, 1961 for the assessment year 2006-07 after recording of the reasons for reopening of assessment. Notice u/s 148 of the Income Tax Act, 1961 was issued to the assessee on 28.03.2013 after getting the prior approval of Commissioner of Income Tax, Central-I, New Delhi vide office letter F. No. CIT(C)-1/2012-13/2316 dated 28.03.2013. In response to the notice u/s 148 of the Income Tax Act, 1961, the assessee company had filed a copy of its return of income for the assessment year 2006-07 on 08.04.2013. The assessee company had declared its total income of Rs.34,15,23,969/- for the assessment year 2006-07. In the present case, assessment was completed u/s 143(3) of the Income Tax Act, 1961 on 31.12.2008. The total income of the assessee company was assessed at Rs.34,70,03,060/- against the returned total income of Rs.34,15,23,969/-.

D a t e o f A m o u n t ( R s . ) R e c e i v i n g P a y i n g I m m e d i a t e U l t i m a t e P A Y I N G D A T E A M O U N T P A Y I N G R e c e i p t C o m p a n y C o m p a n y S o u r c e D a t e S o u r c e C O M P A N Y ( R S . ) C O M P A N Y A M O U N T 1 9 . 0 5 . 2 0 1 0 1 1 , 2 7 , 8 6 , 4 1 7 S E H E S P O 1 9 . 0 5 . 2 0 1 0 1 1 , 2 8 , 0 0 , 0 0 0 F A M O U S 1 9 . 0 5 . 2 0 1 0 1 1 , 2 8 , 0 0 , 0 0 0 V A T I K A D W E L L E R S L T D . 1 1 . 0 6 . 2 0 1 0 8 , 3 1 , 5 3 , 2 2 1 A D V A N T A G E V I N C E N T 1 1 . 0 6 . 2 0 1 0 8 , 3 2 , 0 0 , 0 0 0 V A T I K A L T D . 1 7 . 0 6 . 2 0 1 0 6 , 4 2 , 8 1 , 3 6 1 S E H E S P O 1 7 . 0 6 . 2 0 1 0 6 , 4 0 , 0 0 , 0 0 0 A S P I R E 1 7 . 0 6 . 2 0 1 0 6 , 4 0 , 0 0 , 0 0 0 V A T I K A L T D . 2 3 . 0 6 . 2 0 1 0 7 , 3 4 , 7 7 , 5 5 4 U K P I E S P O 2 3 . 0 6 . 2 0 1 0 7 , 3 5 , 0 0 , 0 0 0 A S P I R E 2 3 . 0 6 . 2 0 1 0 7 , 3 5 , 0 0 , 0 0 0 V A T I K A L T D . 2 4 . 0 6 . 2 0 1 0 1 , 1 0 , 5 0 , 1 0 1 U T T A M E S P O 2 3 . 0 6 . 2 0 1 0 1 , 1 0 , 0 0 , 0 0 0 A S P I R E 2 3 . 0 6 . 2 0 1 0 1 , 1 0 , 0 0 , 0 0 0 V A T I K A L T D . 1 0 . 0 7 . 2 0 1 0 9 , 1 3 , 5 4 , 6 3 5 A D V A N T A G E E S P O 0 8 . 0 7 . 2 0 1 0 9 , 1 5 , 0 0 , 0 0 0 A S P I R E 8 . 0 7 . 2 0 1 0 3 , 1 5 , 0 0 , 0 0 0 V A T I K A L T D . 1 9 . 0 7 . 2 0 1 0 1 2 , 1 6 , 8 5 , 7 2 9 S E H E S P O 1 7 . 0 7 . 2 0 1 0 1 2 , 2 0 , 0 0 , 0 0 0 A S P I R E 0 8 . 0 7 . 2 0 1 0 6 , 0 0 , 0 0 , 0 0 0 V A T I K A L T D . 2 3 . 0 7 . 2 0 1 0 1 , 2 1 , 3 9 , 9 7 4 U T T A M E S P O 2 3 . 0 7 . 2 0 1 0 9 , 0 0 , 0 0 , 0 0 0 A S P I R E 1 6 . 0 7 . 2 0 1 0 1 2 . 2 0 , 0 0 , 0 0 0 V A T I K A L T D . 2 3 . 0 7 . 2 0 1 0 8 , 0 7 , 2 4 , 6 5 5 U K P I E S P O 2 3 . 0 7 . 2 0 1 0 9 , 0 0 , 0 0 , 0 0 0 V A T I K A L T D . 0 8 . 0 9 . 2 0 1 0 1 2 , 2 8 , 4 9 3 S E H E S P O 0 8 . 0 9 . 2 0 1 0 9 , 9 7 , 0 0 , 0 0 0 A S P I R E 0 8 . 0 9 . 2 0 1 0 5 , 0 5 , 0 4 , 1 4 4 A D V A N T A G E E S P O 0 7 . 0 9 . 2 0 1 0 9 , 9 7 , 0 0 , 0 0 0 V A T I K A L T D . 0 8 . 0 9 . 2 0 1 0 4 , 1 2 , 2 9 , 7 9 1 U K P I E S P O 0 8 . 0 9 . 2 0 1 0 6 6 , 9 5 , 9 2 5 U T T A M E S P O T O T A L 7 5 , 0 3 , 1 2 , 0 0 0 6 6 , 4 5 , 0 0 , 0 0 0 7 4 , 7 7 , 0 0 , 0 0 0 NOTE:

33 to 314, 788 to 792, 2376 to 2382, 2686 to 2692, 3583, 3591 to 3598, 3705 to 3712/Del/2017 CO No. 64/Del/2020 CO Nos. 4 to 8, 11 to 16/Del/2022 “4.3.2.17 The Loan agreement was subjected to an amendment on 31.03.2006. The crucial issue that requires examination is whether, as a result of this amendment, the nature of the transaction changed to a purchase agreement. The main clauses of this agreement have been discussed above at para 4.3.2.10 above. It can be seen at para number 1, at page 3 of this amendatory agreement dt. 31.3.2006 itself that the original agreement is amended to extend the periodicity of the loan to 31.12.2006. Even the rate of interest has been specifically revised to 24% pa (compounded quarterly). This clearly shows that the nature of the transaction continues to be a loan transaction. Of course, an additional amendatory clause has been inserted that the Lender has now been given a right to opt for purchase of plots. But is noteworthy that the new right only provides an option to purchase at a future date, and by itself does not bring about a conversion from a loan agreement to a purchase agreement. The Amendatory agreement specifically states that as and when the Lender opts for purchase, the same shall be separately communicated in writing, and the sale consideration shall be adjusted accordingly with the principal and accrued interest. In fact, the Amendatory agreement dated 31.03.2006 specifically states at para 4.2 that “if the lender opts for purchase”, then the total area to be allotted to the Lender would be 9375 sq yards, thus establishing beyond doubt that the lender has not exercised the option to purchase. Moreover, the recitals at para 4.2 of the Amendatory agreement provide that in case the Lender does not exercise the option to purchase, the loan shall be extended for a further period as specified in the extension agreements. Thus the fact that the loan has been extended repeatedly, proves in each extension agreement, that the Lender had not exercised its option to convert the loan transaction to a purchase transaction. Also, the subsequent Extension agreements only change the date of tenure of the loan and 34 to 314, 788 to 792, 2376 to 2382, 2686 to 2692, 3583, 3591 to 3598, 3705 to 3712/Del/2017 CO No. 64/Del/2020 CO Nos. 4 to 8, 11 to 16/Del/2022 the amount of the PDCs. All other conditions of the Amendatory agreement continue in the Extension agreements.

4.3.2.18 I, therefore, agree with the conclusions of the A.O. that the transaction was a loan simpliciter till the date of allotment of plots, when admittedly the appellant gave constructive delivery of the plots (upon the lender exercising its right to purchase), and that this conclusion could be drawn only upon examination of the agreements unearthed during the Search and Seizure action. It is pertinent to note that the appellant, vide its letter to the A.O. dated 24.03.2015 (at para 5 therein), also admits that as a result of search conducted on the appellant on 16.01.2013, several agreements/deeds in respect of “sale and purchase” of land by UK Plants, Shahi group and Span group were found and seized from the appellant’s premises. Accordingly, the addition is based on materials unearthed during the 35 to 314, 788 to 792, 2376 to 2382, 2686 to 2692, 3583, 3591 to 3598, 3705 to 3712/Del/2017 CO No. 64/Del/2020 CO Nos. 4 to 8, 11 to 16/Del/2022 search action on basis of which the assessment proceedings u/s 153A have been completed. Of course, the appellant also submits that various extension agreements, guarantee agreements etc entered into by the appellant subsequent to the main loan agreement have been mentioned in the assessment order, but not confronted to it. To my mind, even if this claim were to be true, this is an irrelevant consideration. The seized loan agreements constitute the primary evidence on basis of which the additions have emanated. The other documents mentioned by the A.O., are only supporting documents of the main evidence entered into consequentially, and no conclusion has been drawn by the A.O. solely on basis of these supporting documents, to the exclusion of the seized initial loan agreements. In any case, all these documents belong to the appellant in the first place, it being one of the parties to the transaction represented in the agreement. The appellant cannot claim that it was in the dark about these documents. Finally, each of these documents have been submitted by the appellant itself during appellate proceedings and it has been heard in detail. Therefore, this claim has to be rejected.

(vi) There are two components of the agreement: a. LOAN AGREEMENT Loan amount Rs. 10,00,00,000/-, bearing interest @18% p.a. for a period of 5 months from 12.08.2005 to 11.01.2006. To secure the loan, Vatika has provided post- dated cheques (PDCs) of Rs. 10,58,17,000/- (net of TDS on 38 to 314, 788 to 792, 2376 to 2382, 2686 to 2692, 3583, 3591 to 3598, 3705 to 3712/Del/2017 CO No. 64/Del/2020 CO Nos. 4 to 8, 11 to 16/Del/2022 interest). Demand Promissory Notes were also provided to secure the payment of the loan with interest, and b. PURCHASE AGREEMENT : The sum of Rs. 10,00,00,000/- so given by SEH Realtors P. Ltd. has been paid as sale consideration for the sale of commercial / housing / residential/institutional/medical/entertainment plots being fully developed 4% of 193.6 sq. yds. of commercial plots, 20% of 968 s.yds of housing plots and 31% of 1500.40 sq. Yds. of residential plots exclusively to the appellant. It was agreed that the “seller” (the appellant) will grant, sell, transfer and convey these plots to the “purchaser” (SEH Realtors P Ltd.) not later that 11.08.2006. The Seller explicitly agreed that any reduction of the agreed area will constitute breach of contract. However, in the event of larger availability of developed land after completion of development, SEH Realtors P Ltd. undertook to pay additional sale consideration on a pro-rata basis. c. The Seller (appellant) undertook to purchase back the plots, at the option of the purchaser, within a period of two years from the date of the agreement, at the prevailing market rates. In case the Seller fails to discharge this obligation, the purchaser (SEH Realtors P. Ltd.) had the right to seek specific performance of the same. d. In the event of the Purchaser selling the plots to any third party, no transfer charges will be payable by SEH Realtors P Ltd. / the third party to the appellant. e. In consideration of the payment made by SEH Realtors P. Ltd., the seller and the Confirming parties deposited all the deeds, documents, agreements, conveyance, mutual records etc evidencing the title of the land with the appellant.

This clause forms part of the “loan agreement” portion of the document. It is abundantly clear that this clause sets out that the primacy of the agreement lies in the “purchase agreement”. It is only when the appellant would choose not to exercise option of purchase the property that the agreement would acquire the colour of a loan transaction. No other clause to the contrary is provided, either specifically or by implication. The “purchase agreement” part of (Part B) of the agreement reads as a pure purchase agreement, and does not anywhere refer to the sum of Rs.10 crores as a loan; rather, it is referred to the “sale consideration”. Undoubtedly, the consideration amount of Rs. 10 crores has been referred to as “loan” amount in the extension agreements (though not in the main agreement) but the extension agreements invariably mention that the extension is taking place on the same terms and conditions as instead of main agreement. Therefore, I am of the view that the mere mention of the word “loan” to describe the sum of Rs. 10 crores in the extension agreements is in the context of the “loan” part of the first agreement, which as we have seen, is only of a subsidiary and fall- back nature. In conclusion, I am of the view that the agreement per se has to be held as a purchase agreement as not as a loan agreement. It would also be seen that the entries in the balance sheet reflect the outcome of these agreements. Seizure of these agreements therefore does not automatically make them incriminating documents to be used against the appellant. What has to be seen is that whether any evidence related to the transaction between appellant and Vatika group has been seized, which would prove or even indicate that the transaction was not really a purchase transaction but one of loan, on which interest has been 42 to 314, 788 to 792, 2376 to 2382, 2686 to 2692, 3583, 3591 to 3598, 3705 to 3712/Del/2017 CO No. 64/Del/2020 CO Nos. 4 to 8, 11 to 16/Del/2022 received/receivable. The details of the assessment order have been discussed in the preceding paras of this order. To my mind, none of the other evidence referred to by the A.O., either individually or collectively, can be said to indicate that this specific transaction between SEH Realtors P. Ltd. and Vatika was actually a loan transaction. The fact that certain agreements between Vatika and other parties have been found in a folder called “ICD exceptions” in the computer of Vatika/U.K. Paints cannot be held against the appellant. Even otherwise, placing an agreement in a folder which is named in a particular way, does not detract from the true nature of the transaction as evidenced from the language of the agreement. On the contrary, the A.O. has referred to an inter-office memo dated 20.04.2011 issued by Sh. Manmohan Mehra, V.P. (Corporate Affairs) of Vatika group where it is clearly mentioned that the Vatika group is planning to repurchase the plots sold to the Shahi group (i.e. SEH Realtors P Ltd.). It also mentions therein that the purchase price by Lincoln Developers is Rs. 16,000/- per square yard and would be sold to Vatika Ltd. at the price of Rs. 22,000/- per square yard. There is yet another seized document extracted from the hard disc at Annexure A-75 from Vatika premises which particularly relates to SEH Realtors P. Ltd. Even in this inter-office memo seized during search, after the subject matter of the memo is a different transaction at Sector-86, NH-8, it is abundantly clear that “Old NH- 8” (i.e. the subject matter of the present discussion) is a “re- purchase”. The inter-office memo also refers to issue of allotment letters in respect of these plots relating of “Old NH-8” transaction, which constitutes independent contemporaneous evidence of internal discussions within the parties to the agreement, and which actually support the view that the transaction was one of purchase and not a loan transaction. I am therefore of the view, that the conclusion drawn by the A.O. on the appellant’s transaction with SEH Realtors

4.3.2.27 A connected question is whether as a consequence of the agreements, (other than with SEH Realtors Pvt. Ltd.) interest income should be held to have accrued in the hands of the appellant, year after year, as has been done by the A.O. The payment, nor debited any interest expenditure in each year, there is no case to make additions every year on account of deemed interest paid. I have evaluated the appellant’s submission in the light of the seized material. The incriminating materials relied upon by the A.O. are the loan agreements and the extension agreements themselves, and therefore these documents have to be appreciated in their totality. It is seen from the agreements themselves no interest was actually paid till the allotment of plots. With each extension, the appellant provided revised PDCs in advance, for an increased interest amount (which, however, were not encashed). Even the ledger accounts of the lenders in the books of the appellant show that the interest amount is debited upon issue of the PDCs , but upon extension of the loan and non encashment, the entry has been reversed. The point here is that the act of making entries of interest also is corroborative evidence of the nature of the transaction as was understood between the parties in respect of the so-called NH8 Gurgaon transaction. Clearly, as per the extension agreements, no actual payment of interest took place of the various years. Yet the plots were allocated by the appellant to the lenders, without any other agreement overriding the terms of interest of the extension agreements. It can only be concluded that the terms of the extension agreement have been adhered to before the plots were allocated. In other words, accrued interest as per the agreement would have been paid before the plots were allotted. This interest payment is not reflected on the 44 to 314, 788 to 792, 2376 to 2382, 2686 to 2692, 3583, 3591 to 3598, 3705 to 3712/Del/2017 CO No. 64/Del/2020 CO Nos. 4 to 8, 11 to 16/Del/2022 books of the appellant. The only conclusion that can be drawn is that the appellant has paid the entire accrued interest till the date of allotment of plots to the lender, as agreed, but outside its books in cash. This constitutes unaccounted expenditure to be assessed u/s 69C of the Income Tax Act, 1961. In fact, there is no contemporaneous documentation found during search or adduced later by the appellant before the search team or the A.O. to show that the exhaustive terms of the earlier loan agreements and the repeated extensions and PDCs were explicitly overridden so as to free the appellant from its contractual obligations to pay interest to the lenders. The plots have been transferred in consequence of the agreement between the parties, and in the absence of any contemporaneous evidence to the contrary, it must be presumed that the plots were transferred as per the terms of agreement. However, this interest cannot be assessed in the appellant hands over the entire period AY 2006-07 to AY 2011-12, since the agreements themselves show that the interest was not actually paid in each year paid, but accumulated. The entire accrued interest upto 27.08.2010 shall be computed by the A.O. @ 24% p.a., compounded quarterly (as per terms of agreement) for the period starting from the date of receiving the loan till 27.08.2010 (i.e. the date of allotment of plots), shall be assessed in the assessment year 2011-12 only. To that extent, the taxable amount shifts from the A.Y. 2006-07, 2007- 08, 2009-10 and 2010-11 to the AY 2011-12.

4.3.2.28 There is yet another way of looking at this transaction. Even assuming that the appellant has not actually paid this accrued interest as it claims, it would be seen that the agreements provided that the loan plus accrued interest would be utilized as the sale consideration. On the other hand, when the actual sale/transfer was reflected in the books of the appellant in the A.Y. 2011-12 (the allotment letters were issued in August 2010), the recorded sale was 45 to 314, 788 to 792, 2376 to 2382, 2686 to 2692, 3583, 3591 to 3598, 3705 to 3712/Del/2017 CO No. 64/Del/2020 CO Nos. 4 to 8, 11 to 16/Del/2022 for a much smaller consideration viz., the original loan amount. Thus, for example, in the case of loan amount of Rs.5.50 crores taken from UK Paints P. Ltd., the accrued interest amount alone on 30.06.2009 was Rs.7,80,94,128/- (as per the loan extension agreement dated 31.12.2008), whereas the plots were transferred to UK Paints P. Ltd. for a principal sum of Rs. 5.50 crores only. After the discovery of the loan agreements (whose authenticity the appellant does not deny) during the search, the appellant has not been able to explain with any conviction as to what compulsions resulted in the recorded sale consideration being so much less that the agreed sale consideration (principal plus accrued interest thereon). It is noteworthy that in the course of the earlier assessment proceedings u/s 143(3) for A.Y. 2006-07, the appellant had, while explaining its practice of issuing allotment letters, submitted that “the company used to receive the sale consideration in installments, in part payment. Unless and until the complete sale consideration, along with the other expenses are not received, by the company, the sale deed in respect of the said land is not executed in favour of the intending receiver. Similarly, the possession of the said land is being given to the intending purchaser only after the receipt of full sale consideration and incidental expenses”. Thus it the event that the appellant has not actually paid the interest due, it has to be held that plots have been allotted in lieu of the original loan amount plus accrued interest thereon; in other words, the appellant has under-reported the sale consideration (by an amount equivalent to the accrued interest discussed at para 4.3.2.27 above) that accrued to it as a result of these agreements. This a real income, to be taxed under the specific provisions of Section 5 of the Income tax Act, 1961.

44.

We find that the learned CIT(A) while summing up in para 4.3.3.18 has held that the conclusion drawn by the AO in respect of the appellant’s transactions for the Jaipur deal are erroneous and thus interest income added by the AO for AY 2006-07 to A.Y. 2011-12 in respect of the Jaipur deal was deleted. With regard to Jaipur Deal, the ld. CIT(A) held that the parties executed documents of agreement to sale in respect of certain properties owned by Vatika at Jaipur. As per these agreements, a specific right was granted to the buyers that the 75 to 314, 788 to 792, 2376 to 2382, 2686 to 2692, 3583, 3591 to 3598, 3705 to 3712/Del/2017 CO No. 64/Del/2020 CO Nos. 4 to 8, 11 to 16/Del/2022 plots, which were subject matter of the sale agreement, may be sold back by them to Vatika at a pre-determined sale consideration and additional payments of Rs.1,87,77,000/- was made by these parties for preferential plots allotted. The terms of the existing agreement between the parties prove that the transactions were for purchase of plots and not a financial transaction in the nature of loan. It was held that the agreements for sale have been entered by these parties with Vatika the “seller”, on various dates in the month of May and June, 2005. Sanskar Buildtech P. Ltd. and Nakshatra Buildcon P. Ltd., who are the owners of the property, were the “confirming parties” to these agreements. It was a fact on record that the parties made full and complete payments of the cost of the plots including preferential location charges. We agree with the observation of the ld. CIT(A) that for construing the intention of the parties from the contents of a contractual document between them, the entirety of the contract must be construed and an effort must be made to harmonize the individual parts into the whole. The ld. CIT(A) has rightly inferred through the harmonious reading of the agreements that the intention was to purchase the plots and not to advance loans as terms of the very first agreement and the accounting treatment given in the books of the parties also proves the same. We affirm the finding of the CIT(A) that none of the evidences referred to by the A.O. either individually or collectively, can be said to indicate that the specific transaction between the buyer and the assessee was actually a loan transaction.

76 to 314, 788 to 792, 2376 to 2382, 2686 to 2692, 3583, 3591 to 3598, 3705 to 3712/Del/2017 CO No. 64/Del/2020 CO Nos. 4 to 8, 11 to 16/Del/2022 45. With regard to NH8 Deal, the five customers namely, UK Paints Pvt. Ltd., SS Dhingra (HUF), Span India Pvt. Ltd., M/s SEH Realtors Pvt. Ltd and Smt. Heminder Kumari have lent monies for purchase of space in NH-8 Gurgaon known as “Vatika India Next”, which aggregate to Rs. 25 crores and learned CIT(A) had held that out of the five customers, amount advanced by four customers i.e. other than M/s SEH Realtors Pvt. Ltd., was on account of loan till the date of allotment of the plot and the amount advanced by M/s SEH Realtors Pvt. Ltd. was on account of purchase of space, as such, proportionate interest in respect of sum received as advance of Rs. 10 crores from M/s SEH Realtors Pvt. Ltd. was deleted. Whereas, the proportionate interest in respect of sum of Rs. 15 crores received from 4 customers/lenders has been sustained on the ground that transaction with such 4 customers/lenders was loan simplicitor till the date of allotment of plot. While concurring with the decision of the ld. CIT(A) pertaining to M/s SEH Realtors Pvt. Ltd. on the issue of deletion made on account of alleged interest paid, we are unable to agree with the decision of the ld. CIT(A) holding that transaction with such 4 customers/lenders was loan simplicitor for the following reasons. In respect of NH-8 deal qua aforesaid four customers, the ld. CIT(A) has held that initial agreements were loan agreements, as in such agreements there was no indication of any purchase of land. By entering into the amendatory loan cum purchase agreement, the original agreement is amended to extend the periodicity of loan with an additional amendatory clause giving an option to the lender to opt for purchase of plots. It was held that this clause only provide an option to 77 to 314, 788 to 792, 2376 to 2382, 2686 to 2692, 3583, 3591 to 3598, 3705 to 3712/Del/2017 CO No. 64/Del/2020 CO Nos. 4 to 8, 11 to 16/Del/2022 purchase at future date, and same by itself does not convert the loan agreement to purchase agreement. It was held that subsequent extension agreements only change the date of tenure of loan and the amounts of PDCs, and all other conditions of the amendatory agreement continues in the extension agreement. It was held by the learned CIT(A) that it is only in the AY 2011-12 i.e. upon the exercise of the option to purchase the space, and allotment of plot thereafter, the loan agreement got converted into purchase agreement and till the exercise of the option, nature of agreement continued as a loan transaction till the AY 2010-11. Such findings of ld. CIT(A) are not correct on facts as he has failed to appreciate that loan agreement was subsequently modified as “Amendatory Loan cum Purchase Agreement”, under which the vendees had opted to convert the loan as purchase consideration for the purchase of plot of land which tenure was extended from time to time and plot of aforesaid land was indeed allotted to the lenders in AY 2011-12.

97 to 314, 788 to 792, 2376 to 2382, 2686 to 2692, 3583, 3591 to 3598, 3705 to 3712/Del/2017 CO No. 64/Del/2020 CO Nos. 4 to 8, 11 to 16/Del/2022 upon certain email communications between some persons related to the assessee company and other entities, the Assessing Officer has concluded that in addition to the amount recorded in the agreement towards consideration for sale of land in Sector 84 and 85 of Gurgaon, the assessee received money in cash, as, the information in the email suggests that the total consideration paid towards purchase of land by different entities was to the tune of Rs.150 crores and not the recorded amount of Rs.105 crores. Accordingly, he has inferred that the assessee has received an amount of Rs.45 crores in cash outside the books towards sale consideration of land, which was added back to the income of the assessee. It is observed from the materials on record, except the email communications, the Assessing Officer has no other corroborative evidence to conclusively prove that money in cash had actually changed hands. Except the email communications, no other documents have been seized, either from the assessee or from other entities to indicate that cash payment was actually made. Apart from relying upon the email communication, the Assessing Officer has not made proper inquiry to establish on record that cash payments were actually made to the assessee. As rightly observed by learned Commissioner (Appeals), the emails on which the Assessing Officer placed reliance, essentially, do not patently show any agreement or discernible consent arrived at between the buyer and seller regarding the land to be purchased or the rate per sq. yards. The emails are in the nature of discussions and proposals to a planned purchase transaction. It has been factually found by learned Commissioner (Appeals) that the 98 to 314, 788 to 792, 2376 to 2382, 2686 to 2692, 3583, 3591 to 3598, 3705 to 3712/Del/2017 CO No. 64/Del/2020 CO Nos. 4 to 8, 11 to 16/Del/2022 figures relating to the alleged total deal vary in different emails. Learned Commissioner (Appeals) has also given a factual finding that no seized materials were found conclusively establishing that any amount in cash was actually paid or any such sum was adjusted against the final sale consideration.