To
The Deputy Commissioner of Income Tax,
[Office Address],
[City], [State]

Subject: Reply to Query Raised During Scrutiny Assessment for the A.Y. 20…-…. – Reg.

Dear Sir,

With reference to the scrutiny assessment for the Assessment Year 20…-…., we would like to submit the following clarifications regarding our land purchase transaction during the financial year 20…-….

During the said period, our company acquired land from our parent company, M/s. ………………… Private Limited. A formal sale agreement was executed, and the entire consideration was duly paid. Following this, we took legal and physical possession of the property. However, the registration of the land was postponed due to the following compelling reasons:

1. Stamp Duty Exemption under ………….. Stamp Act:
   As a wholly owned subsidiary of M/s. ………………… Private Limited, we were eligible for stamp duty exemption under the ……………….. Stamp Act ………, which applies to property transfers between holding and subsidiary companies where the transferor holds at least 90% shares in the transferee entity. Since M/s. ………………… Private Limited held over 90% of our company’s shares, we rightfully sought this exemption. However, due to ongoing legal disputes on this matter, the Registrar’s Office declined our exemption claim. In light of this uncertainty, we decided to await the final legal resolution before proceeding with the registration.

2. Financial Constraints:
   At the time, both companies were facing significant financial challenges, which restricted our ability to allocate funds for the registration process. Given the high costs associated with stamp duty and registration, it was financially prudent to defer the process.

3. Non-Mandatory Registration as per State Laws:
   As per the prevailing laws in [State Name], the registration of such agreements was not mandatory at that time. Consequently, there was no statutory requirement compelling immediate registration.

4. Planned Merger of Companies:
   Both companies were in the process of merging, and completing the registration would have resulted in unnecessary stamp duty expenses. Given that the merger was successfully completed, the property is now part of the unified entity, making individual registration redundant.

In view of the above circumstances, we respectfully request you to consider these facts while evaluating our case. We appreciate your time and cooperation in this matter.

Should you require any further information or clarification, please feel free to contact us.

Thank you for your understanding and support.

Yours sincerely,
[Your Name]
[Your Designation]
[Company Name]
[Company Address]
[Contact Details]