Rohan Projects, Pune V. Deputy Commissioner of Income-tax,

ITA 306/PUN/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7161 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 24-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL U PATH AK
• Keywords: Capital asset; Avoidance of tax
• Section: 143(3)

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.P. TOLANI, JM AND SHRI ANIL CHATURVEDI, AM / ITA NO.306/PUN/2015 / ASSESSMENT YEAR : 2012-13 ROHAN PROJECTS, KHANDELWAL JAIN & ASSOCIATES, ALANKAR CINEMA BUILDING, 1 ST FLOOR, ABOVE UNITED BANK, PUNE 411001. PAN NO.AAHFR4942H. . / APPELLANT V/S DY. COMMISSIONER OF INCOME - TAX , CENTRAL CIRCLE 2(2), SWARGATE, PUNE. . / RESPONDENT / APPELLANT BY : SHRI SUNIL U. PATHAK / RESPONDENT BY : SHRI VINOD KUMAR / ORDER PER ANIL CHATURVEDI, AM : THIS APPEAL OF THE ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A) 12, PUNE, DATED 20.01.2015 FOR THE ASSESSMENT YEAR 2012-13. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER :- / DATE OF HEARING : 22.12.2016 / DATE OF PRONOUNCEMENT: 09.02.2017 2 ITA NO.306/PUN/2015 AY.NO.2012-13 2.1 ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF PROMOTERS AND DEVELOPERS AND THE NATURE OF ACTIVITIES INVOLVED THE PURCHASE OF LAND, DEVELOPMENT RIGHTS OF LAND, CONSTRUCTION AND SALE OF FLATS. ASSESSEE FILED ITS RETUR N OF INCOME FOR A.Y. 2012-13 ON 28.09.2012 DECLARING TOTAL INCOME OF RS.86,03,49,430/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S 143(3) AND THE TOTAL INCOME WAS DETERMINED AT RS.106,03,49,430/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A), WHO VIDE ORDER DT.20.01.2015 IN APPEAL NO.(PN/CIT(A)-12/DCIT CE NT CIR 2(2)/308/2013-14) DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APP EAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS: 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADD ITION OF RS.20 CRS. TO THE TOTAL INCOME OF THE APPELLANT. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT A. AS PER THE MOU AND THE SALE DEED OF LAND BY THE APPELLANT TO SYMBIOSIS, A SUM OF RS. 20 CRS. WAS PAYABLE TO THE APPELLANT ONLY AFTER CERTAIN EVENTS LIKE OBTAINING PRELIMINARY PLAN SANCTION AND ALSO FO R OBTAINING THE FINAL PLAN SANCTION WITH FAR OF 1.5 AND THUS, TILL THEN, THE ABOVE SUM OF RS.20 CRS. D ID NOT ACCRUE TO THE APPELLANT AS INCOME. B. TILL THE END OF THIS YEAR, ONLY THE SALE DEED WAS EXECUTED BY THE APPELLANT WITH SYMBIOSIS FOR SALE O F LAND AND BOTH THE PRELIMINARY AND FINAL SANCTION OF BUILDING PLAN WITH 1.5 FAR WAS NOT RECEIVED AND THEREFORE, THE ADDITIONAL CONSIDERATION OF RS.20 CRS. AS PER THE MOU AND THE SALE DEED HAD NOT ACCRUED TO THE APPELLANT AND THUS, IT WAS NOT TAXABLE IN THIS YEAR. C. SIMPLY BECAUSE, THE APPELLANT HAD EXECUTED THE SALE DEED AND GRANTED POSSESSION OF THE LAND TO SYMBIOSIS IN THIS YEAR IT COULD NOT BE CONCLUDED TH AT THIS SUM OF RS.20 CRS. HAD ACCRUED TO THE APPELLANT DURING THIS YEAR AS INCOME WHEN THE APPELLANT HAD NOT OBTAINED THE RIGHT TO RECEIVE THIS SUM FROM SYMBIOSIS TILL THE END OF THIS YEAR. 3 ITA NO.306/PUN/2015 AY.NO.2012-13 3. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT AS THE TRANSFER OF LAND HAS BEEN COMPLETED DURING T HE YEAR, THE ENTIRE CONSIDERATION ACCRUED TO THE APPEL LANT DURING THE YEAR WITHOUT REALIZING THAT PART CONSIDERATION OF RS. 20 CRS. WAS DEPENDENT ON CERTAIN OBLIGATIONS ON THE APPELLANT WHICH WERE NOT DISCHARGED IN THIS YEA R AND THEREFORE, A SUM OF RS.20 CRS. DID NOT CONSTITUTE I NCOME OF THE APPELLANT FOR A.Y. 2012-13. 4. THE APPELLANT REQUESTS FOR ADMISSION OF ADDITION AL EVIDENCES IF ANY REQUIRED, IN SUPPORT OF THE ABOVE GROUNDS OF APPEAL. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND O R DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 3. BEFORE US, AT THE OUTSET, LD.A.R. SUBMITTED THAT THOUGH ASSESSEE HAS RAISED VARIOUS GROUNDS BUT THE SOLE CONTR OVERSY WHICH IS TO BE DECIDED IS THE TAXABILITY OF RS.20 CRORE WHIC H HAS BEEN OFFERED BY THE ASSESSEE IN SUBSEQUENT YEARS. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ON PERUSING THE DETAILS FURNISHED BY THE ASSESSEE, AO NOTICED THAT ASSESSEE HAD SOLD AN IMMOVABLE PROPERTY TO SYMBOISIS ON 02.02.2012 FOR SALE CONSIDERATION OF RS.120 CRORES BUT IN THE PROFIT AND LOSS ACCOUNT, ASSESSEE HAD OFFERED ONLY RS.10 0 CRORES FOR TAXATION. THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE BALANCE AMOUNT OF RS.20 CRORES WAS NOT OFFERED TO TAX. THE ASSESSEE INTER-ALIA SUBMITTED THAT THE SALE CONSIDERATION AGREED TO BE PAID BY PURCHASER (SYMBOISIS) WAS INCLUSIVE OF TRANSFE R OF LAND, CONSTRUCTION COST AND OTHER DEVELOPMENT EXPENSES FOR EDUCATIONAL PURPOSE. IT WAS FURTHER SUBMITTED THAT GENE RALLY THE F.A.R. AVAILABLE IS 1 BUT FOR EDUCATIONAL BUILDING THE SAME IS 1.5 . IT WAS SUBMITTED THAT IT WAS NECESSARY TO TRANSFER THE LAND IN THE NAME OF INSTITUTE TO HAVE THE FAR OF 1.5 AS WAS COMMITTED BY THE 4 ITA NO.306/PUN/2015 AY.NO.2012-13 ASSESSEE. IT WAS FURTHER SUBMITTED THAT AS PER M.O.U THE CONSIDERATION OF RS.120 CRORES WAS TO BE PAID AS UNDER : 1) RS.80 CRORES ON EXECUTION OF SALE DEED, 2) RS.20 CRORES AFTER 7/12 EXTRACT IN THE NAME OF PURCHASER 3) RS.9 CRORES AFTER PRELIMINARY PLANS ARE SANCTIONED. 4) RS.11 CRORES AFTER FINAL PLAN SANCTION WITH FULL UTILIZATION OF F.A.R. I.E., 1.5. IT WAS FURTHER SUBMITTED THAT SINCE THE PRELIMINARY PLAN A ND FINAL PLAN WITH F.A.R. OF 1.5 COULD NOT BE COMPLETED, THE ASSESSEE DID NOT HAD A RIGHT FOR RECEIPT OF RS.20 CRORES AND THEREFORE THE SAME WAS NOT RECOGNIZED AS REVENUE IN TH E YEAR UNDER CONSIDERATION. THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE AO AS HE WAS OF THE VIEW THAT IN THE PRESENT CASE, TRANSFER OF THE CAPITAL ASSET WAS COMPLET ED AS PER THE PROVISIONS OF SEC.2(47) OF THE ACT AND SINCE THE SALE DEED HAS BEEN REGISTERED ON 02.02.2012 AND THEREFORE ABSOLUTE RIG HTS HAVE BEEN TRANSFERRED BY THE ASSESSEE AND THEREFORE T HE PROFIT ARISING OUT OF THE TRANSFER WAS TAXABLE FOR THE YEAR UNDE R CONSIDERATION. HE ACCORDINGLY BROUGHT TO TAX AT RS.20 C RORES. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATT ER BEFORE LD. CIT(A) WHO UPHELD THE ORDER OF AO BY HOLDING AS UNDER : 2.1.7 I HAVE CAREFULLY CONSIDERED THE FACTS AND TH E ARGUMENTS OF THE APPELLANT. THE APPELLANT HAS STATE D THAT IT HAS NOT ONLY PURCHASED THE LAND BUT HAS ALSO PURCHASED BUILDING ALONG WITH THE LAND. THE CONSIDE RATION FOR WHICH, HAS BEEN DECIDED @ RS 4,200 PER SQ FT. T HIS HAS BEEN STIPULATED IN THE MOU. IT WAS STATED THAT, SALE DEED AND MOU SHOULD BE READ TOGETHER AND SALE DEED SHOULD NOT BE READ IN THE ISOLATION AS DONE BY THE LEARNED AO. THEREFORE, THE BALANCE AMOUNT OF RS 20 CR IS NO T ACCRUED TO IT IN ABSENCE OF THE ACHIEVEMENT OF MILE STONES AS PROVIDED IN THE MOU. THE APPELLANT ALSO ARGUED T HAT, LAND SOLD BY IT IS NOT A CAPITAL ASSET AS ERRONEOUS LY CONSIDERED BY THE LEARNED AO. FOR THE APPELLANT, L AND IS STOCK-IN-TRADE. ACCORDINGLY, THE APPELLANT HAS COR RECTLY OFFERED RS.100 CR TO TAX DURING THE YEAR UNDER CONSIDERATION. 5 ITA NO.306/PUN/2015 AY.NO.2012-13 2.1.8 I DO NOT AGREE WITH THE APPELLANT. EVEN IF MOU IS READ WITH SALE DEED, THE FACT DOES NOT CHANGE THAT ACCORDING TO THE SALE DEED, THE APPELLANT HAS RECEI VED CONSIDERATION OF RS 120 CR FOR TRANSFERRING LAND TO SYMBOISIS. I HAVE NO DISPUTE WITH THE APPELLANT'S AGREEMENT WITH SYMBOISIS ON PURCHASE OF BUILDING @ RS 4,200 PER SQ FT. AS LAID DOWN IN THE MOU. HOWEVER, THE APPELLANT HAS NOT DRAFTED ITS REGISTERED SALE DEED FOR ATTRIBUTING CONSIDERATION OF RS 120 CR TO DIFFERENT ASSETS, BUILDING AND RIGHTS, WHICH WOULD BECOME DUE TO THE APPELLANT ON COMPLETION OF DIFFERENT MILESTONES AS PROVIDED IN THE SALE DEED. 2.1.9 PERUSAL OF SALE DEED SHOWS THAT THE APPELLANT HAS NOT BIFURCATED ANY OF THE CONSIDERATIONS TOWARDS BU ILDING OR ANY OTHER ASSETS. ON THE CONTRARY. THE ENTIRE CONSIDERATION IS PAYABLE ONLY FOR TRANSFER OF LAND. THE RELEVANT PARTS OF THE SALE DEED SUPPORT THE ABOVE CONCLUSION. THESE PARTS OF THE AGREEMENT ARE REPROD UCED AS UNDER : ' THE PURCHASER HEREIN WAS IN SEARCH OF THE LAND FOR EXPANSION OF ITS EDUCATIONAL INSTITUTESL ESTABLISH SEPARATE ACADEMIC STREAMS NEAR, LOHAGAON AND RECEIVED INFORMATION AS TO VENDOR NO.2 HEREIN HAS OBTAINED DEVELOPMENT RIGHTS ALONG WITH THE RIGHTS TO SELL TH E SAID ENTIRE LAND AND HAS ALSO OBTAINED SANCTION TO THE L AYOUT FOR THE SAID ENTIRE LAND AND SHOWN INTEREST TO PURC HASE PLOT NO. II ADMEASURING AREA ABOUT 01 HECTARE 95ARE S I.E. 19500SQ. MTRS. WHICH IS INCLUSIVE OF OPEN SPAC E ADMEASURING AREA ABOUT 2000 SQ.MTRS. AS SHOWN IN TH E PLAN ANNEXED HERETO AS ANNEXURE-5, AND AFTER NEGOTI ATION AT LENGTH AND THE PURCHASER HEREIN OFFERED TO THE DEVELOPER TO PURCHAS E PLOT NO. II OF OWNERSHIP OF VENDOR NO. I AND IN POSSESSION OF VENDOR NO.2 FOR CONSIDERATION OF RS.120,00,00,000/- (RUPEES ONE HUNDRED TWENTY CRORES ONLY) AND WHICH AFORESAID PLOT NO. 11 IS MORE PARTICULARLY IN THE SCHEDULE-III WRITTEN HEREUNDER AND HEREIN AFTER IS REFERRED AS THE 'SAID PROPERTY'. 1. PAYMENT OF CONSIDERATION:- AS STATED IN PREAMBLE PARAGRAPH NO.J ' HEREINABOVE WRITTEN. THE AGREED CONSIDERATION OF THE SAID PROPE RTY AGREED BETWEEN THE VENDOR NO.2 ON ONE HAND AND PURCHASER HEREIN ON OTHER HAND, IS RS. 120,00,00,000/- (RUPEES ON E HUNDRED TWENTY CRORES ONLY) AND WHICH IS PAID BY THE PURCHASER TO THE VENDOR NO.2 BY CHEQUE NO. 782601 DATED 6/2/2012 FOR AMOUNT OF RS. 80,00,00,000/- (RUPEES EIGHTY CRORES ONLY), CHEQUE NO. 782603 DATED 18/04/2012 FOR AMOUNT OF RS. 20,00,00,000/- (RUPEES TWENTY CRORES ONLY), CHEQUE NO.782604 DATED 18/07/2012 FOR. AMOUNT OF RS. 9,00,00,000/- (RUPEES NINE CRORES ONLY) AND CHEQUE NO.782606 DATED 13110/2012 FOR AMOUNT OF RS. 11,00,00,000/- (RUPEES ELEVEN CRORES ONLY) ALL CHEQUES DRAWN ON BANK OF MAHARASHTRA, BALBHARTI BRANCH. SUBJECT TO THE REALIZATION OF THE ABOVE MENTIONED C HEQUES ON DUE DATES, RECEIPT OF RS. 120,00,00,000/- (RUPEES ONE HUNDRED TWENTY CRORES ONLY) THE VENDOR NO.2 HEREIN DOTH HEREBY ADMIT, ACCEPT AND ACKNOWLEDGE AND OF AN D 6 ITA NO.306/PUN/2015 AY.NO.2012-13 FROM THE SAME EVERY PART THEREOF FOREVER ACQUIT, RE LEASE AND DISCHARGE TO THE PURCHASER AND ITS NOMINEE, ASSIGNEE. THE CONSIDERATION AS MENTIONED ABOVE INCLUDES THE CONSIDERATION PAYABLE FOR PERPETUAL EASEMENTARY RIG HTS IN NATURE OF RIGHT OF WAY FOR THE BENEFIT OF THE PU RCHASER, ITS STUDENTS, STAFF VISITOR, FACULTY ETC., FROM THE SAID PROPERTY TO A BUILDING OF THE PURCHASER SITUATED AT PROPERTY BEARING SURVEY NO: 228/4, LOHGAON, PUNE AND WHICH PROPERTY IS ADJACENT TO THE SAID PROPERTY. THE CONSIDERATION OF RS. 20,00,00,000/- [RS. TWENTY CRORE] AS MENTIONED ABOVE, SHALL BE PAYABLE ON INCLUSION O F THE NAME OF THE PURCHASER IN THE 7/12 EXTRACT AND UPON THE DELETION OFCONCEMED ENTRIES WITH THE OFFICE OF REGI STRAR OF CO-OPERATIVE SOCIETIES, WHICH SHOWS THE SAID PROPER TY AS PROPERTY OF VENDOR NO. I. 4. CONVEYANCE OF THE SAID PROPERTY:- IN PURSUANCE OF THE CONSIDERATION PAID BY THE PURCH ASER TO THE VENDOR NO.1 AND VENDOR NO.2 AS STATED IN CLA USE NO 1 HEREINABOVE WRITTEN IN RESPECT OF THE SAID PRO PERTY, THE VENDOR NO.1 AND VENDOR NO.2 HEREIN DOTH HEREBY RELEASE, GRANT, CONVEY, SELL, ASSIGN, AND ASSURE UN TO THE PURCHASER HEREIN FOREVER ALL THAT THE SAID PROPERTY AND TO HAVE AND TO HOLD THE SAME UNTO AND TO THE USE OF TH E PURCHASER ABSOLUTELY AND FOREVER. 7. PURCHASERS RIGHT TO HAVE AND HOLD THE SAID PROPERTY :- HEREINAFTER THE PURCHASER HEREIN HAS RIGHT TO HAVE AND TO HOLD ABSOLUTELY AND FOREVER ALL AND SINGULAR THE SA ID PROPERTY, HEREDITAMENTS AND ALL OTHER APPURTENANCES AND THERETO HEREBY GRANTED, RELEASED, CONVEYED AND ASSU RED OR EXPRESSED SO TO BE WITH ITS APPURTENANCES UNTO A ND TO THE USE OF THE PURCHASER, THEIR EXECUTORS, ADMINIST RATORS, ASSIGNS FOREVER. IRRESPECTIVE OF THE DEFERRED PAYME NT THE SALE DEED EXECUTED HEREIN SHALL BE ABSOLUTE. 10. DELIVERY OF POSSESSION:- AT THE TIME OF EXECUTION THESE PRESENTS THE VENDOR NO.1 AND VENDOR NO.2 HAVE HANDED OVER VACANT AND PEACEFU L POSSESSION OF THE SAID PROPERTY TO THE PURCHASER HE REIN AND BY EXECUTING THESE PRESENT CONFIRMS DELIVERY OF POSSESSION OF THE SAID PROPERTY IN FAVOUR OF THE PU RCHASER HEREIN. THE PURCHASER HEREIN DECLARES THAT, IT HAS RECEIVED THE POSSESSION OF THE SAID PROPERTY.' 2.1.10 THE ABOVE CLAUSES IN ADDITION TO THE CLAUSES REPRODUCED BY THE LEARNED AO IN THE ASSESSMENT ORDE R, LEAVE NO DOUBT THAT THE APPELLANT WOULD RECEIVE RS 120 CR ON TRANSFER OF LAND. THE APPELLANT WISHES THAT THE MOU 7 ITA NO.306/PUN/2015 AY.NO.2012-13 ALSO BE REFERRED AS IT PROVIDES PAYMENTS TO BE MADE ON ACHIEVEMENT OF MILESTONES.. HOWEVER, ACCORDING TO M E, MOU, TRANSFER OF THE PROPERTY HAS TAKEN PLACE, PROV IDES PAYMENT OF 120 CR ONLY FOR FOR TRANSFER OF LAND. TH EREFORE, FOR CONSIDERING TAXABILITY OF RS 120 CR, IT IS TO B E SEEN AS TO WHETHER ENTIRE AMOUNT HAS ACCRUED TO THE APPELLA NT OR NOT DURING THE YEAR UNDER CONSIDERATION. 2.1.11 THE APPELLANT HAS STATED THAT IT HAS NOT TRANSFERRED CAPITAL ASSET, HENCE DEFMRTION OF TRANS FER AS PROVIDED IN SECTION 2(47) WHICH IS, MEANT FOR CAPIT AL ASSETS IS IRRELEVANT. I AGREE WITH THE APPELLANT TH AT THE APPELLANT HAS TRANSFERRED STOCK-IN-TRADE. HOWEVER, THE FACT REMAINS THAT THE APPELLANT HAS SOLD ITS STOCK- IN-TRADE DURING THE YEARUNDER CONSIDERATION AND STOCK-IN-TRA DE BEING IMMOVABLE PROPERTY - LAND - WAS REQUIRED TO B E REGISTERED UNDER REGISTRATION ACT, FOR COMPLETION O F TRANSFER UNDER TRANSFER OF PROPERTIES ACT, 1853. AC CORDING TO TRANSFER OF PROPERTY ACT, 1853 SALE IS COMPLETE WITH THE REGISTRATION OF LAND AS HELD BY THE HONORABLE SUPRE ME COURT IN THE CASE OF NARANDAS KARSONDAS V SA KAMTAM (1977) SCC(3) 247. ACCORDINGLY, AMOUNT OF SALE CONSIDERATION HAS ACCRUED TO THE APPELLANT AND THE APPELLANT IS REQUIRED TO OFFER ENTIRE 2.1.12 IN OTHER WORDS, IF THE APPELLANT'S STOCK-IN- TRADE WAS TO BE COMMODITIES, THE SALE CONSIDERATION WOULD NORMALLY ACCRUE TO THE APPELLANT ON RAISING OF INVO ICE. HOWEVER, AS STATED, THIS BEING LAND, RIGHT TO RECEI VE ENTIRE SALE CONSIDERATION IS VESTED IN APPELLANT ON COMPLE TION OF SALE DEED. IN THIS CONNECTION, HOW PARTIES HAVE AGR EED UPON THEMSELVES TO PAY THE SALE CONSIDERATION IS IRRELEVANT. PARTIES TO THE AGREEMENT MAY HAVE DECID ED TO PAY THE CONSIDERATION ACCORDING TO THEIR UNDERSTAND ING AND ACCORDING TO FULFILLMENT OF MUTUAL LIABILITIES. HOWEVER, IT DOES NOT ALTER THE POSITION OF THE LAW ON ACCRUA L OF INCOME, ACCORDING TO WHICH, ENTIRE CONSIDERATION HA S BECOME DUE OR ACCRUED TO THE APPELLANT ON SALE OF L AND. AS STATED, ACCORDING TO THE MERCANTILE SYSTEM OF ACCOUNTING, THE APPELLANT HAS TO OFFER INCOME TO TA X, WHICH HAS ACCRUED TO IT. 2.1.13 IN VIEW OF THE ABOVE DISCUSSION, I AGREE WI TH THE LEARNED AO THAT RS.20 CR HAS ACCRUED TO THE APPELLA NT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. ACCORDINGLY, I CONFIRM THE ADDITION OF RS.20 CR MAD E BY THE LEARNED AO. 4. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 5. BEFORE US, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD. CIT(A) AND FURTHER SUBMITTED THAT FIRST AND FORE MOST THE LAND WHICH HAS BEEN SOLD BY THE ASSESSEE IS NOT A C APITAL 8 ITA NO.306/PUN/2015 AY.NO.2012-13 ASSET OF THE ASSESSEE BUT IT IS STOCK-IN-TRADE. HE FURTH ER SUBMITTED THAT ASSESSEE HAD ENTERED INTO A M.O.U. ON 02.02.2012 WITH SYMBOISIS, WHEREIN IT WAS AGREED THAT PROPE RTY SITUATED AT PLOT NO.11 HAVING AREA OF AROUND 19,500 SQ.MTR S. OUT OF THE SANCTION LAY-OUT OF SURVEY NO.227 SITUATED AT VILLAGE LOHEGAN, TALUKA HAVELI DISTRICT, PUNE WAS AGREED TO BE SO LD TO SYMBOISIS @ 4200 PER SQ.FT SUBJECT TO THE MAXIMUM AREA OF CONSTRUCTION OF THE SAID PLOT WAS AT 1.5 F.A.R. THE AGREE D RATE AND TOTAL CONSIDERATION TO BE PAID BY THE PURCHASER WAS INCLUSIVE OF TRANSFER OF LAND, THE CONSTRUCTION COST AND OTHER DEVE LOPMENT EXPENSES. FURTHER THE UNDERSTANDING BETWEEN THE PART IES WAS TO SELL THE LAND ALONG WITH BUILDING FOR EDUCATIONAL PURPOSE. IT WAS SUBMITTED THAT GENERALLY THE FAR AVAILABLE FOR EDUCATIONAL BUILDING WAS 1.5. FOR USING THE FAR 1.5 IT WAS NECESSARY T O TRANSFER THE LAND IN THE NAME OF INSTITUTE. ASSESSEE HAD ENTERED INTO REGISTERED SALE DEED ON 02.02.2012 IN PART PERFORMANC E OF M.O.U. THE M.O.U WHICH WAS AN INTEGRAL PART DULY PROVIDED WITH THE SALE CONSIDERATION OF RS.120 CRORES AND WAS TO BE PAID AS PER THE TERMS STIPULATED IN M.O.U. HE FURTHER SUBMITT ED THAT THE CONDITIONS PERTAINING TO THE EXECUTION OF SALE DEED AN D THE TRANSFER THE NAME OF PURCHASER BY 7/12 EXTRACT WAS C OMPLETED PRIOR TO 01.12.2012 AND THEREFORE ASSESSEE HAD RECEIVED RS.100 CRORES AND THE SAME WAS OFFERED AS INCOME. SINCE THE AS SESSEE COULD NOT GET THE PRELIMINARY PLAN SANCTIONED WITH FULL UTILIZAT ION OF F.A.R. OF 1.5, THE STIPULATED CONDITIONS WERE NOT FULFILLED AND THEREFORE RS.20 CRORES DID NOT BECOME DUE TO THE ASSE SSEE AND THEREFORE IT WAS NOT RECOGNIZED AS REVENUE. HE FURTHER SUBMITTED THAT THE PRELIMINARY PLANS WERE SANCTIONED DURIN G THE 9 ITA NO.306/PUN/2015 AY.NO.2012-13 FINANCIAL YEAR 2013-14 I.E., THE ASSESSMENT YEAR 2014-15. HE FURTHER POINTED TO THE VARIOUS CLAUSES OF M.O.U WHICH ARE PLACED IN THE PAPER BOOK AND SUBMITTED THAT THE SALE AGREEMEN T HAS TO BE SEEN ALONG WITH M.O.U AND CONSTRUCTION AGREEMENT. HE FURTHER POINTED TO THE COPY OF SALE DEED AND POINTED TO THE SPECIFIC CLAUSE, WHEREIN IT WAS STATED THAT THE SALE DEED W AS EXECUTED AS PART PERFORMANCE IN M.O.U. DT.02.02.2012. HE FURTHER SUBMITTED THAT IT IS NOT THE CASE OF REVENUE THO UGH THE M.O.U HAS BEEN FILED AND ENTERED BY THE ASSESSEE BUT IT W AS AN AFTERTHOUGHT FOR AVOIDANCE OF TAX. HE FURTHER SUBMITTED TH AT SINCE THE RIGHT TO RECEIVE RS.20 CRORES DID NOT ACCRUE T O THE ASSESSEE AS IT WAS STATED TO BE DUE AFTER COMPLIANCE OF CERTAIN CONDITIONS, RS. 20 CRORE WHICH WAS NOT RECEIVED BY THE A SSESSEE CANNOT BE CONSIDERED AS INCOME OF THE ASSESSEE. HE PLA CED RELIANCE ON THE DECISION OF CIT VS. EXCEL INDUSTRIES LTD. (20 13) 358 ITR 295 (SC) FOR THE PROPOSITION THAT THE INCOME ACC RUES TO THE ASSESSEE WHEN IT IS ACCOMPANIED BY A CORRESPONDING LIABILITY OF THE OTHER PARTY TO PAY THE AMOUNT. HE FURTHER SU BMITTED THAT INCOME ARISEN OR ACCRUING DESCRIBES A RIGHT TO RECEIVE THE PROFITS AND THAT THERE MUST BE A DEBT OWED BY SOMEBOD Y. HE SUBMITTED THAT UNLESS AND UNTIL A DEBT DUE BY SOMEBODY IS CREATED IN FAVOUR OF ASSESSEE, IT CANNOT BE SAID THAT AS SESSEE HAS ACQUIRED RIGHTS TO RECEIVE THE INCOME OR INCOME HAS ACCR UED TO HIM AND FOR THIS PROPOSITION HE RELIED ON THE DECISION OF HO NBLE APEX COURT IN THE COURSE OF E.D. SASSOON COMPANY VS. CI T (1954) 26 ITR 27 (SC). HE FURTHER SUBMITTED THAT THOUGH TH E M.O.U WAS NOT REGISTERED BUT THE NON-REGISTRATION OF M.O.U CANNOT BE CONSIDERED TO BE IMPORTANT FOR THE PURPOSE O F TAXATION 10 ITA NO.306/PUN/2015 AY.NO.2012-13 AND FOR THIS PROPOSITION HE RELIED ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF THAKUR RAGHUNATH JI MAHARAJ AND ANOTHER VS. RAMESH CHANDRA IN APPEAL (CIVIL) 6972 OF 1999 ORDER DT.11.05.2001. HE FURTHER SUBMITTED THAT SINCE ASSESSEE HAD NOT COMPLETED ITS PART OF OBLIGATION, SYMBOISIS COULD NOT H AVE BEEN FORCED TO PAY THE AMOUNT AS PER M.O.U AND THEREFOR E THE AMOUNT OF RS.20 CRORES DID NOT ACCRUE TO THE ASSESSEE. HE FURTHER SUBMITTED THAT SINCE THE ASSESSEE HAS OFFERED R S.20 CRORES IN SUBSEQUENT YEARS AND IF THE REVENUES CONTEN TION OF TAXING THE AMOUNT OF RS.20 CRORES IN THE YEAR UNDER CONSIDERATION IS ACCEPTED, IT WOULD AMOUNT TO TAXATION THE SAME INCOME TWICE WHICH IS NOT PERMISSIBLE. HE THEREFORE SUBMITT ED THAT THE ADDITION OF RS.20 CRORES BE DELETED. LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF AO AND LD. CIT(A) AN D SUBMITTED THAT AS PER THE TRANSFER OF PROPERTY ACT, ON REGISTRATION OF SALE, THE AMOUNT ACCRUED TO THE ASSESSEE . HE THEREFORE SUBMITTED THAT THE AO HAS RIGHTLY MADE THE ADDITION. HE THUS SUPPORTED THE ORDER OF AO. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE SHORT ISSUE IN THE PRESENT CAS E IS WHETHER THE AMOUNT OF RS.20 CRORES WHICH ADMITTEDLY HAS NOT BEEN RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION IS TAXABLE IN THE YEAR UNDER CONSIDERATION A S ACCRUED RECEIPT. IT IS AN UNDISPUTED FACT THAT AS PER T HE MOU DT.02.02.2012 ASSESSEE HAD AGREED TO SELL LAND HAVING AREA OF 19,500 SQ.MTRS ALONG WITH CONSTRUCTED EDUCATIONAL BUILDING B Y CONSUMING MAXIMUM PERMISSIBLE FAR. THE CONSIDERATION THAT 11 ITA NO.306/PUN/2015 AY.NO.2012-13 WAS AGREED TO BE PAID TO THE ASSESSEE WAS INCLUSIVE OF THE LAND COST, CONSTRUCTION COST AND ALL OTHER DEVELOPMENT EXPENS ES AND FOR WHICH IT WAS AGREED THAT ASSESSEE WOULD BE PAID RS.1 20 CRORES OF WHICH 80 CRORES WAS TO BE PAID AT THE TIME O F EXECUTION OF SALE DEED, RS.20 CRORES TO BE PAID AFTER REOPENING THE 7/12 EXTRACT IN THE NAME OF PURCHASER, RS.9 CRORES TO BE PA ID AFTER PRELIMINARY PLAN SANCTIONED AND RS.11 CRORES TO BE PAID AFT ER FINAL PLAN SANCTIONED WITH UTILIZATION OF FULL 1.5 F.A.R. IT IS ALSO AN UNDISPUTED FACT THAT ON 02.02.2012 ASSESSEE HAD ENTERED INTO A SALE DEED WITH THE PURCHASER. THUS, AS PER THE M.O.U THE CONSIDERATION OF RS.20 CRORES WAS PAYABLE TO ASSESSEE ON INCLUSION OF THE NAME OF THE PURCHASER IN 7/12 EXTRACT A ND UPON DELETION OF CONCERNED ENTRIES IN ASSESSEES NAME IN THE R ECORDS WITH THE OFFICE OF REGISTRAR OF CO-OPERATIVE SOCIETIES. IT IS ASSESSEES CASE THAT SINCE IT COULD NOT COMPLETE ITS POR TION OF RESPONSIBILITY PRIOR TO 31.03.2012 THE AMOUNT OF RS.20,00,00,000/- NOT RECEIVED BY ASSESSEE DID NOT ACCRUE TO HIM AND THEREFORE IT HAS NOT BEEN OFFERED AS INCOME. 7. BEFORE US IT IS NOT THE CASE OF REVENUE THAT ASSESSEE HAS COMPLETED THE ACTIVITIES WHICH IT WAS REQUIRED TO COMPLETE BEFORE 31.03.2012. REVENUE IS CONSIDERING THE PROVISIONS OF SEC.2(4 7) TO CONTEND THAT SINCE ASSESSEE HAS ENTERED INTO SALE D EED, THE ENTIRE AMOUNT IS DUE TO THE ASSESSEE. WE FIND THAT SEC .2(47) OF THE ACT IS WITH REFERENCE TO CAPITAL ASSET. IT IS THE CA SE OF THE ASSESSEE THAT THE LAND THAT HAS BEEN SOLD BY IT IS NOT A CAPITAL ASSET BUT IT IS A STOCK-IN-TRADE. BEFORE US REVENUE HAS NOT PLACED ANY MATERIAL ON RECORD TO DEMONSTRATE THE PART OF DUTIES AND ACTIVITIES THAT THE ASSESSEE WAS REQUIRED TO PERFOR M AS PER 12 ITA NO.306/PUN/2015 AY.NO.2012-13 THE M.O.U. ENTERED BY IT WITH SYMBIOSIS HAD BEEN COMPLETED BY ASSESSEE AND THEREFORE THE RIGHT TO RECEIVE RS.20,00,00,00 0/- ACCRUED TO THE ASSESSEE. WE FIND THAT HONBLE APEX COU RT IN THE CASE OF CIT VS. EXCEL INDUSTRIES LTD. (SUPRA) HAS HELD THAT INCOME TAX CANNOT BE LEVIED ON HYPOTHETICAL INCOME AND AFT ER RELYING ON THE DECISION OF HONBLE APEX COURT IN THE CAS E OF CIT VS. SHOORJI VALLABDAS & CO., (1962) 46 ITR 144 (SC) AND MO RVI INDUSTRIES LTD. VS. CIT (1971) 82 ITR 835 (SC) HAS HELD THA T INCOME ACCRUES WHEN IT BECOMES DUE AND IT MUST ALSO BE ACCOMPANIED BY CORRESPONDING LIABILITY OF THE OTHER PARTY T O PAY THE AMOUNT AND ONLY THEN IT CAN BE SAID THAT FOR THE P URPOSE OF TAXABILITY THAT THE INCOME IS NOT HYPOTHETICAL AND HAS REA LLY ACCRUED TO THE ASSESSEE. CONSIDERING THE TOTALITY OF THE AFORESAID FACTS AND RELYING ON THE AFORESAID DECISIONS, WE ARE OF TH E VIEW THAT THE ASSESSEE DID NOT GET THE RIGHT TO RECEIVE R S.20 CRORES IN THE YEAR UNDER CONSIDERATION AND THEREFORE IT CANNOT BE CONSIDERED AS INCOME FOR THE YEAR. FURTHER IT IS ASSESS EES SUBMISSION THAT THE AMOUNT OF RS.20 CRORES HAS BEEN OFFE RED TO TAX IN SUBSEQUENT YEARS. THE AFORESAID FACTUAL SUBMISSION OF THE ASSESSEE HAS NOT BEEN CONTROVERTED BY THE REVENUE. IF THAT BE THE CASE, THEN THE TAXATION OF RS.20 CRORE IN THE YEAR U NDER CONSIDERATION AND IN SUBSEQUENT YEARS WOULD AMOUNT TO DOUBLE TAXATION OF THE SAME AMOUNT. BEFORE US REVENUE HAS ALSO NOT PLACED ANY MATERIAL ON RECORD TO DEMONSTRATE THAT THE M.O.U THAT HAS BEEN ENTERED INTO BY THE ASSESSEE IS AN AFTER THOUGHT FOR THE PURPOSE OF AVOIDANCE / DEFERMENT OF TAX. CONSIDERING THE TOTALITY OF THE FACTS AND AFTER RELYING ON THE AFORESAID DE CISIONS, WE ARE OF THE VIEW THAT IN THE PRESENT CASE THE AMOUNT OF RS.20 13 ITA NO.306/PUN/2015 AY.NO.2012-13 CRORES WHICH HAS NOT BEEN RECEIVED BY OR ACCRUED TO THE ASSESSEE CANNOT BE BROUGHT TO TAX IN THE YEAR UNDER CONSIDERATION. WE ARE THEREFORE SET ASIDE THE ADDITION M ADE BY THE AO AND THUS THE GROUNDS OF ASSESSEE ARE ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 9 TH DAY OF FEBRUARY, 2017. SD/- SD/- ( R.P. TOLANI ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER PUNE; ! DATED : 9 TH FEBRUARY, 2017. YAMINI '#$%&'&$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. THE CIT (A)-12, PUNE. THE CIT, CENTRAL, PUNE. #$% &&'(, * '(, / DR, ITAT, B PUNE; %+, - / GUARD FILE. / BY ORDER, // TRUE COPY // . /012 / ASSISTANT REGISTRAR, * '( , / ITAT, PUNE.