Appeal Details
Counselvise Citation
[2024] 100 COUNSELVISE.COM (IT) 0068 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
9 month(s) 13 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
13-08-2024
Appeal Filed By
Department
Order Result
PartlyAllowed
Bench Allotted
F
Next Hearing Date
27-05-2024
Assessment Year
2016-2017
Appeal Filed On
31-10-2023
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAHUL CHAUDHARY (JUDICIAL MEMBER) ITA No. 3856/MUM/2023 Assessment Year: 2016-17 Unique Shanti Developers LLP, 103/104, Rajshree Apartment, Royal Compex, Eksar Road, Borivali (W), Mumbai-400092. Vs. ACIT Circle 32(3), Now ACIT Circle 1 Thane, A Wing, 6 th floor, Asher IT Park, 16Z, Wagle Industrial Estate, Thane (West)-400604. PAN NO. AAEFU 1254 E Appellant Respondent ITA No. 3902/MUM/2023 Assessment Year: 2016-17 DCIT, Thane, Room No. 210, A Wing, 6 th floor, Ashar IT Park, Road No. 16Z, Thane West-400604. Vs. Unique Shanti Developers LLP, Harish Plazza, 100 Road, 1 st floor, Opp Sector-2, Mira Road (E), Thane-400604. PAN NO. AAEFU 1254 E Appellant Respondent Assessee by : Mr. Hitesh Shah Revenue by : Ms. Rajeshwari Menon, Sr. DR Date of Hearing : 28/05/2024 Date of pronouncement : 14/08/2024 PER OM PRAKASH KANT, AM These cross-appeals by the assessee and Revenue are directed against order dated 30.08.2023 Income-tax (Appeals), Pune assessment year 2016 2. The grounds raised by the assessee are On the facts and in the circumstances of the case, the Commissioner of Income Tax (Appeals) Rs. 5,75,00,000/ reduced from the opening The Appellant therefore prays that the addition of Rs. 5,75,00,000/ account difference in opening WIP being unwarranted, illegal, bad be deleted. 2.1 The grounds raised by the Revenue are reproduced as under: On the facts and in the Ld CITIA) has erred in deleting the addition of Rs.20,15,94,392/ holding that the Assessing Officer has accepted the method of accounting in earlie The fact that the assessee maintained having different figures of inventory and advance, audited by two different auditors, which raises significant doubts regarding the credibility of the books of accounts of the company. (i the Guidance Note on Acco issued by ICAI does not provide for including indirect expenses as cost of construction/cost of project, but still the assessee has included admin expenses, selling and distribution expenses, employees cost and othe Skyline and Aurum the case and in law, the Ld CIT(A) has erred in deleting add Rs.2,62,17,851/ Unique Shanti Developers LLP ITA Nos. 3856 & ORDER PER OM PRAKASH KANT, AM appeals by the assessee and Revenue are directed against order dated 30.08.2023, passed by the Ld. Commissioner of tax (Appeals), Pune-11 [in short ‘the Ld. CIT(A)’] for assessment year 2016-17. The grounds raised by the assessee are reproduced as under: On the facts and in the circumstances of the case, the Commissioner of Income Tax (Appeals) - 11 PUNE has erred in confirming the addition of Rs. 5,75,00,000/- being income declared under the IDS Scheme 2016 as reduced from the opening WIP, The Appellant therefore prays that the addition of Rs. 5,75,00,000/ account difference in opening WIP being unwarranted, illegal, bad The grounds raised by the Revenue are reproduced as under: On the facts and in the circumstances of the case and in law, the Ld CITIA) has erred in deleting the addition of Rs.20,15,94,392/ holding that the Assessing Officer has accepted the method of accounting in earlier years without appreciating: (i) The fact that the assessee maintained two set of balance sheets having different figures of inventory and advance, audited by two different auditors, which raises significant doubts regarding the credibility of the books of accounts of the company. (ii) The fact that the Guidance Note on Accounting for Real Estate Transactions issued by ICAI does not provide for including indirect expenses as cost of construction/cost of project, but still the assessee has included admin expenses, selling and distribution expenses, employees cost and other expenses in WIP of the projects namely Skyline and Aurum-1. 2. On the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in deleting add Rs.2,62,17,851/- made. Unique Shanti Developers LLP 2 ITA Nos. 3856 & 3902/MUM/2023 appeals by the assessee and Revenue are directed passed by the Ld. Commissioner of 11 [in short ‘the Ld. CIT(A)’] for reproduced as under: On the facts and in the circumstances of the case, the Commissioner of 11 PUNE has erred in confirming the addition of being income declared under the IDS Scheme 2016 as The Appellant therefore prays that the addition of Rs. 5,75,00,000/- on account difference in opening WIP being unwarranted, illegal, bad-in-law The grounds raised by the Revenue are reproduced as under: of the case and in law, the Ld CITIA) has erred in deleting the addition of Rs.20,15,94,392/- holding that the Assessing Officer has accepted the method of two set of balance sheets having different figures of inventory and advance, audited by two different auditors, which raises significant doubts regarding the ) The fact that unting for Real Estate Transactions-2012 issued by ICAI does not provide for including indirect expenses as cost of construction/cost of project, but still the assessee has included admin expenses, selling and distribution expenses, r expenses in WIP of the projects namely 1. 2. On the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in deleting addition of 3. Briefly stated facts of the case are that consideration, the assessee was eng and developing real estate properties income for relevant assessment year income at Rs.11,58,65,380/ assessee was selected for scrutiny and statutory notices under the Income-tax Act, 1961 (in short ‘the Act’) were issued and complied with. In the assessment order passed u/s 143(3) of the Act dated 31.12.2018, the Assessing Officer made to Rs.28,53,12,234/ was made for under reported profit in relation to two old projects namely ‘Skyline commenced prior to 1.4.2012 Rs.2,62,17,851/- was made for under reported profit in respect of projects commenced from 01.04.2012 namely ‘Unique Castle’, ‘Unique Signature 3.1 On further appeal, the Ld. CIT(A) allowed part relief in respect of first addition, whereas allowed entire relief in respect of second addition. 3.2 Aggrieved, both the assessee and the Revenue are in appeal before the Tribunal by way of raising grounds a 4. Before us, the Ld. counsel for the assessee has filed a Paper Book in two volume containing pages Unique Shanti Developers LLP ITA Nos. 3856 & Briefly stated facts of the case are that during the ye the assessee was engaged in the business of building and developing real estate properties. The assessee filed return of assessment year on 17.10.2016 income at Rs.11,58,65,380/-. The return of income filed by the assessee was selected for scrutiny and statutory notices under the tax Act, 1961 (in short ‘the Act’) were issued and complied with. In the assessment order passed u/s 143(3) of the Act dated 31.12.2018, the Assessing Officer made two additions aggregating Rs.28,53,12,234/-. The first addition of Rs.25,90,93,383/ under reported profit in relation to two old Skyline’ and ‘Unique Aurum-I commenced prior to 1.4.2012. The second was made for under reported profit in respect of projects commenced from 01.04.2012 namely ‘Unique Aurum Unique Signature’ and ‘Unique Homes On further appeal, the Ld. CIT(A) allowed part relief in respect hereas allowed entire relief in respect of second both the assessee and the Revenue are in appeal before the Tribunal by way of raising grounds as reproduced above. Before us, the Ld. counsel for the assessee has filed a Paper k in two volume containing pages 100 and 144. Unique Shanti Developers LLP 3 ITA Nos. 3856 & 3902/MUM/2023 during the year under aged in the business of building . The assessee filed return of on 17.10.2016 declaring total come filed by the assessee was selected for scrutiny and statutory notices under the tax Act, 1961 (in short ‘the Act’) were issued and complied with. In the assessment order passed u/s 143(3) of the Act dated two additions aggregating Rs.25,90,93,383/- under reported profit in relation to two old real estate I’, which were addition of was made for under reported profit in respect of Unique Aurum-II’, Unique Homes’. On further appeal, the Ld. CIT(A) allowed part relief in respect hereas allowed entire relief in respect of second both the assessee and the Revenue are in appeal s reproduced above. Before us, the Ld. counsel for the assessee has filed a Paper 5. The ground No. 1 of the appeal of the assessee and ground No. 1 of the appeal of the Revenue are interconnected and t both these grounds are 5.1 Briefly stated, facts company namely “M/s two real estate projects namely ‘Skyline’ and ‘Unique Aurum (herein after referred development of flats in Mumbai in financial year 2010 w.e.f. 25/11/2014, Liability Partnership’ (LLP) i.e. present assessee before us. I respect of those two old projects namely Aurum-I’, which were comme predecessor company accounting for declaring the profit. It is the contention of the assessee that Institute of chartered Accountants of India(I Guidelines, 2012 issued following ‘percentage completion method’ for computation from real estate project are effective only from 01.04.2012 therefore, the assessee did not follow said method for recognizing profit from those old projects and method’ . But, we find that the method followed by respect of those two projects is neither nor ‘percentage completion method which is combination of both methods. Unique Shanti Developers LLP ITA Nos. 3856 & The ground No. 1 of the appeal of the assessee and ground No. 1 of the appeal of the Revenue are interconnected and t both these grounds are taken up together for adjudication. Briefly stated, facts qua the issue in dispute M/s Unique Shanti Developers p ltd two real estate projects namely ‘Skyline’ and ‘Unique Aurum referred as ‘old projects’) for construction and development of flats in Mumbai in financial year 2010 the company was converted into a Liability Partnership’ (LLP) i.e. present assessee before us. I two old projects namely ‘Skyline which were commenced in financial year 2010 predecessor company, the assessee followed a unique meth for declaring the profit. It is the contention of the nstitute of chartered Accountants of India(I issued in respect of builder and developer following ‘percentage completion method’ for computation from real estate project are effective only from 01.04.2012 therefore, the assessee did not follow said method for recognizing profit from those old projects and followed ‘project completion , we find that the method followed by se two projects is neither ‘project completion method percentage completion method’ and it is a unique method which is combination of both methods. According to the method Unique Shanti Developers LLP 4 ITA Nos. 3856 & 3902/MUM/2023 The ground No. 1 of the appeal of the assessee and ground No. 1 of the appeal of the Revenue are interconnected and therefore, adjudication. qua the issue in dispute are that a Unique Shanti Developers p ltd” commenced two real estate projects namely ‘Skyline’ and ‘Unique Aurum-I’ for construction and development of flats in Mumbai in financial year 2010-11. Later on he company was converted into a ‘Limited Liability Partnership’ (LLP) i.e. present assessee before us. In Skyline’ and ‘Unique nced in financial year 2010-11 by he assessee followed a unique method of for declaring the profit. It is the contention of the nstitute of chartered Accountants of India(ICAI) in respect of builder and developer for following ‘percentage completion method’ for computation of profit from real estate project are effective only from 01.04.2012 , therefore, the assessee did not follow said method for recognizing project completion , we find that the method followed by the assessee in ject completion method’ s a unique method, According to the method followed, a certain percentage of profit was es incurred on the projects including sales and administrative expenses for any particular year closing work in progress the expenses along with estimated profit and c subsequent year. Further, a against sale of flats/shops, subsequent year under the head “current liabilities”. from the projects was declared in the year of c after deducting estimated profit declared in earlier years. to the assessee this method of accounting was accepted in all earlier assessment years from assessment year 2010 assessment year 2015 5.2 For other projects namely ‘Unique Homes’ and ‘new projects’) , which March, 2012, the assessee adopted of accounting as per ICAI Guidelines, 2012 for real estate transactions for revenue recognition. Accordingly, submitted that revenue was recognized for the above projects as per ICAI Guidelines and profit was offered for taxation after asse year 2012-13, which has been duly accepted in the assessment order passed by the Assessing Officer. notes on account (i.e. part of financial statemen Unique Shanti Developers LLP ITA Nos. 3856 & a certain percentage of profit was estimated on expenses incurred on the projects including sales and administrative particular year and offered to tax work in progress (WIP) has been worked out by adding all the expenses along with estimated profit and c Further, advances received by the assessee against sale of flats/shops, have been also carried forward to subsequent year under the head “current liabilities”. from the projects was declared in the year of completion deducting estimated profit declared in earlier years. to the assessee this method of accounting was accepted in all earlier assessment years from assessment year 2010 assessment year 2015-16. For other projects namely ‘Unique Aurum-II’, and ‘Unique Signature’ ( herein after referred as , which were commenced by the assessee on or after he assessee adopted ‘percentage completion metho of accounting as per ICAI Guidelines, 2012 for real estate transactions for revenue recognition. Accordingly, revenue was recognized for the above projects as per ICAI Guidelines and profit was offered for taxation after asse which has been duly accepted in the assessment order passed by the Assessing Officer. The relevant schedule of notes on account (i.e. part of financial statement for year under Unique Shanti Developers LLP 5 ITA Nos. 3856 & 3902/MUM/2023 timated on expenses incurred on the projects including sales and administrative and offered to tax. Thereafter, worked out by adding all the expenses along with estimated profit and carried over to dvances received by the assessee carried forward to subsequent year under the head “current liabilities”. The final profit ompletion of projects deducting estimated profit declared in earlier years. According to the assessee this method of accounting was accepted by the AO in all earlier assessment years from assessment year 2010-11 to , ‘Unique Castle’, ( herein after referred as sessee on or after percentage completion method’ of accounting as per ICAI Guidelines, 2012 for real estate transactions for revenue recognition. Accordingly, the assessee revenue was recognized for the above projects as per ICAI Guidelines and profit was offered for taxation after assessment which has been duly accepted in the assessment The relevant schedule of t for year under consideration), available on paper book page 67 is reprodu under: “3. Revenue Recognition: a) During the year the assessee has completed Projects namely Skyline and Unique Aurum is recognised for all the Flats/Shops sold upto 31st March 2016 by accounting for Sales. Accordingly balance Profit is taxation by adjusting Profits already offered for tax purpose in earlier years on estimated basis Guidelines on Accounting for Real Estate Transactions 2012 for under construction projects namely Unique Aurum II, Unique Castle and Unique Signature and accordingly proportionate Revenue is recognised on percentage completion Me accounting as pe upto 81st March 2016 and and which are secured by Contracts as on reporting date as reasonable level of development of the Project is already achieved during the year for above mentioned Projects.” 5.3 As far as the projects namely are concerned, same were completed during the year under consideration and revenue amounting to Rs.204,06,97,400/ recognized during the year revenue, the assessee recorded opening work in progress on 1.04.2015 for financial year under consideration) closing WIP as on 31.03.2015 Rs.202,50,66,949/-. The assessee explained that difference between these two figures of Rs.5,75,00,000/ declared for financial year 2015 Income Disclosure scheme, 2016 (IDS) and therefore, the opening WIP for financial year 2015 Rs.5,75,00,000/-. The opening WIP Unique Shanti Developers LLP ITA Nos. 3856 & , available on paper book page 67 is reprodu 3. Revenue Recognition: a) During the year the assessee has completed Projects namely Skyline and Unique Aurum is recognised for all the Flats/Shops sold upto 31st March 2016 by accounting for Sales. Accordingly balance Profit is taxation by adjusting Profits already offered for tax purpose in earlier years on estimated basis b) The Assesse is following ICAI Guidelines on Accounting for Real Estate Transactions 2012 for under construction projects namely Unique Aurum II, Unique Castle and Unique Signature and accordingly proportionate Revenue is recognised on percentage completion Me accounting as per ICAI guidelines in respect of Flats/Shops sold upto 81st March 2016 and and which are secured by Contracts as on reporting date as reasonable level of development of the Project is already achieved during the year for above mentioned r as the projects namely ‘Unique Aurum same were completed during the year under consideration and revenue amounting to Rs.204,06,97,400/ during the year from those two projects. essee recorded opening work in progress inancial year 2015-16 ( i.e. for year under consideration) at Rs.208,25,66,949/- closing WIP as on 31.03.2015 for financial year . The assessee explained that difference between these two figures of Rs.5,75,00,000/- was on account of income ared for financial year 2015-16 by the assessee under the isclosure scheme, 2016 (IDS) and therefore, the opening year 2015-16 was increased by an amount of . The opening WIP of Rs.202,50,66,949/ Unique Shanti Developers LLP 6 ITA Nos. 3856 & 3902/MUM/2023 , available on paper book page 67 is reproduced as 3. Revenue Recognition: a) During the year the assessee has completed Projects namely Skyline and Unique Aurum-I. Revenue is recognised for all the Flats/Shops sold upto 31st March 2016 by accounting for Sales. Accordingly balance Profit is offerred for taxation by adjusting Profits already offered for tax purpose in b) The Assesse is following ICAI Guidelines on Accounting for Real Estate Transactions 2012 for under construction projects namely Unique Aurum II, Unique Castle and Unique Signature and accordingly proportionate Revenue is recognised on percentage completion Method of ® guidelines in respect of Flats/Shops sold upto 81st March 2016 and and which are secured by Contracts as on reporting date as reasonable level of development of the Project is already achieved during the year for above mentioned Unique Aurum-I’ and ‘Skyline’ same were completed during the year under consideration and revenue amounting to Rs.204,06,97,400/- was se two projects. Against said essee recorded opening work in progress (WIP) as the assessment as against the financial year 2014-15 at . The assessee explained that difference between was on account of income 16 by the assessee under the isclosure scheme, 2016 (IDS) and therefore, the opening 16 was increased by an amount of of Rs.202,50,66,949/- for financial year 2015 expenses incurred on the projects 2010-11 to financial selling/employee cost expenses financial year 2014 amount of net profit declared financial year 2014- amount of net profit expenses for working WIP as on 1.04.2015 of inclusion of administration/ sell amounting to Rs. 20,15,94,393/ inclusion of undisclosed income disclosure scheme corresponding to assessment year under 5.4 On further appeal, the Ld. CIT(A) allowed the assessee of including 20,15,94,393/- to closing WIP inclusion of Rs.5,75,00,000/ scheme. The assessee is aggrieved with rejection of Rs.5,75,00,000/- added to opening WIP and susequent against the revenue offered in respect of two old projects. 5.5 As far as issue of Rs.5,75,00,000/ its sole ground is concerned Unique Shanti Developers LLP ITA Nos. 3856 & financial year 2015-16 includes construction and de incurred on the projects for the period since financial year financial year 2014-15; administration selling/employee cost expenses since financial year 2010 financial year 2014-15 amounting to Rs.20,15,94,393/ amount of net profit declared from financial year 2010 -15. The Assessing Officer has not disputed net profit and amount of construction and development for working out closing WIP as on 31.03.2015 or opening WIP as on 1.04.2015 but he rejected, firstly, claim of t administration/ selling/ employee cost expenses 20,15,94,393/- to closing WIP, undisclosed income of Rs.5,75,00,000/ income disclosure scheme to opening WIP for FY 2015 assessment year under consideration On further appeal, the Ld. CIT(A) allowed the including admin/selling/employee cost expenses to closing WIP as on 31.03.2015 of Rs.5,75,00,000/- which was declared scheme. The assessee is aggrieved with rejection of added to opening WIP and susequent against the revenue offered in respect of two old projects. issue of Rs.5,75,00,000/- raised by the assessee in is concerned, the assessee contended Unique Shanti Developers LLP 7 ITA Nos. 3856 & 3902/MUM/2023 16 includes construction and development for the period since financial year administration and financial year 2010-11 to 15 amounting to Rs.20,15,94,393/- and financial year 2010-11 to icer has not disputed construction and development 2015 or opening claim of the assessee ing/ employee cost expenses , and secondly, of Rs.5,75,00,000/-offered under for FY 2015-16, consideration. On further appeal, the Ld. CIT(A) allowed the claim of the /selling/employee cost expenses of Rs. as on 31.03.2015 but rejected which was declared under IDS scheme. The assessee is aggrieved with rejection of added to opening WIP and susequent deduction against the revenue offered in respect of two old projects. raised by the assessee in contended that a survey action u/s 133A of the Act was conducted 22.09.2016 , wherein the assessee income of Rs.5,75,00,000/ 16. The assessee submitted that since this income was declared prior to completion of projects, treatment was given in the account accordingly, the opening WIP wa Rs.5,75,00,000/-. 5.6 Before the Ld. CIT(A), the assessee submitted that declaration for extra profit to the extent of Rs.5,75,00,000/ the survey operation on the assurance of the survey team that same can be adjusted in WIP and can be reduced from the profits declared in AY 2016 already paid taxes at the rate of be reduced from the profits of the assessment year under consideration, then assessee would be liable to pay taxes at the rate of income of Rs.5,75,00,000/ remand report called for by t the provisions of IDS expenditure or allowance could be allowed against the income in respect of which declaration was made. Unique Shanti Developers LLP ITA Nos. 3856 & action u/s 133A of the Act was conducted on the assessee LLP on , wherein the assessee made declaration of undisclosed Rs.5,75,00,000/- under IDS for assessment year 2015 16. The assessee submitted that since this income was declared to completion of projects, therefore, a suitable accounting treatment was given in the accounts of financial year 2015 the opening WIP was increased by an amount of Before the Ld. CIT(A), the assessee submitted that declaration for extra profit to the extent of Rs.5,75,00,000/- was made during the survey operation on the assurance of the survey team that same djusted in WIP and can be reduced from the profits declared in AY 2016-17. The assessee further claimed that it had at the rate of 45% and if same is not allowed to be reduced from the profits of the assessment year under then it would amount to double taxation would be liable to pay taxes at the rate of income of Rs.5,75,00,000/-. The Assessing Officer in response to remand report called for by the Ld. CIT(A) , submitted that under IDS-2016, no deduction in respect of any expenditure or allowance could be allowed against the income in respect of which declaration was made. Unique Shanti Developers LLP 8 ITA Nos. 3856 & 3902/MUM/2023 the assessee LLP on declaration of undisclosed IDS for assessment year 2015- 16. The assessee submitted that since this income was declared a suitable accounting of financial year 2015-16 and s increased by an amount of Before the Ld. CIT(A), the assessee submitted that declaration was made during the survey operation on the assurance of the survey team that same djusted in WIP and can be reduced from the profits 17. The assessee further claimed that it had same is not allowed to be reduced from the profits of the assessment year under amount to double taxation and would be liable to pay taxes at the rate of 75% on such The Assessing Officer in response to submitted that under no deduction in respect of any expenditure or allowance could be allowed against the income in 5.7 After considering the submission of the assessee and objection of the Assessing Officer, the Ld. CIT(A) r assessee observing as under: “33. I have considered the facts of the case and the submissions made by the appellant. It is not under dispute that the declaration of Rs. 5,75,00,000/- income earned from the projects developed by it. Since the declaration is made as undisclosed income earned from the projects developed by it, the appellant cannot increase WIP in its books of accounts, declared income and c profit worked out on the basis of books of accounts. I also tend to agree with the comments of the Assessing Officer in the remand report that if the appellant is allowed to reduce the undisclosed income 2016, same will defeat the very purpose of the IDS scheme because the appellant will be able to set accounts by the income disclosed in the IDS the declaration o required to be kept separate from the income computed on the basis of regular books of accounts and therefore the action of the Assessing Officer of reducing the opening WIP by Rs. 5,75,00,000/ declaration made under IDS 5.8 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. It is the contention of the assessee under IDS -2016 in the form of undi those two old projects. The assessee net profit shown from projects therefore, assessee computed higher percentage of the profit on the expenses and the difference amount was offered as income during the survey year. The assessee consistent method of including net profit declared progress (WIP) and therefore, this additional income declared also constituted part of work Unique Shanti Developers LLP ITA Nos. 3856 & After considering the submission of the assessee and objection of the Assessing Officer, the Ld. CIT(A) rejected the contention of the assessee observing as under: I have considered the facts of the case and the submissions made by the appellant. It is not under dispute that the declaration of Rs. was made by the appellant under IDS-2016 as income earned from the projects developed by it. Since the declaration is made as undisclosed income earned from the projects developed by it, the appellant cannot increase WIP in its books of accounts, by adding the said declared income and cannot reduce this undisclosed profit from the actual profit worked out on the basis of books of accounts. I also tend to agree with the comments of the Assessing Officer in the remand report that if the appellant is allowed to reduce the undisclosed income declared under IDS 2016, same will defeat the very purpose of the IDS scheme because the appellant will be able to set-off his income worked on the basis of books of accounts by the income disclosed in the IDS-2016 scheme. In my opinion, the declaration of undisclosed income made under IDS-2016 scheme is required to be kept separate from the income computed on the basis of regular books of accounts and therefore the action of the Assessing Officer of reducing the opening WIP by Rs. 5,75,00,000/-correspondi declaration made under IDS-2016 is upheld.” We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. It is the contention of the assessee that Rs.5,75,00,000/- in the form of undisclosed income in respect of se two old projects. The assessee further contended that rate of from projects in earlier years therefore, assessee computed higher percentage of the profit on the nd the difference amount was offered as income during the survey year. The assessee submitted that it consistent method of including net profit declared and therefore, this additional income declared also work in progress, which was to be reduced Unique Shanti Developers LLP 9 ITA Nos. 3856 & 3902/MUM/2023 After considering the submission of the assessee and objection ejected the contention of the I have considered the facts of the case and the submissions made by the appellant. It is not under dispute that the declaration of Rs. 2016 as undisclosed income earned from the projects developed by it. Since the declaration is made as undisclosed income earned from the projects developed by it, the by adding the said annot reduce this undisclosed profit from the actual profit worked out on the basis of books of accounts. I also tend to agree with the comments of the Assessing Officer in the remand report that if the declared under IDS- 2016, same will defeat the very purpose of the IDS scheme because the off his income worked on the basis of books of 2016 scheme. In my opinion, 2016 scheme is required to be kept separate from the income computed on the basis of regular books of accounts and therefore the action of the Assessing Officer corresponding to We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. It is the - was declared sclosed income in respect of contended that rate of was less and therefore, assessee computed higher percentage of the profit on the nd the difference amount was offered as income during that it was following consistent method of including net profit declared to the work in and therefore, this additional income declared also to be reduced from the total revenue of those projects. The assessee contended that the additional profit declared is also from tho be included in the work in progress and to be revenue of those two projects for working out the profit those two projects. 5.9 The contentions of the assessee have been examined in the light of Income disclosure Act, 2016. The income declaration scheme, 2016 scheme introduced by 2016 Union budget to unearth the system. Lasting from 1 scheme provided an opportunity to tax defaulters to avoid litigation and become compliant by declaring their assets, thereafter of 45%. The scheme guaranteed immunity fr the Income-Tax Act, Transactions (Prohibition) Act, 1988 declarations under it would not be subjected to any inquiry. But the scheme prohibited claim of further expenditure or allowance as deduction against the income declared under the scheme. For ready reference, of scheme, is reproduced as under: Unique Shanti Developers LLP ITA Nos. 3856 & those two projects for computing profit from The assessee contended that the additional profit from those two projects, therefore same be included in the work in progress and to be reduced from the se two projects for working out the profit contentions of the assessee have been examined in the light of Income disclosure scheme announced under the Finance The income declaration scheme, 2016 was an amnesty scheme introduced by the Government of India as a part of the to unearth black money and bring it back into the system. Lasting from 1st June to 30th September, scheme provided an opportunity to income tax defaulters to avoid litigation and become compliant by declaring thereafter paying the tax/penalty on them The scheme guaranteed immunity from prosecution under Tax Act, Wealth-Tax Act, 1957, and the (Prohibition) Act, 1988 and also ensured that declarations under it would not be subjected to any But the scheme prohibited claim of further expenditure or allowance as deduction against the income declared under the reference, a relevant provision i.e. reproduced as under: Unique Shanti Developers LLP 10 ITA Nos. 3856 & 3902/MUM/2023 for computing profit from The assessee contended that the additional profit therefore same is liable to reduced from the se two projects for working out the profit or loss from contentions of the assessee have been examined in the unced under the Finance was an amnesty as a part of the and bring it back into September, 2016 the income tax and wealth defaulters to avoid litigation and become compliant by declaring on them at the rate om prosecution under , and the Benami and also ensured that declarations under it would not be subjected to any scrutiny or But the scheme prohibited claim of further expenditure or allowance as deduction against the income declared under the i.e. section 180(4) 180. (1) Subject to the provisions of this Scheme, any person may make, on or after the date of 10 commencement of this Scheme but before a date to be notified by the Gazette, a declaration in respect of any income chargeable to tax under the Income assessment year beginning on the 1st day of April, 2017 (a) for which he has failed to furni Income-tax Act; (b) which he has failed to disclose in a return of income furnishe him under the Income Scheme; (c) which has escaped assessment by reason of the omiss on the part of such person to furnish a return under the Income or to disclose fully and truly all material facts necessary for the assessment or otherwise. (2) Where the income chargeable to tax is declared in the form of investment in any asset, the fair 20 market value of such asset as on the date of commencement of this Scheme shall be deemed to be the undisclosed income for the purposes of sub (3) The fair market value of any asset shall be determined in such manner, as may be prescribed. (4) No deduction in respect of any expenditure or allowance shall be allowed against the income in respect of which declaration under this section is made. 5.10 . On perusal of prescribed form availing the scheme, which 100 , it is seen that assessee declared 5,75,00,000/- under the scheme ICAI guidelines on WIP and income declared f skyline and Aurum-II project. income, which is an Annexure appended to prescribed form available on paper book page 89 is reproduced as under: Unique Shanti Developers LLP ITA Nos. 3856 & 180. (1) Subject to the provisions of this Scheme, any person may make, on or after the date of 10 commencement of this Scheme but before a date to be notified by the Central Government in the Official Gazette, a declaration in respect of any income chargeable to tax under the Income-tax Act for any assessment year prior to the assessment year beginning on the 1st day of April, 2017- (a) for which he has failed to furnish a return under section 139 of the tax Act; (b) which he has failed to disclose in a return of income furnishe him under the Income-tax Act before the date of commencement of this (c) which has escaped assessment by reason of the omission or failure on the part of such person to furnish a return under the Income or to disclose fully and truly all material facts necessary for the assessment or otherwise. (2) Where the income chargeable to tax is declared in the form of in any asset, the fair 20 market value of such asset as on the date of commencement of this Scheme shall be deemed to be the undisclosed income for the purposes of sub-section (1). (3) The fair market value of any asset shall be determined in such as may be prescribed. (4) No deduction in respect of any expenditure or allowance shall be allowed against the income in respect of which declaration under this section is made.” (emphasis supplied by us) On perusal of prescribed form-I filed by the assessee for , which is available on paper book page , it is seen that assessee declared an amount of Rs. under the scheme for difference in i ICAI guidelines on WIP and income declared for AY 2015 II project. The relevant statement of undisclosed income, which is an Annexure appended to prescribed form available on paper book page 89 is reproduced as under: Unique Shanti Developers LLP 11 ITA Nos. 3856 & 3902/MUM/2023 180. (1) Subject to the provisions of this Scheme, any person may make, on or after the date of 10 commencement of this Scheme but Central Government in the Official Gazette, a declaration in respect of any income chargeable to tax tax Act for any assessment year prior to the sh a return under section 139 of the (b) which he has failed to disclose in a return of income furnished by Act before the date of commencement of this ion or failure on the part of such person to furnish a return under the Income-tax Act or to disclose fully and truly all material facts necessary for the (2) Where the income chargeable to tax is declared in the form of in any asset, the fair 20 market value of such asset as on the date of commencement of this Scheme shall be deemed to be the (3) The fair market value of any asset shall be determined in such (4) No deduction in respect of any expenditure or allowance shall be allowed against the income in respect of which (emphasis supplied by us) filed by the assessee for book page 87 to amount of Rs. for difference in income as per or AY 2015-16 for The relevant statement of undisclosed income, which is an Annexure appended to prescribed form-I, available on paper book page 89 is reproduced as under: 5.11 Further, on paper book page 92, the assessee ha complete detail of calculation of the amount of Rs. 5,75,00,000/ which is reproduced as under: Unique Shanti Developers LLP ITA Nos. 3856 & Further, on paper book page 92, the assessee ha complete detail of calculation of the amount of Rs. 5,75,00,000/ which is reproduced as under: Unique Shanti Developers LLP 12 ITA Nos. 3856 & 3902/MUM/2023 Further, on paper book page 92, the assessee has provided complete detail of calculation of the amount of Rs. 5,75,00,000/-, 5.12 On perusal of above 5,75,00,000/- has been computed as difference in profit in respect of all the projects including of the assessee that amount pertains to wrong and misleading. Further course of survey explained as how under reported in returns filed. The relevant question and answers recorded during survey proceedings 98, are reproduced as under: Q.12. Please justify your offer of income under Income Disclosure Scheme, 2016. Ans. As per my knowledge, a declaration under the aforesaid scheme may be made in respect of any income or income in the form of investment in any assets located in India and acquired from income chargeable to tax under the Income Tax Act for any assessmen year 2017-18. The above declaration has been made as per the market value of the undisclosed assets as on 1st June, 2016. Hence, my case is fit for availing this opportunity for disclosure of the company’s undisclosed income of Rs.5.75 crores. Accordingly, we have filed prescribed Form Unique Shanti Developers LLP ITA Nos. 3856 & On perusal of above, it is clear that amount of Rs. has been computed as difference in profit in respect of all the projects including ‘old’ and ‘new’ projects. Thus of the assessee that amount pertains to only old projects is ing. Further, sh Dilesh C shah, course of survey explained as how profit in respect of projects was in returns filed. The relevant question and answers recorded during survey proceedings available on paper book page uced as under: Q.12. Please justify your offer of income under Income Disclosure Scheme, Ans. As per my knowledge, a declaration under the aforesaid scheme may be made in respect of any income or income in the form of investment in any assets located in India and acquired from income chargeable to tax under the Income Tax Act for any assessment year prior to the assessment 18. The above declaration has been made as per the market value of the undisclosed assets as on 1st June, 2016. Hence, my case is fit for availing this opportunity for disclosure of the company’s undisclosed of Rs.5.75 crores. Accordingly, we have filed prescribed Form Unique Shanti Developers LLP 13 ITA Nos. 3856 & 3902/MUM/2023 it is clear that amount of Rs. has been computed as difference in profit in respect projects. Thus, the claim old projects is false, shah, during the profit in respect of projects was in returns filed. The relevant question and answers available on paper book page Q.12. Please justify your offer of income under Income Disclosure Scheme, Ans. As per my knowledge, a declaration under the aforesaid scheme may be made in respect of any income or income in the form of investment in any assets located in India and acquired from income chargeable to tax t year prior to the assessment 18. The above declaration has been made as per the market value of the undisclosed assets as on 1st June, 2016. Hence, my case is fit for availing this opportunity for disclosure of the company’s undisclosed of Rs.5.75 crores. Accordingly, we have filed prescribed Form-I for income Declaration Scheme Commissioner of Income 5.13 In view of above discussion, t seeking deduction of income declared under IDS acceptable for the reason that for claim of Rs. 5,75,00,000/ Finance Act, 2016, as allowance is permitted provisions of the Income under scheme, Secondly of Rs. 5,75,00,000/- amount. Thus, we concur with the finding of the Ld. CIT(A) that declaration of the undisclosed income made under IDS required to be treated basis of regular books of accounts. of ld CIT(A) on the issue in dispute. appeal of assessee is accordingly dismissed. 6. The ground No. 1 of the appeal of parts. In first part , the Revenue has challenged finding of ld CIT(A) on the issue of maintenance of two sets of balance sheet 31/03/2014 by assessee and inventory and long term loans and advances sheets, raising significant doubts regarding the credibility of the books of accounts of the company. In this regard, the Ld. CIT(A) has Unique Shanti Developers LLP ITA Nos. 3856 & income Declaration Scheme-2016 and the same will be submitted to the Pr. Commissioner of Income-tax-13, Mumbai on or before 26.09.2016. In view of above discussion, the contentions of the assessee seeking deduction of income declared under IDS acceptable for the reason that firstly, the assessee is not entitled for claim of Rs. 5,75,00,000/- as deduction as per section 180(4) of Finance Act, 2016, as no deduction in respect of any permitted against the income under the normal provisions of the Income-tax in respect of income declaration made Secondly, without prejudice, only part amount out - pertains to old projects and not the whole of we concur with the finding of the Ld. CIT(A) that declaration of the undisclosed income made under IDS treated separately from the income calculation ks of accounts. Accordingly, we uphold finding of ld CIT(A) on the issue in dispute. Therefore, the sole ground of assessee is accordingly dismissed. The ground No. 1 of the appeal of Revenue comprises of two parts. In first part , the Revenue has challenged finding of ld CIT(A) maintenance of two sets of balance sheet 31/03/2014 by assessee and having variation in and long term loans and advances in th raising significant doubts regarding the credibility of the books of accounts of the company. In this regard, the Ld. CIT(A) has Unique Shanti Developers LLP 14 ITA Nos. 3856 & 3902/MUM/2023 2016 and the same will be submitted to the Pr. 13, Mumbai on or before 26.09.2016. he contentions of the assessee seeking deduction of income declared under IDS-2016 are not the assessee is not entitled per section 180(4) of any expenditure or under the normal in respect of income declaration made , without prejudice, only part amount out and not the whole of we concur with the finding of the Ld. CIT(A) that declaration of the undisclosed income made under IDS-2016 is ly from the income calculation on the Accordingly, we uphold finding he sole ground of comprises of two parts. In first part , the Revenue has challenged finding of ld CIT(A) maintenance of two sets of balance sheet dated variation in amount of in those balance raising significant doubts regarding the credibility of the books of accounts of the company. In this regard, the Ld. CIT(A) has given a detailed finding CIT(A) is reproduced as under: “16.1 First observation of the Assessing Officer is that M/s Unique Shanti Developers Pvt. Limited (the predecessor of the appellant) has filed two different balance sheets as on 31/03/2014, one before Registrar of Companies and another during the assessment proceedings. The Assessing Officer has scanned both these balance sheets at page 36 and 37 of the assessment order and has pointed out that there are variations in the figures of long term advances' and inventories. 16.2 During the appellate proceedings, th the financials dated 16.06.2014 was uploaded by the predecessor company on MCA portal since it was in the process of getting the entity converted into a limited liability partnership firm. Accordingly, the private limited com month of October 2014, when Tax audit of M/s Unique Shanti Developers Pvt Ltd was in the process, the auditor observed that Rs. 4,48,6,000/- paid to Ferreira family for S. No. 479/2 at Mira Road on behalf of Mrs Madhu H. Doshi was wrongly treated as cost of land purchase/land development rights and also a refundable deposit of Rs.1,50,00,000 paid to land owners of Unique Castle Project at Mira Road Was wrongly debited as cost of land purchased and included i closing inventory in the audited balance sheet 16.06.2014 showing total inventory at Rs 141,40,65,600/ report, both the entries were corrected appropriately in the books of accounts. At the time of assessment proceeding fact to the assessing officer vide letter dated that apart from differences in figures of inventory and long and advances in schedule 12 of the balance sheet. there is no change in any other item line of the balance sheet. Particulars as head of item line Financial as filed with RoC MCA Long Term Loans & advances 36,11,46,896 Inventories 141,40,65,600 16 June, 2014 16.3 The Assessing Officer in the remand report has not commented adversely on the above explanation of the appellant, however, the Assessing Officer has stated that the fact that two set of balance sheet having different figures of inventory and advance, raises significant doubts regarding the credibility of the books of accounts of the company. In the rejoinder to the remand report, the appellant has submitted that this discrepancy was explained during proceedings and a written submission along with copies of documentary evidences and copy of agreements to clear the doubts of Unique Shanti Developers LLP ITA Nos. 3856 & given a detailed finding. For ready reference, said finding of the Ld. CIT(A) is reproduced as under: 1 First observation of the Assessing Officer is that M/s Unique Shanti Developers Pvt. Limited (the predecessor of the appellant) has filed two different balance sheets as on 31/03/2014, one before Registrar of Companies and another during the assessment roceedings. The Assessing Officer has scanned both these balance sheets at page 36 and 37 of the assessment order and has pointed out that there are variations in the figures of long term advances' and 16.2 During the appellate proceedings, the appellant has submitted that the financials dated 16.06.2014 was uploaded by the predecessor company on MCA portal since it was in the process of getting the entity converted into a limited liability partnership firm. Accordingly, the private limited company got converted into LLP on 25.11.2014. In the month of October 2014, when Tax audit of M/s Unique Shanti Developers Pvt Ltd was in the process, the auditor observed that Rs. paid to Ferreira family for S. No. 479/2 at Mira Road on f Mrs Madhu H. Doshi was wrongly treated as cost of land purchase/land development rights and also a refundable deposit of Rs.1,50,00,000 paid to land owners of Unique Castle Project at Mira wrongly debited as cost of land purchased and included i closing inventory in the audited balance sheet 16.06.2014 showing total inventory at Rs 141,40,65,600/-. Hence while finalising Tax Audit report, both the entries were corrected appropriately in the books of accounts. At the time of assessment proceedings, it had clarified this fact to the assessing officer vide letter dated 24.12.2018. It is submitted that apart from differences in figures of inventory and long and advances in schedule 12 of the balance sheet. there is no change in tem line of the balance sheet. Financial as filed with RoC MCA Financials as submitted by the appellant 36,11,46,896 42,09,62,896 141,40,65,600 135,42,49,600 16 June, 2014 31 st October, 2014 16.3 The Assessing Officer in the remand report has not commented adversely on the above explanation of the appellant, however, the Assessing Officer has stated that the fact that two set of balance sheet having different figures of inventory and advance, raises significant doubts regarding the credibility of the books of accounts of the company. In the rejoinder to the remand report, the appellant has submitted that this discrepancy was explained during the assessment proceedings and a written submission along with copies of documentary evidences and copy of agreements to clear the doubts of Unique Shanti Developers LLP 15 ITA Nos. 3856 & 3902/MUM/2023 said finding of the Ld. 1 First observation of the Assessing Officer is that M/s Unique Shanti Developers Pvt. Limited (the predecessor of the appellant) has filed two different balance sheets as on 31/03/2014, one before Registrar of Companies and another during the assessment roceedings. The Assessing Officer has scanned both these balance sheets at page 36 and 37 of the assessment order and has pointed out that there are variations in the figures of long term advances' and e appellant has submitted that the financials dated 16.06.2014 was uploaded by the predecessor company on MCA portal since it was in the process of getting the entity converted into a limited liability partnership firm. Accordingly, the pany got converted into LLP on 25.11.2014. In the month of October 2014, when Tax audit of M/s Unique Shanti Developers Pvt Ltd was in the process, the auditor observed that Rs. paid to Ferreira family for S. No. 479/2 at Mira Road on f Mrs Madhu H. Doshi was wrongly treated as cost of land purchase/land development rights and also a refundable deposit of Rs.1,50,00,000 paid to land owners of Unique Castle Project at Mira wrongly debited as cost of land purchased and included in closing inventory in the audited balance sheet 16.06.2014 showing total . Hence while finalising Tax Audit report, both the entries were corrected appropriately in the books of s, it had clarified this 24.12.2018. It is submitted that apart from differences in figures of inventory and long-term loans and advances in schedule 12 of the balance sheet. there is no change in Financials as submitted by Variance 5,98,16,000 (5,98,16,000) 16.3 The Assessing Officer in the remand report has not commented adversely on the above explanation of the appellant, however, the Assessing Officer has stated that the fact that two set of balance sheets having different figures of inventory and advance, raises significant doubts regarding the credibility of the books of accounts of the company. In the rejoinder to the remand report, the appellant has the assessment proceedings and a written submission along with copies of documentary evidences and copy of agreements to clear the doubts of the Assessing Officer was filed. The appellant has further submitted that these observations correspond to AY 2015 u/s 143(3) of the Act, for the relevant. completed in the 16.4 I have considered the above submissions. Although the Assessing Officer has raised doubts regarding the of the appellant for A.Y. 2015 assessment u/s 143(3) of the Act for A.Y. 2015 completed by the Assessing Officer on the basis of corrected balance sheet and the tax audit for A. Y. 2015 and circumstances for which the error was committed which was subsequently corrected while completing the tax audit and the Assessing Office the appellant either in the assessment proceeding or during the remand proceedings. Moreover, in the assessment order, the Assessing Officer has also not pointed out as to how the variation noted by him adversely impact the taxable income for the year under consideration. Since the corrected balance the appellant for working the cost of closing WIP, the error committed in first balance-sheet will not have the year under consideration. Moreover, the assessment for A. Y. 2015 16 has already been completed both u/s 143(3) on 12/12/2017 as well as u/s 143(3) r.w.s. 153A dated 30/05/2022 and in none of the assessments, the A account, therefore, in my opinion the observations of the Assessing Officer made regarding the revised balance adequately clarified by the appellant and no adverse view on same should be taken for the year under consideration. 6.1 In view of perusal of the submission of the Assessing Officer in the remand report and finding of the Ld. CIT(A), we find that the Assessing Officer has not commented adversely on the explanation of the assessee regarding which was mutually adjusted against two items. The assessee has explained this variance because of particular one entry in respect of amount paid to ‘Ferreira family in two sets of the accounts. pertain to year under consideration and it was carried out in immediately preceding year, wherein the Assessing Officer accepted Unique Shanti Developers LLP ITA Nos. 3856 & the Assessing Officer was filed. The appellant has further submitted that these observations correspond to AY 2015-16 and the assessment of the Act, for the relevant. A.Y. 2015-16 is already completed in the case of LLP, without making any addition. 16.4 I have considered the above submissions. Although the Assessing Officer has raised doubts regarding the correctness of books of accounts of the appellant for A.Y. 2015-16, however, it is seen that the assessment u/s 143(3) of the Act for A.Y. 2015-16 has already been completed by the Assessing Officer on the basis of corrected balance sheet and the tax audit report without rejecting the books of accounts for A. Y. 2015-16. Moreover, the assessee has explained the reasons and circumstances for which the error was committed which was subsequently corrected while completing the tax audit and the Assessing Officer has not found any defect in the said explanation of the appellant either in the assessment proceeding or during the remand proceedings. Moreover, in the assessment order, the Assessing Officer has also not pointed out as to how the variation noted by him adversely impact the taxable income for the year under consideration. Since the corrected balance-sheet for earlier year is finally adopted by the appellant for working the cost of closing WIP, the error committed in sheet will not have any impact on the taxable income for the year under consideration. Moreover, the assessment for A. Y. 2015 16 has already been completed both u/s 143(3) on 12/12/2017 as well as u/s 143(3) r.w.s. 153A dated 30/05/2022 and in none of the assessments, the Assessing Officer has made any addition on this account, therefore, in my opinion the observations of the Assessing Officer made regarding the revised balance-sheet for AY 2015 adequately clarified by the appellant and no adverse view on same be taken for the year under consideration.” In view of perusal of the submission of the Assessing Officer in the remand report and finding of the Ld. CIT(A), we find that the Assessing Officer has not commented adversely on the explanation regarding variation amounting to Rs.5,98,16, which was mutually adjusted against two items. The assessee has explained this variance because of particular one entry in respect of Ferreira family’ which was the reason of difference in two sets of the accounts. Moreover, this adju pertain to year under consideration and it was carried out in immediately preceding year, wherein the Assessing Officer accepted Unique Shanti Developers LLP 16 ITA Nos. 3856 & 3902/MUM/2023 the Assessing Officer was filed. The appellant has further submitted 16 and the assessment 16 is already case of LLP, without making any addition. 16.4 I have considered the above submissions. Although the Assessing correctness of books of accounts 16, however, it is seen that the 16 has already been completed by the Assessing Officer on the basis of corrected balance report without rejecting the books of accounts 16. Moreover, the assessee has explained the reasons and circumstances for which the error was committed which was subsequently corrected while completing the tax audit and the r has not found any defect in the said explanation of the appellant either in the assessment proceeding or during the remand proceedings. Moreover, in the assessment order, the Assessing Officer has also not pointed out as to how the variation noted by him will adversely impact the taxable income for the year under consideration. sheet for earlier year is finally adopted by the appellant for working the cost of closing WIP, the error committed in any impact on the taxable income for the year under consideration. Moreover, the assessment for A. Y. 2015- 16 has already been completed both u/s 143(3) on 12/12/2017 as well as u/s 143(3) r.w.s. 153A dated 30/05/2022 and in none of the ssessing Officer has made any addition on this account, therefore, in my opinion the observations of the Assessing 2015-16 are adequately clarified by the appellant and no adverse view on same In view of perusal of the submission of the Assessing Officer in the remand report and finding of the Ld. CIT(A), we find that the Assessing Officer has not commented adversely on the explanation amounting to Rs.5,98,16,000/- which was mutually adjusted against two items. The assessee has explained this variance because of particular one entry in respect of which was the reason of difference this adjustment doesn’t pertain to year under consideration and it was carried out in immediately preceding year, wherein the Assessing Officer accepted the claim of the assessee. Officer himself has not commented adversely in th we do not find any reason for agitating this issue by the Assessing Officer in the appeal filed before us action is brought before us. the appeal of the Revenue. 6.2 Further, in second part of the ground No. 1 of the appeal, the Revenue has contested the relief granted by the Ld. CIT(A) i respect of deduction of admin employee cost and other expenses in WIP of the projects namely ‘Skyline’ and ‘Aurum profit/loss from those two projects. 6.3 The Ld. CIT(A) has allowed relief of the amount of Rs.20,15,94,392/- observing as under: “28.5 There is no dispute that the expenses amounting to Rs. 20,15,9 mot incurred by the appellant in earlier years are genuine expenses. It is also not under dispute that no deduction for these expenses have been claimed by the appellant or its predecessor company in any of the earlier assessment years. The appellant h is of the view that these expenses cannot be included in WIP, in that case he should have reworked the P/L Account of earlier assessment years and should have allowed corresponding losses of those years to be carry forward to present assessment year and to set year against such losses. I have considered this argument of the appellant and I am of the opinion that the genuine expenses incurred for the project and recorded in the books of accoun the sale consideration especially when capitalization of such expenses in WIP has been allowed by the assessing officer in earlier years. The action of Assessing Officer of disturbing the opening WIP by excluding indi expenses amounts to unsettling of already completed assessments u/s 143(3) of the Act without any meaningful gain because the whole exercise is revenue neutral. Unique Shanti Developers LLP ITA Nos. 3856 & the claim of the assessee. In our opinion, once, the Assessing Officer himself has not commented adversely in the remand report we do not find any reason for agitating this issue by the Assessing Officer in the appeal filed before us unless any malafide in his action is brought before us. Accordingly, we dismiss this ground of the appeal of the Revenue. Further, in second part of the ground No. 1 of the appeal, the Revenue has contested the relief granted by the Ld. CIT(A) i respect of deduction of admin expenses, selling and distribution cost and other expenses in WIP of the projects namely ‘Aurum-I’ out of revenue while computing the profit/loss from those two projects. The Ld. CIT(A) has allowed relief of the amount of observing as under: 28.5 There is no dispute that the expenses amounting to Rs. 20,15,9 mot incurred by the appellant in earlier years are genuine expenses. It is also not under dispute that no deduction for these expenses have been claimed by the appellant or its predecessor company in any of the earlier assessment years. The appellant has argued that if the Assessing Officer is of the view that these expenses cannot be included in WIP, in that case he should have reworked the P/L Account of earlier assessment years and should have allowed corresponding losses of those years to be carry orward to present assessment year and to set-off the income of present year against such losses. I have considered this argument of the appellant and I am of the opinion that the genuine expenses incurred for the project and recorded in the books of accounts, are eligible for deduction against the sale consideration especially when capitalization of such expenses in WIP has been allowed by the assessing officer in earlier years. The action of Assessing Officer of disturbing the opening WIP by excluding indi expenses amounts to unsettling of already completed assessments u/s 143(3) of the Act without any meaningful gain because the whole exercise is revenue neutral. Unique Shanti Developers LLP 17 ITA Nos. 3856 & 3902/MUM/2023 In our opinion, once, the Assessing e remand report, we do not find any reason for agitating this issue by the Assessing unless any malafide in his Accordingly, we dismiss this ground of Further, in second part of the ground No. 1 of the appeal, the Revenue has contested the relief granted by the Ld. CIT(A) in expenses, selling and distribution, cost and other expenses in WIP of the projects namely out of revenue while computing the The Ld. CIT(A) has allowed relief of the amount of 28.5 There is no dispute that the expenses amounting to Rs. 20,15,9450 mot incurred by the appellant in earlier years are genuine expenses. It is also not under dispute that no deduction for these expenses have been claimed by the appellant or its predecessor company in any of the earlier as argued that if the Assessing Officer is of the view that these expenses cannot be included in WIP, in that case he should have reworked the P/L Account of earlier assessment years and should have allowed corresponding losses of those years to be carry off the income of present year against such losses. I have considered this argument of the appellant and I am of the opinion that the genuine expenses incurred for the project ts, are eligible for deduction against the sale consideration especially when capitalization of such expenses in WIP has been allowed by the assessing officer in earlier years. The action of Assessing Officer of disturbing the opening WIP by excluding indirect expenses amounts to unsettling of already completed assessments u/s 143(3) of the Act without any meaningful gain because the whole exercise 28.6 The appellant has not claimed the indirect expenses under question twice but included expenses in the year under consideration is unwarranted because it is not the case of the Assessing Officer that the appellant has claimed these expenses twice. In such a situation, not allowing deduct expenses incurred by the appellant in any year would be against the principle of natural justice. If the Assessing Officer believed that these indirect expenses cannot be included in WIP, in that case he should have reduced the WIP by c years and should have allowed deduction for these genuine expenses in respective assessment years. 29. In view of the above discussion, I am of considered opinion that action of the assessing officer in ac assessment years and allowing it to capitalize the indirect expenses in WIP in earlier years and then suddenly excluding the indirect expenses from the opening WIP in the year when the sales considerations are bo the P/L Account, is against the principle of natural justice especially when genuineness of these expenses is not under doubt. The action of the assessing officer has resulted in not allowing deduction for genuine expenses in any of the assessment Therefore, considering the totality of facts of the case, I am of the opinion that the aggregate amount of Rs. 20,15,94,392/ employees' cost, admin expenses, selling & distribution expenses and other expenses as on 01/04/2015 and therefore this addition is directed to be deleted. 6.4 We have heard rival submission of the parties and perused the relevant material on record. The Assessing Officer administrative expenses, employee cost etc. are allowable in the respective years of incurring assessment year under consideration. According to the Assessing Officer in percentage completion method, the profit propor the stage of construction has to be recognized in respect of project but the employee cost allowed in year in which the assessee that those expenses have not been c assessment years and same have been carried forward as work in progress to be reduced from the revenue or the sales at the time of Unique Shanti Developers LLP ITA Nos. 3856 & The appellant has not claimed the indirect expenses under question twice but included the same in WIP every year. The disallowance of these expenses in the year under consideration is unwarranted because it is not the case of the Assessing Officer that the appellant has claimed these expenses twice. In such a situation, not allowing deduction for the genuine expenses incurred by the appellant in any year would be against the principle of natural justice. If the Assessing Officer believed that these indirect expenses cannot be included in WIP, in that case he should have reduced the WIP by corresponding amounts in each of earlier assessment years and should have allowed deduction for these genuine expenses in respective assessment years. 29. In view of the above discussion, I am of considered opinion that action of the assessing officer in accepting the method of accounting in earlier assessment years and allowing it to capitalize the indirect expenses in WIP in earlier years and then suddenly excluding the indirect expenses from the opening WIP in the year when the sales considerations are bo the P/L Account, is against the principle of natural justice especially when genuineness of these expenses is not under doubt. The action of the assessing officer has resulted in not allowing deduction for genuine expenses in any of the assessment years which cannot be upheld. Therefore, considering the totality of facts of the case, I am of the opinion that the aggregate amount of Rs. 20,15,94,392/- incurred towards employees' cost, admin expenses, selling & distribution expenses and other expenses in earlier years cannot be excluded from the opening WIP as on 01/04/2015 and therefore this addition is directed to be deleted. We have heard rival submission of the parties and perused the relevant material on record. The Assessing Officer administrative expenses, employee cost etc. are allowable in the of incurring and cannot be allowed in the assessment year under consideration. According to the Assessing Officer in percentage completion method, the profit propor the stage of construction has to be recognized in respect of project but the employee cost, administrative expenses etc. are to be in which same are incurred. But the contention of the assessee that those expenses have not been claimed in relevant assessment years and same have been carried forward as work in progress to be reduced from the revenue or the sales at the time of Unique Shanti Developers LLP 18 ITA Nos. 3856 & 3902/MUM/2023 The appellant has not claimed the indirect expenses under question The disallowance of these expenses in the year under consideration is unwarranted because it is not the case of the Assessing Officer that the appellant has claimed these ion for the genuine expenses incurred by the appellant in any year would be against the principle of natural justice. If the Assessing Officer believed that these indirect expenses cannot be included in WIP, in that case he should have orresponding amounts in each of earlier assessment years and should have allowed deduction for these genuine expenses in 29. In view of the above discussion, I am of considered opinion that action cepting the method of accounting in earlier assessment years and allowing it to capitalize the indirect expenses in WIP in earlier years and then suddenly excluding the indirect expenses from the opening WIP in the year when the sales considerations are booked in the P/L Account, is against the principle of natural justice especially when genuineness of these expenses is not under doubt. The action of the assessing officer has resulted in not allowing deduction for genuine years which cannot be upheld. Therefore, considering the totality of facts of the case, I am of the opinion incurred towards employees' cost, admin expenses, selling & distribution expenses and in earlier years cannot be excluded from the opening WIP as on 01/04/2015 and therefore this addition is directed to be deleted.” We have heard rival submission of the parties and perused the relevant material on record. The Assessing Officer held that administrative expenses, employee cost etc. are allowable in the and cannot be allowed in the assessment year under consideration. According to the Assessing Officer in percentage completion method, the profit proportionate to the stage of construction has to be recognized in respect of project administrative expenses etc. are to be same are incurred. But the contention of laimed in relevant assessment years and same have been carried forward as work in progress to be reduced from the revenue or the sales at the time of completion of the entire projects. method of the assessee completion or a unique method, which is combination of both, but sane has been accepted by the Revenue in earlier years and said indirect expenses have been allowed to be carried forward as part of WIP. We find that the Ld. CIT(A) not claimed those expens so, then in principle, those carried forward indirect expenses are to be allowed in the year of completion of project, b of indirect expenses filed by the assessee, administrative expenses expenses etc. carried forward to WIP of old projects pertain to projects initiated prior to March, 2012 March, 2012. The administrative expenses, employee cost etc. in relation to two projects namely Skyline and Unique Aurum only be allowed to be carried forward as work in progress following the unique method of accounting of the assessee subject to s has not been claimed in earlier years. In the circumstances, we feel it appropriate to restore this issue back to the file of the Assessing Officer for verification of selling, employee cost indirect expenses pertaining to the two projects nam and ‘Unique Aurum-1 the closing WIP as on 31.03.2015. book page 99 that the profit declared in ea Unique Shanti Developers LLP ITA Nos. 3856 & completion of the entire projects. In our opinion, w method of the assessee, whether project completion or percentage completion or a unique method, which is combination of both, but has been accepted by the Revenue in earlier years and said indirect expenses have been allowed to be carried forward as part of We find that the Ld. CIT(A) has mentioned that assessee has claimed those expenses in relevant assessment years. If that is so, then in principle, those carried forward indirect expenses are to be allowed in the year of completion of project, but, penses filed by the assessee, it is not clear whether the administrative expenses, selling expenses, employee cost carried forward to WIP of old projects pertain to projects initiated prior to March, 2012 or project commenced post arch, 2012. The administrative expenses, employee cost etc. in relation to two projects namely Skyline and Unique Aurum only be allowed to be carried forward as work in progress following the unique method of accounting of the assessee subject to s has not been claimed in earlier years. In the circumstances, we feel it appropriate to restore this issue back to the file of the Assessing Officer for verification of total cost on account of administrative, selling, employee cost and other expenses and identify those pertaining to the two projects nam 1’, incurred upto 31.03.2015, for to be added to the closing WIP as on 31.03.2015. Further, we note from paper book page 99 that the profit declared in earlier years also include Unique Shanti Developers LLP 19 ITA Nos. 3856 & 3902/MUM/2023 In our opinion, whatever be the completion or percentage completion or a unique method, which is combination of both, but has been accepted by the Revenue in earlier years and said indirect expenses have been allowed to be carried forward as part of has mentioned that assessee has es in relevant assessment years. If that is so, then in principle, those carried forward indirect expenses are to from the details it is not clear whether the , employee cost and other carried forward to WIP of old projects pertain to project commenced post arch, 2012. The administrative expenses, employee cost etc. in relation to two projects namely Skyline and Unique Aurum-1 could only be allowed to be carried forward as work in progress following the unique method of accounting of the assessee subject to same has not been claimed in earlier years. In the circumstances, we feel it appropriate to restore this issue back to the file of the Assessing on account of administrative, nd identify those pertaining to the two projects namely ‘Skyline’ for to be added to we note from paper rlier years also include profit from sale of development can’t be added to WIP as profit of the old projects and consequently can’t be reduced from the revenue project, as same is not part of profit from project. of the Revenue is accordingly allowed partly for statistical purposes. 7. The ground No. 2 of the appeal of the Revenue relates to addition of Rs.2,62,1 the revenue pertaining to three deleted by the Ld. CIT(A). 7.1 The issue in dispute Assessing Officer for the purpose of recognizing revenue projects namely ‘Unique Signature Homes’, under the recognition of revenue from sale of flats at the stage of allotment of flats by the assessee, whereas those flats at the stage when into with the buyers. During appellate proceedings before the Ld. CIT(A) assessee made detailed submissions and relied upon various decisions of the Co-ordinate Bench. ‘percentage completion method from the sale of the real estate, at t and reward of the ownership can be considered to the buyers or otherwise with the buyers, which has effect of transferring legal title of the Unique Shanti Developers LLP ITA Nos. 3856 & profit from sale of development right certificates and interest, which added to WIP as profit of the old projects and consequently from the revenue in the year of completion of the project, as same is not part of profit from project. The ground No. 1 of the Revenue is accordingly allowed partly for statistical purposes. The ground No. 2 of the appeal of the Revenue relates to ddition of Rs.2,62,17,851/- (sic) in relation to non the revenue pertaining to three new projects, which has been deleted by the Ld. CIT(A). The issue in dispute involved in ground No. 2 Assessing Officer for the purpose of recognizing revenue Unique Signature’, ‘Unique Aurum under the ‘percentage completion method recognition of revenue from sale of flats at the stage of allotment of , whereas the assessee recognised revenue at the stage when registered sale agreement was entered into with the buyers. During appellate proceedings before the Ld. CIT(A) assessee made detailed submissions and relied upon various ordinate Bench. It is settled law percentage completion method’ , the revenue should be recognised om the sale of the real estate, at the point when and reward of the ownership can be considered to be otherwise when the seller enter into an agreement which has effect of transferring legal title of the Unique Shanti Developers LLP 20 ITA Nos. 3856 & 3902/MUM/2023 certificates and interest, which added to WIP as profit of the old projects and consequently in the year of completion of the The ground No. 1 of the Revenue is accordingly allowed partly for statistical purposes. The ground No. 2 of the appeal of the Revenue relates to ) in relation to non-recognition of which has been No. 2 is that the Assessing Officer for the purpose of recognizing revenue from three Unique Aurum-II’ and ‘Unique percentage completion method’, considered recognition of revenue from sale of flats at the stage of allotment of ognised revenue from agreement was entered into with the buyers. During appellate proceedings before the Ld. CIT(A) assessee made detailed submissions and relied upon various law that under the , the revenue should be recognised significant risk be transferred to into an agreement which has effect of transferring legal title of the ownership to the buyer provided that the agreement is legally enforceable although possession of the real estate unit have been given. In the decisions cited by the assessee before the Ld. CIT(A), it is held that significant risk and reward only in the event of registration of real estate property with the stamp duty authority and not at the stage of issue of allotme letter by the developer against certain payments. Following the decisions of the Co-ordinate Bench, the Ld. CIT(A) verified all the sales agreement and that in some cases registered agreement the assessee did not consider the same f recognizing revenue. The Ld. CIT(A) accordingly sustained the addition to the extent of Rs.6, Assessing Officer of Rs.2,62,17,851/ Ld. CIT(A) is reproduced as under: Findings 43. I have considered the facts of the case and the submissions made by the appellant from time to time. The issue under dispute is regarding the incorrect recognition of revenue from the projects na Unique Signature and Unique Homes. Since all these three projects are separate and are at different stages of development, therefore, it will be appropriate if the issues involved in each of these projects are dealt separately. Unique Aurum 44. There is no dispute that 25.24% of the project was completed during the year and accordingly, the appellant recognized the revenue to the extent of 25% of the total sale consideration for the flats for which, sale agreements were registered. appellant and had recognized the revenue for all flats booked by the customers. Thus, the dispute is regarding the point at which the revenues is to be recognized for a particular flat. As per the appellant, the Unique Shanti Developers LLP ITA Nos. 3856 & ownership to the buyer provided that the agreement is legally enforceable although possession of the real estate unit iven. In the decisions cited by the assessee before the it is held that significant risk and reward only in the event of registration of real estate property with the stamp duty authority and not at the stage of issue of allotme letter by the developer against certain payments. Following the ordinate Bench, the Ld. CIT(A) verified all the allotment letters and correspondingly observed that in some cases registered agreement were entered i the assessee did not consider the same for the purpose for recognizing revenue. The Ld. CIT(A) accordingly sustained the addition to the extent of Rs.6,23,553/- out of addition made by the Assessing Officer of Rs.2,62,17,851/-. The relevant fi Ld. CIT(A) is reproduced as under: 43. I have considered the facts of the case and the submissions made by the appellant from time to time. The issue under dispute is regarding the incorrect recognition of revenue from the projects namely Unique Aurum Unique Signature and Unique Homes. Since all these three projects are separate and are at different stages of development, therefore, it will be appropriate if the issues involved in each of these projects are dealt Aurum-II 44. There is no dispute that 25.24% of the project was completed during the year and accordingly, the appellant recognized the revenue to the extent of 25% of the total sale consideration for the flats for which, sale agreements were registered. The Assessing Officer did not agree with the appellant and had recognized the revenue for all flats booked by the customers. Thus, the dispute is regarding the point at which the revenues is to be recognized for a particular flat. As per the appellant, the Unique Shanti Developers LLP 21 ITA Nos. 3856 & 3902/MUM/2023 ownership to the buyer provided that the agreement is legally enforceable although possession of the real estate unit may not iven. In the decisions cited by the assessee before the it is held that significant risk and reward are transferred only in the event of registration of real estate property with the stamp duty authority and not at the stage of issue of allotment letter by the developer against certain payments. Following the ordinate Bench, the Ld. CIT(A) verified all the allotment letters and correspondingly observed entered into, however or the purpose for recognizing revenue. The Ld. CIT(A) accordingly sustained the out of addition made by the . The relevant finding of the 43. I have considered the facts of the case and the submissions made by the appellant from time to time. The issue under dispute is regarding the mely Unique Aurum-lI, Unique Signature and Unique Homes. Since all these three projects are separate and are at different stages of development, therefore, it will be appropriate if the issues involved in each of these projects are dealt 44. There is no dispute that 25.24% of the project was completed during the year and accordingly, the appellant recognized the revenue to the extent of 25% of the total sale consideration for the flats for which, sale The Assessing Officer did not agree with the appellant and had recognized the revenue for all flats booked by the customers. Thus, the dispute is regarding the point at which the revenues is to be recognized for a particular flat. As per the appellant, the date of registration of sale agreement should be considered, however, the Assessing Officer is of the opinion that the execution or registration of sale agreement does not matter while recognizing the revenue as per AS Accounting Standards laid down view that whenever, all critical approvals for the project are in place, 25% of project is completed and at least 25% of saleable project area is booked, in such situations, the revenue on those flats in which 10% o realized, should be recognized. The Assessing Officer also considered the booking application/allotment letter as valid contract and has held that these are legally enforceable documents. Thus, although the appellant has recognized revenue 20,06,01,000/- agreement were registered before 31/03/2016, the Assessing Officer recognized the revenue for all flats booked by the customers. In this manner, the Assessing Officer has recognized the revenue to the extent of Rs. 8,87,06,935/ flats). 45. On the other hand, the appellant has submitted that Accounting Standard AS-7 is to be read along with Accoun para 3.3 of AS conditions specified in paragraph 10 & 11 of AS 9, one of the most important requirements is transfer of all significant risks and reward of of terms and conditions of the agreement for sale. As per para 3.3 of AS this agreement for sale is considered of having the effect of transferring all significant risk and reward of agreement is legally enforceable. The AS legally enforceable agreement is entered with the buyer, the revenue is to recognized subject to fulfillment of other conditions, irrespective whether legal title is transferred or not or possession is given or not. So, one of the important conditions is presence of a legally enforceable agreement to sell. 46.1 The appellant has contended that Assessing Officer has erroneously considered the booking form as letter of acceptance and has equated the same to an enforceable contract/agreement to sell. A perusal of specimen booking form filed before the Assessing Officer suggests that this is an application form by the buyer to the appellan agreed to book a specific flat for a specified consideration. Clause 11 of this form reads as under: "11. I/We have clearly understood that this application does not constitute an agreement to sell and I/We do not become entitled the provisional allotment of a residential flat notwithstanding the fact that the company may have issued a receipt in acknowledgement of the money tendered with this application. I/We undertake to execute the agreement. Allotment letter on the company' and condition of the same. I conditions of this application and of allotment letter." Unique Shanti Developers LLP ITA Nos. 3856 & registration of sale agreement should be considered, however, the Assessing Officer is of the opinion that the execution or registration of sale agreement does not matter while recognizing the revenue as per AS Accounting Standards laid down by ICAl. The Assessing Officer is of the view that whenever, all critical approvals for the project are in place, 25% of project is completed and at least 25% of saleable project area is booked, in such situations, the revenue on those flats in which 10% o realized, should be recognized. The Assessing Officer also considered the booking application/allotment letter as valid contract and has held that these are legally enforceable documents. Thus, although the appellant has recognized revenue amounting to Rs. 5,01,50,250/- -) which is corresponding to the flats for which sale agreement were registered before 31/03/2016, the Assessing Officer recognized the revenue for all flats booked by the customers. In this he Assessing Officer has recognized the revenue to the extent of Rs. 8,87,06,935/- (25.24% of sale value of Rs. 35, 14,30,000/ 45. On the other hand, the appellant has submitted that Accounting 7 is to be read along with Accounting Standard AS para 3.3 of AS-7 clearly provides that revenue is to recognized when the conditions specified in paragraph 10 & 11 of AS-9 are fulfilled. As per AS 9, one of the most important requirements is transfer of all significant risks d reward of ownership' which is required to be determined on the basis of terms and conditions of the agreement for sale. As per para 3.3 of AS this agreement for sale is considered of having the effect of transferring all significant risk and reward of ownership to the buyer, provided the agreement is legally enforceable. The AS-7 further provides that once such legally enforceable agreement is entered with the buyer, the revenue is to recognized subject to fulfillment of other conditions, irrespective whether legal title is transferred or not or possession is given or not. So, one of the important conditions is presence of a legally enforceable agreement to sell. 46.1 The appellant has contended that Assessing Officer has erroneously red the booking form as letter of acceptance and has equated the same to an enforceable contract/agreement to sell. A perusal of specimen booking form filed before the Assessing Officer suggests that this is an application form by the buyer to the appellant wherein, the buyer had agreed to book a specific flat for a specified consideration. Clause 11 of this form reads as under:- "11. I/We have clearly understood that this application does not constitute an agreement to sell and I/We do not become entitled the provisional allotment of a residential flat notwithstanding the fact that the company may have issued a receipt in acknowledgement of the money tendered with this application. I/We undertake to execute the agreement. Allotment letter on the company's standard format agreeing to abide & agree by the terms and condition of the same. I/We agree to abide by the terms and conditions of this application and of allotment letter." Unique Shanti Developers LLP 22 ITA Nos. 3856 & 3902/MUM/2023 registration of sale agreement should be considered, however, the Assessing Officer is of the opinion that the execution or registration of sale agreement does not matter while recognizing the revenue as per AS-7 of by ICAl. The Assessing Officer is of the view that whenever, all critical approvals for the project are in place, 25% of project is completed and at least 25% of saleable project area is booked, in such situations, the revenue on those flats in which 10% of sale value is realized, should be recognized. The Assessing Officer also considered the booking application/allotment letter as valid contract and has held that these are legally enforceable documents. Thus, although the appellant has (25% of Rs. ) which is corresponding to the flats for which sale agreement were registered before 31/03/2016, the Assessing Officer recognized the revenue for all flats booked by the customers. In this he Assessing Officer has recognized the revenue to the extent of (25.24% of sale value of Rs. 35, 14,30,000/- for all 45. On the other hand, the appellant has submitted that Accounting ting Standard AS-9 because 7 clearly provides that revenue is to recognized when the 9 are fulfilled. As per AS- 9, one of the most important requirements is transfer of all significant risks ownership' which is required to be determined on the basis of terms and conditions of the agreement for sale. As per para 3.3 of AS-7, this agreement for sale is considered of having the effect of transferring all ownership to the buyer, provided the 7 further provides that once such legally enforceable agreement is entered with the buyer, the revenue is to recognized subject to fulfillment of other conditions, irrespective of the fact whether legal title is transferred or not or possession is given or not. So, one of the important conditions is presence of a legally enforceable 46.1 The appellant has contended that Assessing Officer has erroneously red the booking form as letter of acceptance and has equated the same to an enforceable contract/agreement to sell. A perusal of specimen booking form filed before the Assessing Officer suggests that this is an t wherein, the buyer had agreed to book a specific flat for a specified consideration. Clause 11 of "11. I/We have clearly understood that this application does not constitute an agreement to sell and I/We do not become entitled to the provisional allotment of a residential flat notwithstanding the fact that the company may have issued a receipt in acknowledgement of the money tendered with this application. I/We undertake to execute the agreement. Allotment letter on the s standard format agreeing to abide & agree by the terms We agree to abide by the terms and conditions of this application and of allotment letter." 46.2 Thus, the clause 11 clearly provides that this is a booking and it does not constitute an agreement to sell. It has also been clearly mentioned that through this application, the proposed buyer does not become entitled to provisional allotment of the said residential flat. Also, this application cannot be considered clearly provided in clause 11 that the allotment letter on the company's standard format shall be executed separately. 46.3 I have also perused the specimen allotment letter filed by the appellant. The clause under:- "10. Detailed terms and conditions of sale shall be incorporated in a standard agreement for sale, copy whereof, shall be handed over to you in due course. The agreement for sale will inter conditions/covenants not limiting to... 13. This writing is merely a letter of intent and is not and does not purport to be an agreement for sale/purchase of the said flat. Your rights shall become effective only on execution of the agreement for sale thoug Annexure "A" shall be liable to be discharged, irrespective of whether the agreement for sale has been executed or not." 46.4 Thus clause allotment letter should not be considered as agreement for sale. It further provides that the buyer's right shall become effective only on execution of the agreement for sale. 47. As discussed earlier in this order, that as per AS revenue is requ of the total revenue as per the agreements of sale or any other legally enforceable documents are realized. In the present case, the booking form as well as the allotment letter clearly provides t effective unless agreement for sale is executed. all significant risk and reward of ownership have been transferred to the buyer. Therefore, the booking letter as well as allotment letter cannot be said to be a legally enforceable agreement to sale. 48. It may also be mentioned that a similar issue has been considered the Hon'ble ITAT Mumbai in the case of M/s Shankala Realtors Pvt Ltd Vs. ITO ITA No.3827/MUM/2017 dated 28/8/2019. Shankala Realtors the business of real estate development and was following the percentage completion method and offered the income only in respect of those flats for which agreements were registered. The Assessing Officer observed that in many cases, the assessee ha still it had not offered the income for taxation on the pretext that no agreement has been made with the prospective buyer. The Assessing Officer after considering the AS approached the appellant, allotment letter is issued on receipt of advance money and in some cases, the assessee has taken almost 90% of the total Unique Shanti Developers LLP ITA Nos. 3856 & Thus, the clause 11 clearly provides that this is a booking nd it does not constitute an agreement to sell. It has also been clearly mentioned that through this application, the proposed buyer does not become entitled to provisional allotment of the said residential flat. Also, this application cannot be considered as allotment letter because it is clearly provided in clause 11 that the allotment letter on the company's standard format shall be executed separately. 46.3 I have also perused the specimen allotment letter filed by the The clause-10 and clause-13 of this allotment letter read as "10. Detailed terms and conditions of sale shall be incorporated in a standard agreement for sale, copy whereof, shall be handed over to you in due course. The agreement for sale will inter onditions/covenants not limiting to... 13. This writing is merely a letter of intent and is not and does not purport to be an agreement for sale/purchase of the said flat. Your rights shall become effective only on execution of the agreement for sale though your obligation to pay the consideration amount as per Annexure "A" shall be liable to be discharged, irrespective of whether the agreement for sale has been executed or not." Thus clause-13 of the allotment letter clearly provides that the t letter should not be considered as agreement for sale. It further provides that the buyer's right shall become effective only on execution of the agreement for sale. 47. As discussed earlier in this order, that as per AS-7 read with AS revenue is required to be recognized on those projects, where at least 10% of the total revenue as per the agreements of sale or any other legally enforceable documents are realized. In the present case, the booking form as well as the allotment letter clearly provides that buyer's rights are not effective unless agreement for sale is executed. Thus, it cannot be said that significant risk and reward of ownership have been transferred to the Therefore, the booking letter as well as allotment letter cannot be id to be a legally enforceable agreement to sale. It may also be mentioned that a similar issue has been considered the Hon'ble ITAT Mumbai in the case of M/s Shankala Realtors Pvt Ltd Vs. ITO ITA No.3827/MUM/2017 dated 28/8/2019. Shankala Realtors the business of real estate development and was following the percentage completion method and offered the income only in respect of those flats for which agreements were registered. The Assessing Officer observed that in many cases, the assessee had received considerable portion of advance, still it had not offered the income for taxation on the pretext that no agreement has been made with the prospective buyer. The Assessing Officer after considering the AS-9 noted that when a prospective buyer roached the appellant, allotment letter is issued on receipt of advance money and in some cases, the assessee has taken almost 90% of the total Unique Shanti Developers LLP 23 ITA Nos. 3856 & 3902/MUM/2023 Thus, the clause 11 clearly provides that this is a booking application nd it does not constitute an agreement to sell. It has also been clearly mentioned that through this application, the proposed buyer does not become entitled to provisional allotment of the said residential flat. Also, as allotment letter because it is clearly provided in clause 11 that the allotment letter on the company's 46.3 I have also perused the specimen allotment letter filed by the 13 of this allotment letter read as "10. Detailed terms and conditions of sale shall be incorporated in a standard agreement for sale, copy whereof, shall be handed over to you in due course. The agreement for sale will inter-alla includes 13. This writing is merely a letter of intent and is not and does not purport to be an agreement for sale/purchase of the said flat. Your rights shall become effective only on execution of the agreement for h your obligation to pay the consideration amount as per Annexure "A" shall be liable to be discharged, irrespective of whether the agreement for sale has been executed or not." 13 of the allotment letter clearly provides that the t letter should not be considered as agreement for sale. It further provides that the buyer's right shall become effective only on execution of 7 read with AS-9, ired to be recognized on those projects, where at least 10% of the total revenue as per the agreements of sale or any other legally enforceable documents are realized. In the present case, the booking form hat buyer's rights are not Thus, it cannot be said that significant risk and reward of ownership have been transferred to the Therefore, the booking letter as well as allotment letter cannot be It may also be mentioned that a similar issue has been considered by the Hon'ble ITAT Mumbai in the case of M/s Shankala Realtors Pvt Ltd Vs. ITO ITA No.3827/MUM/2017 dated 28/8/2019. Shankala Realtors was in the business of real estate development and was following the percentage completion method and offered the income only in respect of those flats for which agreements were registered. The Assessing Officer observed that in d received considerable portion of advance, still it had not offered the income for taxation on the pretext that no agreement has been made with the prospective buyer. The Assessing 9 noted that when a prospective buyer roached the appellant, allotment letter is issued on receipt of advance money and in some cases, the assessee has taken almost 90% of the total value. Accordingly, the Assessing Officer held that entering into an agreement and its registration is not neces on advances and worked out the profit. reasons given by the Assessing Officer and upheld the addition. When matter reached to Hon'ble ITAT Mumbai, the Bench observed as under: "7.3 In the inst buyer approaches the assessee for booking the fat, allotment letter is issued to the buyer The appellant filed a written submission dated 26.03.2015 before the AO stating th architect till 31.03.2009 is 73% and the assessee recognized the revenue by applying 73% to the value of agreements executed till 31.03.2009. It was further stated before the AO that the revenue as passing of risks and rewards by virtue of ownership is an essential condition for revenue recognition as per AS not been fulfilled in the instant case, as no agreement is executed and no possession have been given to the buyer. The case laws relied on by the Ld. counsel and Ld. DR have been narrated at length hereinbefore. One principle which emerges from the above case laws is the role of agreement executed. Immovable property is not co registered deed. Further, it is the date of execution of registered document, registration of document which is relevant. Once the executed documents are of execution of documents and not on the date of registration of documents as held in Alapati Venkataramiah v. CIT 185 (SC). As per the ingredients of AS even though legal title of the property is not transferred and possession is not given. Once seller transfers significant risks and rewards of ownership to buyer, seller thereafter acts like a contractor. Accordingly, revenue recognition will have to be a Percentage Completion Method' (AS We are concerned here with the execution of agreements and not with the registration of agreements. Having considered the application of principles of AS sale of goods to a real estate project and both sides in the back drop of the facts of the case, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to make an addition, bringing to tax by percentage completion method, the revenue out of any, during the impugned assessment year. The assessee is directed to file the documents/evidence in respect of agreements Unique Shanti Developers LLP ITA Nos. 3856 & value. Accordingly, the Assessing Officer held that entering into an agreement and its registration is not necessary for recognition of revenue on advances and worked out the profit. The Ld. CIT(A), agreed with the reasons given by the Assessing Officer and upheld the addition. When matter reached to Hon'ble ITAT Mumbai, the Bench observed as under: In the instant case as recorded by the AO when a prospective approaches the assessee for booking the fat, allotment letter is issued to the buyer on receipt of the advance money. The appellant filed a written submission dated 26.03.2015 before the AO stating that the degree of work completed and certified by architect till 31.03.2009 is 73% and the assessee recognized the revenue by applying 73% to the value of agreements executed till 31.03.2009. It was further stated before the AO that the revenue in respect of balance advances could not be recognized as passing of risks and rewards by virtue of ownership is an essential condition for revenue recognition as per AS not been fulfilled in the instant case, as no agreement is executed o possession have been given to the buyer. The case laws relied on by the Ld. counsel and Ld. DR have been narrated at length hereinbefore. One principle which emerges from the above case laws is the role of agreement executed. Immovable property is not conveyed by delivery of possession, but by a duly registered deed. Further, it is the date of execution of registered document, not the date of delivery of possession or the date of registration of document which is relevant. Once the executed documents are registered, the transfer will take place on the date of execution of documents and not on the date of registration of documents as held in Alapati Venkataramiah v. CIT 185 (SC). As per the ingredients of AS-7 and AS-9, 'revenue' be recognized even though legal title of the property is not transferred and possession is not given. Once seller transfers significant risks and rewards of ownership to buyer, seller thereafter acts like a contractor. Accordingly, revenue recognition will have to be a Percentage Completion Method' (AS-7). We are concerned here with the execution of agreements and not with the registration of agreements. Having considered the application of principles of AS sale of goods to a real estate project and the case laws relied on by both sides in the back drop of the facts of the case, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to make an addition, bringing to tax by percentage completion method, the revenue out of the remaining executed agreements, if any, during the impugned assessment year. The assessee is directed to file the documents/evidence in respect of agreements Unique Shanti Developers LLP 24 ITA Nos. 3856 & 3902/MUM/2023 value. Accordingly, the Assessing Officer held that entering into an sary for recognition of revenue The Ld. CIT(A), agreed with the reasons given by the Assessing Officer and upheld the addition. When matter reached to Hon'ble ITAT Mumbai, the Bench observed as under: as recorded by the AO when a prospective approaches the assessee for booking the fat, allotment letter on receipt of the advance money. The appellant filed a written submission dated 26.03.2015 before at the degree of work completed and certified by architect till 31.03.2009 is 73% and the assessee-company has recognized the revenue by applying 73% to the value of agreements executed till 31.03.2009. It was further stated before the AO that in respect of balance advances could not be recognized as passing of risks and rewards by virtue of ownership is an essential condition for revenue recognition as per AS-9, which has not been fulfilled in the instant case, as no agreement is executed The case laws relied on by the Ld. counsel and Ld. DR have been narrated at length hereinbefore. One principle which emerges from the above case laws is the role of agreement executed. Immovable nveyed by delivery of possession, but by a duly registered deed. Further, it is the date of execution of registered not the date of delivery of possession or the date of registration of document which is relevant. Once the executed registered, the transfer will take place on the date of execution of documents and not on the date of registration of documents as held in Alapati Venkataramiah v. CIT (1965) 57 ITR 9, 'revenue' be recognized even though legal title of the property is not transferred and possession is not given. Once seller transfers significant risks and rewards of ownership to buyer, seller thereafter acts like a contractor. Accordingly, revenue recognition will have to be as in We are concerned here with the execution of agreements and not Having considered the application of principles of AS-9 in respect of the case laws relied on by both sides in the back drop of the facts of the case, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to make an addition, bringing to tax by percentage completion the remaining executed agreements, if any, during the impugned assessment year. The assessee is directed to file the documents/evidence in respect of agreements executed during the impugned assessment year. Needless to say, the AO would provide reasonable assessee before finalizing the order." 49. Thus, in the case of Shankala Realtors (supra), the jurisdictional ITAT after considering AS percentage completion method, the date of is the point Which determines the point of recognition of revenue because passing of risks and rewards by virtue of ownership is an essential condition for revenue recognition. The Hon'ble ITAT has further held that it is the date of execution of agreement which is important and not the date of registration of agreement, as canvassed by the assessee. Accordingly, the ITAT directed the assessing officer to bring to tax, the revenue out of the remaining executed agreements, if assessment year, by applying the percentage completion method. It is seen that the facts of the present case are similar to the case of Shankala Realtors (supra). 50. An identical issue was raised by the Assessing Officer in the c group concern namely M/s Unique Shanti Neminath Developers LLP wherein similar additions were made by the Assessing Officer while completing assessment for A.Y. 2016 favour of the tax payer by CIT(A). Against the an appeal before 24/11/2022, the Hon. observing as under: "12. Aforesaid findings returned by the Ld. CIT(A) need no interference been recognized by the assessee as per accepted percentage completion method; that the flats for which no doubt assessee has received more than 10% of the sale consideration but cannot be taken for rev sale consideration, the revenue cannot be recognized for taxing the income; that moreover the Ld. CIT(A) has returned factual findings that there is no flat for which revenue is required to be recognize over and above the revenue recognized in the books of account and; that moreover the assessee has already offered the corresponding revenue in the subsequent years for A.Y. 2017 2018-19 and 2019 Since, the issue under consideration stands decide in assessee's favour in the case of sister concern of the appellant, it is incumbent upon me to follow the said decision. 51. One of the contentions of the appellant is that even though it is following the consistent policy regardi Assessing Officer has been inconsistent in this regard. A perusal of the assessment order for A.Y. 2017 assessment, the Assessing Officer did not stick to the accounting policy adopted by him for A.Y. Unique Shanti Developers LLP ITA Nos. 3856 & executed during the impugned assessment year. Needless to say, the AO would provide reasonable opportunity of being heard to the assessee before finalizing the order." 49. Thus, in the case of Shankala Realtors (supra), the jurisdictional ITAT after considering AS-7 and AS-9 has held that while applying the completion method, the date of execution of 'agreement to sell' is the point Which determines the point of recognition of revenue because passing of risks and rewards by virtue of ownership is an essential condition for revenue recognition. The Hon'ble ITAT has further held that it he date of execution of agreement which is important and not the date of registration of agreement, as canvassed by the assessee. Accordingly, the ITAT directed the assessing officer to bring to tax, the revenue out of the remaining executed agreements, if any, during the impugned assessment year, by applying the percentage completion method. It is seen that the facts of the present case are similar to the case of Shankala Realtors (supra). 50. An identical issue was raised by the Assessing Officer in the c group concern namely M/s Unique Shanti Neminath Developers LLP wherein similar additions were made by the Assessing Officer while completing assessment for A.Y. 2016-17. The said issue was decided in favour of the tax payer by CIT(A). Against the said order, the revenue filed an appeal before Hon. ITAT in ITA No. 1733/Mum/2022. Vide order dated 24/11/2022, the Hon. ITAT has dismissed the revenue's appeal by observing as under:- "12. Aforesaid findings returned by the Ld. CIT(A) need no interference on the grounds inter-alia that the entire revenue has been recognized by the assessee as per accepted percentage completion method; that the flats for which no doubt assessee has received more than 10% of the sale consideration but cannot be taken for revenue recognition because enforceable contract qua all sale consideration, the revenue cannot be recognized for taxing the income; that moreover the Ld. CIT(A) has returned factual findings that there is no flat for which revenue is required to be recognize over and above the revenue recognized in the books of account and; that moreover the assessee has already offered the corresponding revenue in the subsequent years for A.Y. 2017 19 and 2019-20." Since, the issue under consideration stands decided by Jurisdictional ITAT in assessee's favour in the case of sister concern of the appellant, it is incumbent upon me to follow the said decision. 51. One of the contentions of the appellant is that even though it is following the consistent policy regarding the recognition of revenue, the Assessing Officer has been inconsistent in this regard. A perusal of the assessment order for A.Y. 2017-18 suggests that while completing the assessment, the Assessing Officer did not stick to the accounting policy d by him for A.Y. 2016-17 (assessment year under consideration) Unique Shanti Developers LLP 25 ITA Nos. 3856 & 3902/MUM/2023 executed during the impugned assessment year. Needless to say, opportunity of being heard to the 49. Thus, in the case of Shankala Realtors (supra), the jurisdictional ITAT 9 has held that while applying the execution of 'agreement to sell' is the point Which determines the point of recognition of revenue because passing of risks and rewards by virtue of ownership is an essential condition for revenue recognition. The Hon'ble ITAT has further held that it he date of execution of agreement which is important and not the date of registration of agreement, as canvassed by the assessee. Accordingly, the ITAT directed the assessing officer to bring to tax, the revenue out of any, during the impugned assessment year, by applying the percentage completion method. It is seen that the facts of the present case are similar to the case of Shankala 50. An identical issue was raised by the Assessing Officer in the case of a group concern namely M/s Unique Shanti Neminath Developers LLP wherein similar additions were made by the Assessing Officer while 17. The said issue was decided in the revenue filed Hon. ITAT in ITA No. 1733/Mum/2022. Vide order dated ITAT has dismissed the revenue's appeal by "12. Aforesaid findings returned by the Ld. CIT(A) need no alia that the entire revenue has been recognized by the assessee as per accepted percentage completion method; that the flats for which no doubt assessee has received more than 10% of the sale consideration but cannot be enue recognition because enforceable contract qua all sale consideration, the revenue cannot be recognized for taxing the income; that moreover the Ld. CIT(A) has returned factual findings that there is no flat for which revenue is required to be recognized over and above the revenue recognized in the books of account and; that moreover the assessee has already offered the corresponding revenue in the subsequent years for A.Y. 2017-18, d by Jurisdictional ITAT in assessee's favour in the case of sister concern of the appellant, it is 51. One of the contentions of the appellant is that even though it is ng the recognition of revenue, the Assessing Officer has been inconsistent in this regard. A perusal of the 18 suggests that while completing the assessment, the Assessing Officer did not stick to the accounting policy 17 (assessment year under consideration) and accepted the revenue recognized by the appellant in the P/L Account and no addition was made on this issue in A.Y. 2017 assessment u/s 143(3) of the Act or any other su years. The copies of assessment orders for A.Ys. 2017 20, 2020-21 and 2021 Act have also been filed. Thus, the contention of the appellant that the Assessing Officer ha has merits. 52. Another contention of the appellant is that the method of revenue recognition adopted by the Assessing Officer has resulted in pre of the revenue from subsequent assessment years t under consideration. It has been submitted that by following the accounting policy, the appellant itself has recognized revenue in subsequent assessment years. income stands taxed in two assessment y A chart giving the year recognized for each of three projects along with corresponding audited financial statements have been filed by the appellant. amount is tabulated as under for all the three projects: A.Y. Unique Aurum-ll (UA- Total revenue from UA-II Additional Revenue from those UA- which AO recognized revenue during AY16 2017-18 9,05,68,000 2,59,78,000 2018-19 24,91,24,920 9,42,43,020 2019-20 24,87,10,330 2,62,47,980 2020-21 2,27,74,000 13,60,000 2020-21 - - Total 52,96,77,250 15,08,29,000 The above chart suggests that the appellant has offered the corresponding revenues in subsequent assessment years i.e. A. Ys. 2017 2019-20, 2020- 53. Considering the totality of facts of the case and the decisions jurisdictional ITAT in the case of Shankala Realtors (supra) and M/s Unique Shanti Neminath LLP (supra), I am of the opinion that the assessing officer has erred in recognizing the revenue for all flats ignoring the fact that in many cases, there w form of agreement to sell. In the case of Shankala Realtors (supra), Hon'ble ITAT has held that revenue is required to be recognized at the time of Unique Shanti Developers LLP ITA Nos. 3856 & and accepted the revenue recognized by the appellant in the P/L Account and no addition was made on this issue in A.Y. 2017-18 while completing assessment u/s 143(3) of the Act or any other subsequent assessment years. The copies of assessment orders for A.Ys. 2017-18, 2018 21 and 2021-22 completed u/s 143(3)/143(3) r.w.s. 153A of the Act have also been filed. Thus, the contention of the appellant that the Assessing Officer has not been consistent in the method adopted by him, 52. Another contention of the appellant is that the method of revenue recognition adopted by the Assessing Officer has resulted in pre of the revenue from subsequent assessment years to the assessment year under consideration. It has been submitted that by following the accounting policy, the appellant itself has recognized revenue in subsequent assessment years. As a result, same revenue and same income stands taxed in two assessment years resulting in double taxation. A chart giving the year-wise details in which the said revenue was recognized for each of three projects along with corresponding audited financial statements have been filed by the appellant. The consolidated abulated as under for all the three projects: Sale recognized in P/L Account -II) Unique Signature (US) Unique Homes (UH) Additional Revenue from those -II flats on which AO recognized revenue during AY16-17 Total revenue from US Additional Revenue from those US flats on which AO recognized revenue during AY 16-1 7 Total revenue from UH 2,59,78,000 18,52,13,797 3,63,92,298 1,25,57,611 9,42,43,020 18,40,64,001 5,37,79,842 37,05,701 2,62,47,980 4,05,02,487 51,76,837 5,58,85,358 13,60,000 7,89.25,340 1,94,13,138 11,37,38,423 9,40,74,339 1,42,36,298 2,49,94,074 15,08,29,000 58,27,79,964 12,89,98,410 21,08,81,167 The above chart suggests that the appellant has offered the corresponding revenues in subsequent assessment years i.e. A. Ys. 2017 20, 2020-21 and 2021-22. 53. Considering the totality of facts of the case and the decisions jurisdictional ITAT in the case of Shankala Realtors (supra) and M/s Unique Shanti Neminath LLP (supra), I am of the opinion that the assessing officer has erred in recognizing the revenue for all flats ignoring the fact that in many cases, there was no legally enforceable agreement in the form of agreement to sell. In the case of Shankala Realtors (supra), Hon'ble ITAT has held that revenue is required to be recognized at the time of Unique Shanti Developers LLP 26 ITA Nos. 3856 & 3902/MUM/2023 and accepted the revenue recognized by the appellant in the P/L Account 18 while completing bsequent assessment 18, 2018-19, 2019- 22 completed u/s 143(3)/143(3) r.w.s. 153A of the Act have also been filed. Thus, the contention of the appellant that the s not been consistent in the method adopted by him, 52. Another contention of the appellant is that the method of revenue recognition adopted by the Assessing Officer has resulted in pre-ponment o the assessment year under consideration. It has been submitted that by following the accounting policy, the appellant itself has recognized revenue in As a result, same revenue and same ears resulting in double taxation. wise details in which the said revenue was recognized for each of three projects along with corresponding audited The consolidated Unique Homes (UH) Additional Revenue from those UH flats on which AO recognized revenue during AY 16-1 7 1,25,57,611 37,05,701 1,90,47,108 5,40,77,819 78,87,212 13,15,90,350 The above chart suggests that the appellant has offered the corresponding revenues in subsequent assessment years i.e. A. Ys. 2017-18, 2018-19, 53. Considering the totality of facts of the case and the decisions of the jurisdictional ITAT in the case of Shankala Realtors (supra) and M/s Unique Shanti Neminath LLP (supra), I am of the opinion that the assessing officer has erred in recognizing the revenue for all flats ignoring the fact as no legally enforceable agreement in the form of agreement to sell. In the case of Shankala Realtors (supra), Hon'ble ITAT has held that revenue is required to be recognized at the time of execution of agreements and the date of registration of agreement immaterial. Accordingly, the Hon'ble ITAT had directed to bring to tax the revenue out of the agreements which were executed but remained to be registered. In the present case, the Assessing Officer has considered the total sale for Unique Aurum Against this amount, the assessee has considered the sale value at Rs. 20,06,01,000/- guidelines 2012. The appellant has submitted complete details of remaining flats booking, date of agreement and year of revenue recognized in respect of the flats for which no revenue was recognized during the year under consideration even though the flats were booked by the cust said details are as under: |Statement of Flats subsequent years agreement Flat No. Name Unique Aurum-II 203 Ritesh Gangwal & Jt. 205 Hemlata R. Singh & Jt. 208 Rachika Samaiya & Jt. 301 Prakash S Gadade & Jt 302 Nalin Chandra Pant 303 Bhamini J. Thakkar & Jt 401 Anil Fernandes 402 Vandana Tiwari & Jt. 508 Dinesha Achuita Shetty 602 Gupta Vishal & J 708 Jugal C. Mascarenhas 902 Rajani B. Ranchooddas 904 Rambha Rakesh Singh 1003 Ajay Kumar Pandey & Jt. 1006 Nitin Palan & Jt. 1008 Sanjay Kulshrestha & Jt. 1104 Sheela R. Kalokh 1105 Rukmani J. Nadar 1201 Amit Jha & Jt 1202 Amit Jha & Jt. 1205 Mr. Amit Saha & Jt. 1206 Deepati R. Jaiswal & JT 1207 Miss. Rithisha J. Shetty & Jt. 1208 Khushboo A. Dharadhar 1304 Bandhna Rangu & Jt. 1308 RakeshV.Shetty&t Unique Shanti Developers LLP ITA Nos. 3856 & execution of agreements and the date of registration of agreement immaterial. Accordingly, the Hon'ble ITAT had directed to bring to tax the revenue out of the agreements which were executed but remained to be registered. In the present case, the Assessing Officer has considered the total sale for Unique Aurum-ll till 31/03/2016 at Rs. 35,14,30,000/ Against this amount, the assessee has considered the sale value at Rs. - for the purpose of computation of profit as per ICAl guidelines 2012. The appellant has submitted complete details of remaining flats having sale value of Rs. 15,08,29,000/- such as date of booking, date of agreement and year of revenue recognized in respect of the flats for which no revenue was recognized during the year under consideration even though the flats were booked by the cust said details are as under: Flats Booked before 3103.2016 but Revenue years as per Percentage Completion on the basis of date of Agreement Value Date of Booking Date of Agreemen t Revenue Recognition A.Y2017- 18 A.Y.2018- 19 28,80,000 08.09.11 14.08,18 23,61,60 49,05,000 10,04.14 20,06.19 40,22,100 28,80,000 31.07.12 06.09.17 14,40,000 9 , 21,600 47,00,000 17.02.14 09.08.18 - 38,54,000 43,60,000 14.02.12 28.08.18 - 35,75,200 28,80,000 31.07.12 28.05.18 - 23,61,600 43,60,000 27.12.12 26.07.17 21,80,000 13 , 95,200 43,60,000 01.11.12 24.04.17 26.07.17 13,95,200 30,24,000 10.08.13 29.11.18 - 24,79,680 54,50,000 30.10.15 14.12,18 - 44,69,000 32,80,000 17.02.14 20.06.14 16,40,000 10,43,600 43,60,000 07.08.12 06.11.17 - 35,75,200 28,80,000 21.01.13 21.12.16 14,40,000 9,21,600 36,00,000 03.11.13 18.08.18 - 29,52,000 43,60,000 27.06,17 29.06,17 - 35,75,200 30,00,000 05.05.13 13.09.17 15,00,000 9,60,000 29,54,000 13.09.13 23.12.14 15,48,000 9,90,720 43,60,000 25.07.11 12.12.18 43,60 , 000 08.06.12 21.03.17 21,80,000 13,95,200 43,60,000 08.06.12 21.03,17 21,80,000 13,95,200 53,30,000 17.04.15 07,03,18 - 43,70,600 49,50,000 01.10.15 31.07.18 - 28,00,000 23.12.11 30.06,18 - 22,96,000 28,00,000 16.08,12 20.02.18 22,96,000 28,80,000 12,09.11 29,06.17 14,40,000 9,21,600 34,20,000 20.01.14 19.06.17 17,10,000 10,94,400 Unique Shanti Developers LLP 27 ITA Nos. 3856 & 3902/MUM/2023 execution of agreements and the date of registration of agreements is immaterial. Accordingly, the Hon'ble ITAT had directed to bring to tax the revenue out of the agreements which were executed but remained to be registered. In the present case, the Assessing Officer has considered the ll 31/03/2016 at Rs. 35,14,30,000/-. Against this amount, the assessee has considered the sale value at Rs. for the purpose of computation of profit as per ICAl guidelines 2012. The appellant has submitted complete details of such as date of booking, date of agreement and year of revenue recognized in respect of the flats for which no revenue was recognized during the year under consideration even though the flats were booked by the customers. The ue recognized In Completion on the basis of date of Revenue Recognition -A.Y.2019- 20 A.Y.2020-21 5,18,400 0 8,82,900 5,18,400 38,54,000 8,46,000 0 7,84,800 23,61,600 5,18,400 00 7,S4,800 0 7,84,800 24,79,680 5,44,320 44,69,000 9,81,000 10,43,600 5,90,400 35,75,200 7,84,800 5,18,400 29,52,000 6,48,000 0 7,84,800 5,40,000 4,15,280 - 43,60,000 00 7,84,800 13,95,200 7,84,800 43,70,600 9,59,400 8,91,000 22,96,000 5,04,000 000 5,04,000 5,18,400 10,94,400 6,15,600 1401 HrushikeshR.Deo& Jt. 1402 ShaileshKotadia&J 1405 Mr.UmeshH Pathak & Jt 1502 HarishKarande 1504 MaheshkumareMaurya &Jt. 1505 NishantraiH Pandey&Jt 1508 ShardaR Thakur&Jt. 1605 MeenaK Ashar&Jt. 1701 PratimaR, Chavan&Jt 1703 AnushriA.Bandekar 1707 BhanuprasadNMewada&Jt. 1805 RampratapMistry 1806 DurgadeviMistry TotalotUniqueAurum-ll 54. A perusal of above chart suggests that out of 39 has not been recognized by the appellant during the year, the agreement to sale was executed beyond 31/03/2016 in 37 cases. In case of flat no. 708 and flat no. 1104, agreement to sell was executed on 20/06/2014 and 23/12/2014. Since executed before 31/03/2016, therefore, in terms of the directions of Hon'ble ITAT in the case of Shankala Realtors, the revenue corresponding to these two flats is required to be recognized during the year consideration. As per the details submitted by the appellant the sale consideration for these two flats is Rs. 62,34,000/ 29,54,000). Since the project has been completed to the extent of 25.24%, therefore, the revenue to the extent of 62,34,000) is required to be recognized during the year under consideration. For the project Unique Aurum computation chart filed by the appellant comes to 21.34% (10703140/50150250), therefore, the p revenue comes to Rs. 3,35,810/ 55. Considering the totality facts of the case as discussed above and the decision of the jurisdictional ITAT in the case of Shankala Realtors (supra) and Unique Shanti Nem that the assessing officer has erred in recognizing the revenue for all flats ignoring the fact that in many cases, there was no legally enforceable document in the form of agreement to sell. Moreover, the has not been consistent in the method adopted by him in AY 2016 However, as discussed above, the appellant was required to recognize revenue corresponding to flat no. 708 and 1104 during the year under consideration because the agreem executed before 31/03/2016. As discussed above, the profit on the Unique Shanti Developers LLP ITA Nos. 3856 & 43,60,000 12.08.11 29.09.18 35,75,200 43,60,000 08.06.12 21.03.17 21,80,000 13,95,200 43,60,000 01.03.12 13.03.18 21,80,000 13,95,200 43,60,000 07.02.12 07.03.17 21,80,000 13,95,200 28,80,000 23.08.11 06.03.18 23,61,600 43,60,000 21.09.11 11.04.18 35,75,200 34,56,000 25.06.14 13.10.17 28,33,920 43,60,000 21.12.12 27.09.17 35,75,200 43,60,000 24.02.13 18.03.19 35,75,200 28,80,000 08.08.11 19.08.19 23,61,600 28,80,000 25.05.12 14.11.17 23,61,600 43,60,000 13.10.11 13.11.17 35,75,200 43,60,000 13.10.11 13.11.17 35,75,200 15,08,29,0 00 2,59,78,0 00 9,42,43,02 0 A perusal of above chart suggests that out of 39 flats on which has not been recognized by the appellant during the year, the agreement to sale was executed beyond 31/03/2016 in 37 cases. In case of flat no. 708 and flat no. 1104, agreement to sell was executed on 20/06/2014 and 23/12/2014. Since the agreement to sell in these two cases has been executed before 31/03/2016, therefore, in terms of the directions of Hon'ble ITAT in the case of Shankala Realtors, the revenue corresponding to these two flats is required to be recognized during the year consideration. As per the details submitted by the appellant the sale consideration for these two flats is Rs. 62,34,000/- 29,54,000). Since the project has been completed to the extent of 25.24%, therefore, the revenue to the extent of Rs. 15,73,460/ 62,34,000) is required to be recognized during the year under consideration. For the project Unique Aurum-ll, the profit ratio as per computation chart filed by the appellant comes to 21.34% (10703140/50150250), therefore, the profit on such under reported revenue comes to Rs. 3,35,810/- (21.34% of 15,73,460). 55. Considering the totality facts of the case as discussed above and the decision of the jurisdictional ITAT in the case of Shankala Realtors (supra) Unique Shanti Neminath Developers LLP (supra), I am of the opinion that the assessing officer has erred in recognizing the revenue for all flats ignoring the fact that in many cases, there was no legally enforceable document in the form of agreement to sell. Moreover, the assessing officer has not been consistent in the method adopted by him in AY 2016 However, as discussed above, the appellant was required to recognize revenue corresponding to flat no. 708 and 1104 during the year under consideration because the agreement to sell for these flats have been executed before 31/03/2016. As discussed above, the profit on the Unique Shanti Developers LLP 28 ITA Nos. 3856 & 3902/MUM/2023 35,75,200 7,84,800 13,95,200 7,84,800 13,95,200 7,84,800 13,95,200 7,84,800 23,61,600 5,18,400 35,75,200 7,84,800 28,33,920 6,22,080 35,75,200 7,84,800 35,75,200 7,84,800 23,61,600 5,18,400 23,61,600 5,18,400 35,75,200 7,84,800 35,75,200 7,84,800 9,42,43,022,62,47,98 0 43,60,000 flats on which revenue has not been recognized by the appellant during the year, the agreement to sale was executed beyond 31/03/2016 in 37 cases. In case of flat no. 708 and flat no. 1104, agreement to sell was executed on 20/06/2014 and the agreement to sell in these two cases has been executed before 31/03/2016, therefore, in terms of the directions of Hon'ble ITAT in the case of Shankala Realtors, the revenue corresponding to these two flats is required to be recognized during the year under consideration. As per the details submitted by the appellant the sale (32,80,000 + 29,54,000). Since the project has been completed to the extent of 25.24%, Rs. 15,73,460/- (25.25% of 62,34,000) is required to be recognized during the year under ll, the profit ratio as per computation chart filed by the appellant comes to 21.34% rofit on such under reported 55. Considering the totality facts of the case as discussed above and the decision of the jurisdictional ITAT in the case of Shankala Realtors (supra) inath Developers LLP (supra), I am of the opinion that the assessing officer has erred in recognizing the revenue for all flats ignoring the fact that in many cases, there was no legally enforceable assessing officer has not been consistent in the method adopted by him in AY 2016-17. However, as discussed above, the appellant was required to recognize revenue corresponding to flat no. 708 and 1104 during the year under ent to sell for these flats have been executed before 31/03/2016. As discussed above, the profit on the revenue to be recognized for these two flats comes to Rs. 3,35,810/ Therefore, the addition to the extent of Rs. 3,35,810/ Unique Signatur 56. This project was completed to the extent of 40.81%. the appellant has recognized revenue to the extent of 41% of sale value amounting to Rs. 14,71,66,310/- agreement were registered before 31/03/2016 not agree with the appellant and had recognized the revenue for all flats booked by the customers. In this manner, the Assessing Officer has recognized the revenue to the extent of 40.81% of Rs. 27,61,64,720/ value of all flats booked by customers). 57. The reasons given by the Assessing Officer for recognizing the revenue on all flats booked by the customer for project namely Unique Signature, are identical to the reasons given for the project namely Unique Aurum During the assessment proceedings, as well as appellate proceedings, the appellant has given common contentions for all the three projects which have been discussed earlier in this order. Therefore, following my findings given for the project namely Unique Aur should be recognized only for those flats where legally enforceable document in the form of agreement to sell has been entered into before 31/03/2016. 58. For this project, the Assessing Officer has considered the total s Unique Signature till 31/03/2016 at Rs. 27,61,64,720/ amount of Rs. 14,71,66,310/ of computation of profit as per ICAl guidelines 2012. The appellant has submitted complete details of remain 12,89,98,410/- revenue recognized in respect of the flats for which no revenue was recognized during the year under booked by the customers. The said details are as under: Flat No. Name Agreement Value Unique Signature 104 Harpal Singh Gulati 47,30,000 105 Mr. Harpal Singh Gulati 47,30,000 201 Mrs. Naseem Bano Shaikh 49,21,800 304 Mrs. Kamini Kaur & Jt. 46,26,150 305 Mrs. Kamini Kaur & Jt. 46,26,150 306 Mrs. Shabbana Aamir Chikte & Jt. 70,45,100 Unique Shanti Developers LLP ITA Nos. 3856 & revenue to be recognized for these two flats comes to Rs. 3,35,810/ Therefore, the addition to the extent of Rs. 3,35,810/- is upheld. Unique Signature 56. This project was completed to the extent of 40.81%. the appellant has recognized revenue to the extent of 41% of sale value amounting to Rs. - which is corresponding to the flats for which sale agreement were registered before 31/03/2016. The Assessing Officer did not agree with the appellant and had recognized the revenue for all flats booked by the customers. In this manner, the Assessing Officer has recognized the revenue to the extent of 40.81% of Rs. 27,61,64,720/ flats booked by customers). 57. The reasons given by the Assessing Officer for recognizing the revenue on all flats booked by the customer for project namely Unique Signature, are identical to the reasons given for the project namely Unique Aurum ng the assessment proceedings, as well as appellate proceedings, the appellant has given common contentions for all the three projects which have been discussed earlier in this order. Therefore, following my findings given for the project namely Unique Aurum-ll, it is held that the revenue should be recognized only for those flats where legally enforceable document in the form of agreement to sell has been entered into before 58. For this project, the Assessing Officer has considered the total s Unique Signature till 31/03/2016 at Rs. 27,61,64,720/ amount of Rs. 14,71,66,310/- considered by the assessee, for the purpose of computation of profit as per ICAl guidelines 2012. The appellant has submitted complete details of remaining flats having sale value of Rs. -such as date of booking, date of agreement and year of revenue recognized in respect of the flats for which no revenue was recognized during the year under consideration even though the flats were the customers. The said details are as under: Agreement Date of Booking Date of Agreemen t Revenue Recognition A.Y2017- 18 A.Y.2018 -19 A.Y.2019 20 47,30,000 19.06.14 20.02.17 25,06,900 8,04,100 1,89,200 47,30,000 19.06.14 13.12.17 - 33,11,00 0 1,89,200 49,21,800 07.11.14 10.07.18 - 34,45,26 0 12,96,872 46,26,150 06.08.14 28.05.18 - 32,38,30 5 1,85,046 46,26,150 06.08.14 28.05.18 - 32,38,30 5 1,85,046 70,45,100 12.07.15 23.11.16 37,33,903 11,97,66 7 2,81,804 Unique Shanti Developers LLP 29 ITA Nos. 3856 & 3902/MUM/2023 revenue to be recognized for these two flats comes to Rs. 3,35,810/-. is upheld. 56. This project was completed to the extent of 40.81%. the appellant has recognized revenue to the extent of 41% of sale value amounting to Rs. which is corresponding to the flats for which sale . The Assessing Officer did not agree with the appellant and had recognized the revenue for all flats booked by the customers. In this manner, the Assessing Officer has recognized the revenue to the extent of 40.81% of Rs. 27,61,64,720/- (sale 57. The reasons given by the Assessing Officer for recognizing the revenue on all flats booked by the customer for project namely Unique Signature, are identical to the reasons given for the project namely Unique Aurum-Il. ng the assessment proceedings, as well as appellate proceedings, the appellant has given common contentions for all the three projects which have been discussed earlier in this order. Therefore, following my findings ll, it is held that the revenue should be recognized only for those flats where legally enforceable document in the form of agreement to sell has been entered into before 58. For this project, the Assessing Officer has considered the total sale for Unique Signature till 31/03/2016 at Rs. 27,61,64,720/- against the considered by the assessee, for the purpose of computation of profit as per ICAl guidelines 2012. The appellant has ing flats having sale value of Rs. such as date of booking, date of agreement and year of revenue recognized in respect of the flats for which no revenue was consideration even though the flats were A.Y.2019- 20 A.Y.2020 -21 AY 2021- 22 1,89,200 7,09,500 5,20,300 1,89,200 7,09,500 5,20,300 12,96,872 7,38,270 5,41,398 1,85,046 6,93,923 5,08,876 1,85,046 6,93,923 5,08,876 2,81,804 10,56,76 5 7,74,961 404 Mr. Ayaz Abdul Kadar Shaikh & Jt. 49,94,070 405 Mr. Azam Hussain Qazi Syed 49,13,840 505 Mr. Aabid Husain Patrawala 45,56,800 601 Mr. Ashif T. Sorathiya & Jt. 49,28,370 602 Mr. Terry D’souza & Jt. 63,68,660 701 Mr. Deepak Singh & Jt. 5,20,350 706 Mr. Mohammed Taiyeb Bhoira 44,95,000 805 Mr. Tarashankar Singh 31,16,750 906 Mr. Shaikh Rafique Ahmed & Jt. 70,56,000 1001 Smt. Sapna O. Pandit & Jt. 50,59,770 1005 Mrs. Rajeshwari N. Singh 50,79,480 1101 Farha Abdul Hameed Shaikh 51,20,360 1104 Mr. Iqubal Ahmed Abdul Lateef & Jtd. 51,18,000 1205 Miss. Sarah Melital Lobo 51,14,520 1304 Mr. Rakesh Sequeira & Jt. 51,78,030 1305 Mohamad Abdul Rehman 45,38,720 1404 Mr. Faizanl. Choudhry 51,18,900 1405 Mr. Raj Kumar & Jt. 51,53,940 1505 Mr. Sajid Kachhi 47,35,650 Shop No. 5 Mohammed Khajamohd Haji & Jt. 26,52,000 Total of Unique Signature 12,89,98,410 59. A perusal of above chart suggests that out of 26 flats has not been recognized during the year, the agreement to sale was executed beyond 31/03/2016 in 25 cases. In case of flat no. 805, agreement to sell was executed on 22/04/2012. Since the agreement to sell has been executed before 31/03/20 directions of Hon'ble ITAT in the case of Shankala Realtors (supra), the revenue corresponding to flat no. 805, is required to be recognized during the year under consideration. appellant, the sale consideration for this flat is Rs. 31,16,750/ project has been completed to the extent of 40.81%, therefore, the revenue to the extent of Rs. 12,71,945/ recognized during the year under consider For the project Unique Signature, the profit ratio as per computation chart filed by the appellant comes to 22.62% (1,36,49,858/6,03,38, 187), Unique Shanti Developers LLP ITA Nos. 3856 & 49,94,070 13.11.14 16.02.18 - 34,95,84 9 1,99,763 49,13,840 20.05.14 23.01.18 - 34,39,68 8 1,96,554 45,56,800 20.12.14 30.12.21 - 31,89,76 0 1,82,272 49,28,370 05.09.14 24.04.18 - 34,49,85 9 1,97,135 63,68,660 27.06.14 07.02.23 - 44,58,06 2 2,54,746 31.10.14 12.07.17 26,60,786 8,53,460 2,00,814 44,95,000 15.09.11 13.01.17 23,82,350 7,64,150 1,79,800 31,16,750 09.07.11 22.04.12 16,51,878 5,29,848 1,24,670 70,56,000 01.02.16 30.06.17 37,39,680 11,99,52 0 2,82,240 50,59,770 09.12.14 14.02.18 - 35,41,83 9 2,02,391 50,79,480 31.10.14 17.06.17 26,92,124 8,63,512 2,03,179 51,20,360 28.07.14 28.07.17 27,13,791 8,70,461 2,04,814 51,18,000 23.12.15 21.09.16 27,12,540 8,70,060 2,04,720 51,14,520 28.05.14 07.11.17 - 35,80,16 4 2,04,581 51,78,030 28.07.14 24.07.17 27,44,356 8,80,265 2,07,121 45,38,720 25.05.15 10.08.16 22,06,947 8,43,407 1,98,449 51,18,900 01.07.14 27.04.17 - 35,83,23 0 2,04,756 51,53,940 22.03.16 27.04.17 27,31,588 8,76,170 2,06,158 47,35,650 12.09.14 23.03.17 25,09,895 8,05,061 1,89,426 26,52,000 26.02.16 28.03.17 14,05,560 4,50,840 1,06,080 12,89,98,410 3,63,92,2 98 5377984 2 51,76,837 A perusal of above chart suggests that out of 26 flats on which revenue has not been recognized during the year, the agreement to sale was executed beyond 31/03/2016 in 25 cases. In case of flat no. 805, agreement to sell was executed on 22/04/2012. Since the agreement to sell has been executed before 31/03/2016, therefore, in terms of the directions of Hon'ble ITAT in the case of Shankala Realtors (supra), the revenue corresponding to flat no. 805, is required to be recognized during the year under consideration. As per the details submitted by the the sale consideration for this flat is Rs. 31,16,750/ project has been completed to the extent of 40.81%, therefore, the revenue to the extent of Rs. 12,71,945/- (40.81% of 31,16,750) is required to be recognized during the year under consideration. For the project Unique Signature, the profit ratio as per computation chart filed by the appellant comes to 22.62% (1,36,49,858/6,03,38, 187), Unique Shanti Developers LLP 30 ITA Nos. 3856 & 3902/MUM/2023 1,99,763 7,49,110 5,49,348 1,96,554 7,37,076 5,40,522 1,82,272 6,83,520 5,01,248 1,97,135 7,39,255 5,42,121 2,54,746 9,55,299 7,00,553 2,00,814 7,53,053 5,52,238 1,79,800 6,74,250 4,94,450 1,24,670 4,67,513 3,42,842 2,82,240 10,58,40 0 7,76,160 2,02,391 7,58,965 5,65,575 2,03,179 7,61,922 5,58,743 2,04,814 7,68,054 5,63,240 2,04,720 7,67,700 5,62,980 2,04,581 7,67,178 5,62,597 2,07,121 7,76,705 5,69,583 1,98,449 7,44,183 5,45,734 2,04,756 7,67,835 5,63,079 2,06,158 7,73,091 5,66,933 1,89,426 7,10,348 5,20,921 1,06,080 2,91,720 51,76,837 1,94,13,1 38 1,42,36298 on which revenue has not been recognized during the year, the agreement to sale was executed beyond 31/03/2016 in 25 cases. In case of flat no. 805, agreement to sell was executed on 22/04/2012. Since the agreement to 16, therefore, in terms of the directions of Hon'ble ITAT in the case of Shankala Realtors (supra), the revenue corresponding to flat no. 805, is required to be recognized during As per the details submitted by the the sale consideration for this flat is Rs. 31,16,750/-. Since the project has been completed to the extent of 40.81%, therefore, the revenue 31,16,750) is required to be For the project Unique Signature, the profit ratio as per computation chart filed by the appellant comes to 22.62% (1,36,49,858/6,03,38, 187), therefore, the profit on such under 2,87,743/- (22.62% of 12,71,945). 60. Considering the totality of facts of the case as discussed above and the decision of the jurisdictional ITAT in the case of Shankala Realtors (supra) and Unique Shanti Neminath Developers LLP (supra), I am of the opinion ring the assessing officer has erred ignoring the fact that in many cases, there was no legally enforceable document in the form of agreement to sell. Moreover, the assessing officer has not been consistent in the method adopted by him in AY 2016 However, as discussed above, the appellant was required to recognize revenue corresponding to flat no. 805 of Unique Signature project during the year under consideration because the agreement to sell for this flat has been executed before 31/03/2016. As di revenue to be recognized for this flat comes to Rs. 2,87,743/ the addition to the extent of Rs. 2,87,743/ Unique Homes 61. For the project namely Unique Homes, there is no dispute that the project was completed to the extent of 28%. The appellant has however claimed that only 13.13% of total area is secured by legally enforceable agreements. The appellant, therefore, did not recognize any revenue form this project because the condition that at least be secured by legally enforceable agreements, is not fulfilled. Against this, the Assessing Officer has held that percentage of total area sold by the appellant comes to 36.62%. Assessing Offic sale consideration has been received irrespective of execution of agreement to sell. The Assessing Officer has considered the booking form/allotment letter as legally enforceable agreement. 62. The reasons given by the Assessing Officer for holding booking/allotment letter as legally enforceable agreement and for recognizing the revenue on all flats booked by the customer for project namely Unique Homes, are identical to the reasons given for the pro namely Unique Aurum appellate proceedings, the appellant has given common contentions for all the three projects which have been discussed earlier in this order. Therefore, following my findings given Aurum-ll, it is held that the only area for those flats can be considered as secured by legally enforceable agreement where document in the form of agreement to sell has been entered into before 31/03/2016. 63. For this projec ansi die Unique Homes till 31/03/2016 at Rs. 16,14,10,860/ amount of Rs. computation of profit as per ICAI guidelines 2012. The appel submitted complete details of these flats having sale value of Rs. 16,14,10,860/- revenue recognized in respect of these flats for which no revenue was Unique Shanti Developers LLP ITA Nos. 3856 & therefore, the profit on such under-reported revenue comes to Rs. (22.62% of 12,71,945). nsidering the totality of facts of the case as discussed above and the decision of the jurisdictional ITAT in the case of Shankala Realtors (supra) Unique Shanti Neminath Developers LLP (supra), I am of the opinion ring the assessing officer has erred in recognizing the revenue for all flats ignoring the fact that in many cases, there was no legally enforceable document in the form of agreement to sell. Moreover, the assessing officer has not been consistent in the method adopted by him in AY 2016 owever, as discussed above, the appellant was required to recognize revenue corresponding to flat no. 805 of Unique Signature project during the year under consideration because the agreement to sell for this flat has been executed before 31/03/2016. As discussed above, the profit on the revenue to be recognized for this flat comes to Rs. 2,87,743/ the addition to the extent of Rs. 2,87,743/- is upheld. Unique Homes 61. For the project namely Unique Homes, there is no dispute that the as completed to the extent of 28%. The appellant has however claimed that only 13.13% of total area is secured by legally enforceable agreements. The appellant, therefore, did not recognize any revenue form this project because the condition that at least 25% of project areashould be secured by legally enforceable agreements, is not fulfilled. Against this, the Assessing Officer has held that percentage of total area sold by the appellant comes to 36.62%. While computing this percentage, the Assessing Officer has considered all the flats in which more than 10% of sale consideration has been received irrespective of execution of agreement to sell. The Assessing Officer has considered the booking form/allotment letter as legally enforceable agreement. reasons given by the Assessing Officer for holding booking/allotment letter as legally enforceable agreement and for recognizing the revenue on all flats booked by the customer for project namely Unique Homes, are identical to the reasons given for the pro namely Unique Aurum-ll. During the assessment proceedings, as well as appellate proceedings, the appellant has given common contentions for all the three projects which have been discussed earlier in this order. Therefore, following my findings given for the project namely Unique ll, it is held that the only area for those flats can be considered as secured by legally enforceable agreement where document in the form of agreement to sell has been entered into before 31/03/2016. 63. For this project, the Assessing Officer has considered the total sale for ansi die Unique Homes till 31/03/2016 at Rs. 16,14,10,860/ amount of Rs. Nil considered by the assessee, for the purpose of computation of profit as per ICAI guidelines 2012. The appel submitted complete details of these flats having sale value of Rs. - such as date of booking, date of agreement and year of revenue recognized in respect of these flats for which no revenue was Unique Shanti Developers LLP 31 ITA Nos. 3856 & 3902/MUM/2023 reported revenue comes to Rs. nsidering the totality of facts of the case as discussed above and the decision of the jurisdictional ITAT in the case of Shankala Realtors (supra) Unique Shanti Neminath Developers LLP (supra), I am of the opinion in recognizing the revenue for all flats ignoring the fact that in many cases, there was no legally enforceable document in the form of agreement to sell. Moreover, the assessing officer has not been consistent in the method adopted by him in AY 2016-17. owever, as discussed above, the appellant was required to recognize revenue corresponding to flat no. 805 of Unique Signature project during the year under consideration because the agreement to sell for this flat has scussed above, the profit on the revenue to be recognized for this flat comes to Rs. 2,87,743/-. Therefore, 61. For the project namely Unique Homes, there is no dispute that the as completed to the extent of 28%. The appellant has however claimed that only 13.13% of total area is secured by legally enforceable agreements. The appellant, therefore, did not recognize any revenue form 25% of project areashould be secured by legally enforceable agreements, is not fulfilled. Against this, the Assessing Officer has held that percentage of total area sold by the While computing this percentage, the er has considered all the flats in which more than 10% of sale consideration has been received irrespective of execution of agreement to sell. The Assessing Officer has considered the booking form/allotment reasons given by the Assessing Officer for holding booking/allotment letter as legally enforceable agreement and for recognizing the revenue on all flats booked by the customer for project namely Unique Homes, are identical to the reasons given for the project ll. During the assessment proceedings, as well as appellate proceedings, the appellant has given common contentions for all the three projects which have been discussed earlier in this order. for the project namely Unique ll, it is held that the only area for those flats can be considered as secured by legally enforceable agreement where document in the form of agreement to sell has been entered into before 31/03/2016. t, the Assessing Officer has considered the total sale for ansi die Unique Homes till 31/03/2016 at Rs. 16,14,10,860/- against the Nil considered by the assessee, for the purpose of computation of profit as per ICAI guidelines 2012. The appellant has submitted complete details of these flats having sale value of Rs. such as date of booking, date of agreement and year of revenue recognized in respect of these flats for which no revenue was recognized during the year under conside booked by the customers. The said details are as under: Flat No. Name Agreement Value Unique Signature A-103 Sheela O. Balmiki & Jt. 33,48,810 A-104 Shambuling B. Badegar 22,23,000 A-105 Rita Singh w/o Amit Kumar 23,42,925 A-302 Jyoti A. Bataviya & Jt. 35,64,450 A-306 Mrs. Neeta S. Dave 33,04,375 A-502 Chetan S. Gadoya & Jt 35,64,450 A-503 Nikita U. Thakkar & Jt. 31,43,925 A-504 Morris John D’souza 23,42,925 A-505 Praveen Kumar Yadav & Jt. 23,42,925 A-506 Laila N. Pirani 35,04,375 A-705 Priya M. Gupa 21,06,000 A-706 Hiteshree V. Shrimakar 35,04,375 A-707 Mamta Ashwin Parikh 35,04,375 A-901 Kulsum Akbar Somani 35,64,450 A-902 Rafiq Vazirbhail Lagadia & Jt. 35,64,450 A-903 Sachin H. Savla 31,43,925 A-904 Dwarka Swarup Simlot 22,42,925 A-905 Rajesh Jain 23,42,925 A-1102 Veena Ashok Gala 25,64,450 A-1103 Mr. Bhupinder Singh Sethi & Jt. 31,43,925 A-1104 Mr. Akbar R. Somani 23,42,925 A-1105 Jayshree Atul Mehta 23,42,925 A-1106 Ranjan Satish Gala & Jt. 35,04,375 A-1107 Mrs. Sandhya Anand Kumar Gautam 35,04,375 Unique Homes – B B-101 Pawan Kumar Mishra & Jt. 24,00,840 B-102 Rizwan Bahuali Zamindar 23,42,925 B-104 Mr. Virendra Kandari 23,42,925 B-106 Mr. Imran Irfan Khan 34,44,300 B-303 Mr. Saroj D. Tripathi 23,42,925 B-305 Mr. Chandra Bhanjadhwani 25,63,200 B-306 Mr. Kundan Mal Goyal 34,44,300 B-501 Mr. Rajesh I. Yadav 23,42,925 Unique Shanti Developers LLP ITA Nos. 3856 & recognized during the year under consideration even though the flats were booked by the customers. The said details are as under:- Agreement Date of Booking Date of Agreeme nt Revenue Recognition A.Y2017- 18 A.Y.2018 -19 A.Y.2019 20 33,48,810 11.04.13 01.03.19 - - 13,39,524 22,23,000 14.02.13 12.10.20 - - - 23,42,925 15.01.13 14.10.19 - - 9,37,170 35,64,450 16.01.13 13.11.18 - - 14,25,780 33,04,375 21.09.13 - - - 35,64,450 12.04.13 20.04.19 - - 14,25,780 31,43,925 24.12.12 11.06.14 9,74,617 1,88,636 94,317 23,42,925 21.01.13 13.10.14 7,26,307 1,40,576 70,287 23,42,925 24.01.13 09.10.19 - - - 35,04,375 15.02.14 16.05.15 10,86,356 2,10,263 1,05,131 21,06,000 27.12.12. 18.02.19 - - 8,42,400 35,04,375 12.01.13 05.07.19 - - 14,01,750 35,04,375 12.01.13 - - - 35,64,450 05.02.13 - - - 35,64,450 28.01.13 02.05.16 11,04,980 2,13,867 1,06,933 31,43,925 27.03.14 26.10.18 - - 12,57,570 22,42,925 08.01.13 17.02.21 - - - 23,42,925 08.01.13 26.06.14 7,26,307 1,40,576 70,287 25,64,450 09.10.14 15.10.19 - - - 31,43,925 04.02.13 18.06.14 9,74,617 1,88,636 94,317 23,42,925 05.02.13 - - - 23,42,925 18.01.13 11.01.19 - - 9,37,170 35,04,375 12.02.16 27.05.19 - - 14,01,750 35,04,375 05.01.13 20.01.01 7 - 12,96,61 9 1,05,131 24,00,840 07.02.14 13.11.14 7,44,260 (7,44,260 ) 9,60,336 23,42,925 04.09.13 08.02.17 7,26,307 1,40,576 70,287 23,42,925 09.10.13 25.11.20 - - - 34,44,300 04.09.13 20.02.17 10,67,733 2,06,658 1,03,329 23,42,925 15.09.13 20.12.14 7,26,307 1,40,576 70,287 25,63,200 14.10.13 15.12.18 - - 10,25,280 34,44,300 08.10.13 - - - 23,42,925 30.08.13 02.03.16 7,26,307 1,40,576 70,287 Unique Shanti Developers LLP 32 ITA Nos. 3856 & 3902/MUM/2023 ration even though the flats were A.Y.2019- 20 A.Y.2020- 21 AY 2021- 22 13,39,524 9,37,667 2,00,928 15,11,640 1,33,380 9,37,170 6,56,019 1,40,576 14,25,780 9,98,046 2,13,867 23,82,975 2,10,263 14,25,780 9,98,046 2,13,867 94,317 8,80,299 1,88,636 70,287 6,56,019 1,40,576 15,93,189 1,40,576 1,05,131 9,81,225 2,10,263 8,42,400 8,89,680 1,26,360 14,01,750 9,81,225 2,10,263 23,82,975 2,10,263 24,23,826 2,13,867 1,06,933 9,98,046 2,13,867 12,57,570 8,80,299 1,88,636 15,93,189 1,40,576 70,287 6,56,019 1,40,576 24,23,826 2,13,867 94,317 8,80,299 1,88,636 15,93,189 1,40,576 9,37,170 6,56,019 1,40,576 14,01,750 9,81,225 2,10,263 1,05,131 9,81,225 2,10,263 9,60,336 6,72,325 1,44,051 70,287 6,56,019 1,40,576 15,93,189 1,40,576 1,03,329 9,64,404 2,06,658 70,287 6,56,019 1,40,576 10,25,280 7,17,696 1,53,792 23,42,124 2,06,658 70,287 6,56,019 1,40,576 B-502 Mr. Imran Irfan Khan 23,42,925 B-503 Mrs. Neha Jigish Chiniwala & Jt. 23,42,925 B-504 Trupti A. Ghelani & Jt. 23,42,925 B-506 Mrs. Renu Gupta 34,44,300 B-701 Mr. Rajiv Kishore Gadda 23,42,925 B-702 Mr. Shivkumar K. Pal 23,42,925 B-703 Mr. Harish Koliyar 23,42,925 B-704 Jasmine C. Rathod & Jt. 23,42,925 B-705 Mr. Rajiv B. Bhandari & Jt. 25,63,200 B-901 Mr. Uday Kantilal Somani & Jt. 23,42,925 B-905 Rekha Deepak Patel & Jt. 25,63,200 B-1101 Mr. Arun Kumar Agarwal 23,42,925 B-1102 Mr. Arun Kumar Agarwal 23,42,925 B-1105 Jaykumar R. Patel & Jt. 25,63,200 13,15,90,350 Cancelled Flats UH A-501 Mr. Puriben Devabhai Patel & Jt. 35,64,450 A-906 Sanjeeva Shetty 35,04,375 A-105 Hema Jitendra Desai & Jt. 26,26,560 B-301 Mrs. Raminder A Sablok 23,42,560 B-302 Mr. Rajesh Vijay Dubey 23,42,925 B-304 Mr. Sanjeev J. Parker & Jt. 23,42,925 B-505 Mr. Yatin Manani & Jt. 25,63,200 B-902 Mr. Vipul G. Belani 23,42,925 B-1202 Mr. Ajay R. Verma & Jt. 23,42,925 B-1204 Mrs. Aarti R. Verma & Jt. 23,42,925 Value of Cancelled flats 2,98,20,51 0 Total of Unique Homes A&B 16,14,10,8 60 It can be seen from the above chart that bookings for 11 flats having sale value of Rs. 2,98,20,510/ 64. It is further seen that out of remaining 47 flats, agreement to sell in 12 cases were entered into before 31/03/2016. The details of area for these flatswere furnished by the appellant during the assessment proceedings Unique Shanti Developers LLP ITA Nos. 3856 & 23,42,925 04.09.13 08.02.17 7,26,307 1,40,576 70,287 23,42,925 30.08.13 13.11.18 - - 9,37,170 23,42,925 30.08.13 06.09.18 - 8,66,882 70,288 34,44,300 01.09.13 - - - 23,42,925 30.12.14 - - - 23,42,925 30.08.13 18.10.18 - - 9,37,170 23,42,925 19.09.13 12.11.18 - - 9,37,170 23,42,925 17.09.13 27.06.19 - - 9,37,170 25,63,200 30.08.13 06.10.18 - - 10.25,280 23,42,925 17.09.13 - - - 25,63,200 17.09.13 26.06.14 7,94,592 1,53,792 76,896 23,42,925 14.09.13 05.07.14 7,26,307 1,40,576 70,287 23,42,925 14.09.13 05.07.14 7,26,307 1,40,576 70,287 25,63,200 19.09.13 09.10.20 - - - 35,64,450 02.02.13 Not Done 35,04,375 02.05.13 Not Done 26,26,560 12.02.14 Not Done 23,42,560 14.09.13 Not Done 23,42,925 30.08.13 Not Done 23,42,925 30.08.13 Not Done 25,63,200 19.09.13 Not Done 23,42,925 08.09.13 Not Done 23,42,925 04.09.13 Not Done 23,42,925 04.09.13 Not Done 2,98,20,51 16,14,10,8 12557611 37,05,70 1 1,90,47,10 8 It can be seen from the above chart that bookings for 11 flats having sale value of Rs. 2,98,20,510/- were subsequently cancelled. It is further seen that out of remaining 47 flats, agreement to sell in 12 cases were entered into before 31/03/2016. The details of area for these flatswere furnished by the appellant during the assessment proceedings Unique Shanti Developers LLP 33 ITA Nos. 3856 & 3902/MUM/2023 70,287 6,56,019 1,40,576 9,37,170 6,56,019 1,40,576 70,288 6,56,019 1,40,576 23,42,124 2,06,658 15,93,189 1,40,576 9,37,170 6,56,019 1,40,576 9,37,170 6,56,019 1,40,576 9,37,170 6,56,019 1,40,576 10.25,280 7,17,696 1,53,792 15,93,189 1,40,576 76,896 7,17,696 1,53,792 70,287 6,56,019 1,40,576 70,287 6,56,019 1,40,576 17,42,976 1,53,792 1,90,47,10 54077819 78,87,212 It can be seen from the above chart that bookings for 11 flats having sale It is further seen that out of remaining 47 flats, agreement to sell in 12 cases were entered into before 31/03/2016. The details of area for these flatswere furnished by the appellant during the assessment proceedings along with reply dated 15.12.2018 wh area of the project secured by legally enforceable agreement to sell is less than 25% of the total area of the project, therefore, the condition (c) of para 5.3 of guidance note is not fulfilled. Hence, as per the guida by ICAl, no revenue for the project namely Unique Homes is required to be recognized during the year under consideration. Therefore, the action of the Assessing Officer in recognizing the revenue amounting to Rs. 4,50,60,551/- place to mention that the appellant has recognized revenue from this project in subsequent assessment year as tabulated above which have been accepted by the assessing officer in assessments for subsequent years. 65. To sum up, out of the addition of Rs. 2,62,17,851/ Assessing Officer by treating the booking forms/allotment letters as legally enforceable agreement, addition to the extent of Rs. 6,23,553/ 2,87,743) is confirmed. The rem The ground no. 3 raised by the appellant is PARTLY ALLOWED. 7.2 We have heard rival submissions and perused the finding of ld CIT(A) reproduced above. We CIT(A) for considering to the buyer at the stage of entering into a registered sale agreement as held by the Co-ordinate Bench of the Tribunal in the case of Sankalp Realtors Pvt. Ltd. (supra). We find that the Ld. CIT(A) has thoroughly examined all the allotment letters and sale agreements and thereafter, he upheld the addition to the extent of Rs.3,35,180/- (paragraph 55) in respect of project namely Aurum-II’. Similarly, in respect of project namely also the Ld. CIT(A) verified the allotment/sale agreements entered into with the buyers and upheld the addition to the extent of Rs.2,87,743/-. In this manner Ld. CIT(A) has upheld the disallowance to the extent of Rs.6,23,553/ 2,87,743/-). In our opinion, the finding of the ld CIT(A) on the issue in dispute is well reasoned and w Unique Shanti Developers LLP ITA Nos. 3856 & along with reply dated 15.12.2018 which is 8070 sq. ft. Since the carpet area of the project secured by legally enforceable agreement to sell is less than 25% of the total area of the project, therefore, the condition (c) of para 5.3 of guidance note is not fulfilled. Hence, as per the guidance note issued by ICAl, no revenue for the project namely Unique Homes is required to be recognized during the year under consideration. Therefore, the action of the Assessing Officer in recognizing the revenue amounting to Rs. for the project Unique Homes is erroneous. It is not out of place to mention that the appellant has recognized revenue from this project in subsequent assessment year as tabulated above which have been accepted by the assessing officer in assessments for subsequent 65. To sum up, out of the addition of Rs. 2,62,17,851/- Assessing Officer by treating the booking forms/allotment letters as legally enforceable agreement, addition to the extent of Rs. 6,23,553/ 2,87,743) is confirmed. The remaining addition is directed to be deleted. The ground no. 3 raised by the appellant is PARTLY ALLOWED. have heard rival submissions and perused the finding of ld CIT(A) reproduced above. We concur with the finding of the Ld. CIT(A) for considering the transfer of risk and reward and revenue to the buyer at the stage of entering into a registered sale agreement ordinate Bench of the Tribunal in the case of Sankalp Realtors Pvt. Ltd. (supra). We find that the Ld. CIT(A) has y examined all the allotment letters and sale agreements he upheld the addition to the extent of (paragraph 55) in respect of project namely . Similarly, in respect of project namely ‘Unique Signature e Ld. CIT(A) verified the allotment/sale agreements entered into with the buyers and upheld the addition to the extent of . In this manner Ld. CIT(A) has upheld the disallowance to the extent of Rs.6,23,553/- (Rs.3,35,810/ ur opinion, the finding of the ld CIT(A) on the issue in dispute is well reasoned and we don’t find any infirmity in the Unique Shanti Developers LLP 34 ITA Nos. 3856 & 3902/MUM/2023 ich is 8070 sq. ft. Since the carpet area of the project secured by legally enforceable agreement to sell is less than 25% of the total area of the project, therefore, the condition (c) of para nce note issued by ICAl, no revenue for the project namely Unique Homes is required to be recognized during the year under consideration. Therefore, the action of the Assessing Officer in recognizing the revenue amounting to Rs. ct Unique Homes is erroneous. It is not out of place to mention that the appellant has recognized revenue from this project in subsequent assessment year as tabulated above which have been accepted by the assessing officer in assessments for subsequent - made by the Assessing Officer by treating the booking forms/allotment letters as legally enforceable agreement, addition to the extent of Rs. 6,23,553/- (3,35,810 + aining addition is directed to be deleted. The ground no. 3 raised by the appellant is PARTLY ALLOWED.” have heard rival submissions and perused the finding of ld concur with the finding of the Ld. the transfer of risk and reward and revenue to the buyer at the stage of entering into a registered sale agreement ordinate Bench of the Tribunal in the case of Sankalp Realtors Pvt. Ltd. (supra). We find that the Ld. CIT(A) has y examined all the allotment letters and sale agreements he upheld the addition to the extent of (paragraph 55) in respect of project namely ‘Unique Unique Signature’ e Ld. CIT(A) verified the allotment/sale agreements entered into with the buyers and upheld the addition to the extent of . In this manner Ld. CIT(A) has upheld the (Rs.3,35,810/- + ur opinion, the finding of the ld CIT(A) on the issue e don’t find any infirmity in the finding of ld CIT(A) on the issue in dispute. the finding of the Ld. CIT(A). T Revenue is accordingly dismissed. 8. In the result, the appeal of the assessee the appeal of Revenue is partly allowed for statistical purpose. Order pronounced in the open Court on Sd/- (RAHUL CHAUDHARY JUDICIAL MEMBER Mumbai; Dated: 14/08/2024 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Unique Shanti Developers LLP ITA Nos. 3856 & finding of ld CIT(A) on the issue in dispute. Accordingly, we uphold the finding of the Ld. CIT(A). The ground No. 2 of the appeal of Revenue is accordingly dismissed. In the result, the appeal of the assessee is dismissed whereas the appeal of Revenue is partly allowed for statistical purpose. ced in the open Court on 14/0 - Sd/ RAHUL CHAUDHARY) (OM PRAKASH JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Unique Shanti Developers LLP 35 ITA Nos. 3856 & 3902/MUM/2023 Accordingly, we uphold he ground No. 2 of the appeal of the is dismissed whereas the appeal of Revenue is partly allowed for statistical purpose. /08/2024. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai
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