ITO 21(2)(4), MUMBAI V. VIDHI ENTERPRISES, MUMBAI

ITA 4924/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 3197 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2015
• Appeal Filed By: Department
• Bench Allotted: F
• Next Hearing Date: 08-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 31-07-2012
• Court: TRIBUNAL
• Department Lawyers: AGAINST PASSED

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F , MUMBAI , , , BEFORE SHRI JOGINDER SINGH, J UDICIAL M EMBER, A ND SHRI RAMIT KOCHAR , A CCOUNTANT M EMBER ITA NO 4924/MUM/2012 ASSESSMENT YEAR: - 2009 - 10. INCOME TAX OFFICER - 21 (2)(4), ROOM NO. 503, 5 TH FLOOR, C - 10, PRATYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E) MUMBAI 400 051. VS.` M/S VIDHI ENTERPRISES 504, PARSH WA KUNJ, MALVIYA ROAD, VILE PARLE (E), MUMBAI 400 057. PAN/GIR NO. AAGFV4334C ( / REVENUE) ( /ASSESSEE) DATE OF HEARING: 21/09/2015 DATE OF PRONOUNCEME NT: 28 /09/2015 ORDER PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER PASSED BY C OMMISSIONER OF I NCOME T AX (A PPEALS ) - 32,MUMBAI (HEREINAFTER CALLED THE CIT(A) ) DATED 23.5.2012 FOR ASSESSMENT YEAR 2009 - 10 . THE REVENUE HAS RAISED THE FOLLOWING GROUND S OF APPEALS FILED IN THE MEMO OF APPEAL : - REVENUE BY SHRI B. YADAGIRI / ASSESSEE BY SHRI HIRO RAI 2 ITA NO 4924/MUM/2012 ASSESSMENT YEAR: - 2009 - 10. PAGE 2 OF 10 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CI T(A) HAS ERRED IN DELETING THE ADDITION OF RS.63,52,000/ - MADE BY THE A. O. WHO ESTIMATED THE PROFIT OF THE ASSESSEE ON THE PROJECT BY ADOPTING 30% OF THE WIP AND ESTIMATED THE PROFIT AT 15%. 2. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE ID. IT(A) ERRED IN DELETING THE ADDITION OF RS.63,52,000/ - MADE BY THE A. O. WITHOUT APPRECIATING THE F ACT THAT THE ASSESSEE INSPITE OF FOLLOWING AS - 9 SYSTEM OF ACCOUNTING, FAILED TO BOOK PROFIT AT PERCENTAGE COMPLETION OF THE PROJECT WHEN 30% OF THE PROJECT WAS COMPLETED AND THE ASSESSEE HAD RECEIVED ADVANCE OF RS.1.85 CRORES. 3. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE ID. CIT(A) ERRED IN DELETING THE ADDITION OF RS.63,52,000/ - MADE BY THE A. O. WITHOUT APPRE CIATING THE F ACT THAT THE ASSESSEE HAS SHOWN CLOSING WIP AS BUSINESS ASSET AND NOT AS AN INVESTMENT. 4. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE ID. CIT(A) ERRED IN DELETING THE ADDITION OF RS.63,52,000/ - MADE BY THE A. O. IGNORIN G THE FACT THAT THE ASSESSEE DID NOT PROVIDE DETAILS OF THE DEVELOPMENT AGREEMENT DURING ASSESSMENT PROCEEDINGS. 5. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. THE F ACTS IN BRIEF OF THE CASE ARE THAT ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS. THE ASSESSEE FIRM HAD UNDERTAKEN A PROJECT OF DEVELOPMENT OF COMMERCIAL BUILDING PROJECT I.E. INFORMA TION TECHNOLOGY PARK AT CHANDIV LI, POWAI, FOR WHICH ASSESSEE FIRM HAS ENTERED INTO A DEVELOPMENT AGREEMENT WITH M/S PANKAJ ENTERPRISES ON 02.04.2008, WHICH IS KNOWN AS NEPTUNE INFOTECH IT PARK. THE A SSESSING O FFICER OBSERVED THAT THE ASSESSEE FIRM HAS COMPLETED 30% OF THE PROJECT AS SHOWN IN THE CO MPUTATION OF INCOME BUT NO PROPORTIONATE REVENUE IS RECOGNIZED AND OFFERED FOR TAXATION IN SPITE OF THE FACT THAT THERE IS RS. 14.11 CRORES CLOSING WIP AS PE R BALANCE SHEET. 3 ITA NO 4924/MUM/2012 ASSESSMENT YEAR: - 2009 - 10. PAGE 3 OF 10 ON BEING SHOW - CAUSED BY THE ASSESSING OFFICER THAT PROFIT ON PERCENTAGE COMPLETIO N METHOD NEED TO BE BROUGHT TO TAX AS 30% PROJECT IS COMPLETE BASED ON THE PERCENTAGE COMPLETION OF THE PROJECT , THE ASSESSEE FIRM SUBMITTED THAT THE ASSESSEE FIRM HAS RECEIVED ADVANCE FOR BOOKING OF RS. 1.85 CRORES FROM M/S RITESH EXPORTS WHICH IS A SIST ER CONCERN OF ASS ESSEE FIRM. THE SAID FIRM RITESH EXPORTS REQUESTED FOR CANCELING OF THE BOOKING IN FEBRUARY 2009 AND THE PARTNERS OF THE ASSESEE FIRM TOOK DECISION IN THE MONTH OF MAY 2009 TO CANCEL THE BOOKING AND RS. 20 LAC WAS REFUNDED BY THE ASSESSEE FIRM ON 15.05 .2009 TO RITESH EXPORTS AND BALANCE OF RS. 1.65 CRORE WAS CREDITED TO THE ASSESSEES FIRM PARTNER S ACCOUNT WHICH WAS DONE PRIOR TO FINALIZATION OF THE ACCOUNTS OF THE ASSESSEE FIRM FOR THE YEAR ENDING MARCH 2009. THE ASSESSEE FIRM HAS NOT RECEIVED ANY OTHER BOOKING/ADVANCE AGAINST THIS PROJECT FROM ANY OTHER PARTY FOR WHICH FACTS ARE EVIDENT IN THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 ST MARCH 2010 AND 31 ST MARCH 2011 . THE ASSE SSEE FIRM HAS TO GIVE 42% OF CONSTRUCTED AREA TO THE OWNERS OF THE LAND AS PER AGREEMENTS WITH THE OWNERS OF THE LAND AND BALANCE 58% OF THE CONSTRUCTED AREA WILL BE RETAINED BY THE ASSESSEE FIRM . THE ASSESSEE FIRM SUBMITTED THAT THE PARTNERS OF T HE FIR M HAS DECIDED NOT TO SELL THE UNITS OF THE CONSTRUCTED AREA BELONGING TO THE ASSESSEE FIRM ON OUTRIGHT SALE BASIS BUT RATHER DECIDED TO LEASE THE SAID UNITS IN THE PREMISE S TO EARN RENTAL INCOME. WITHOUT PREJUDICE, THE ASSESSEE FIRM SUBMITTED THAT 42% OF C ONSTRUCTED AREA IS TO BE GIVEN TO THE OWNERS OF LAND AS PER AGREEMENT OF THE ASSESSEE FIRM WITH OWNERS OF LAND AND THE BALANCE 58% OF THE AREA BELONG TO THE ASSESSEE FIRM AND 30% OF THE COMPLETED CONSTRUCTION WILL LEAD TO 15.6% OF THE AREA BEING CONSTRUCT ED REMAIN ING IN THE HANDS OF THE ASSE SSEE FIRM. 4 ITA NO 4924/MUM/2012 ASSESSMENT YEAR: - 2009 - 10. PAGE 4 OF 10 THE ASSESSING OFFICER , HOWEVER , REJECTED THE CONTENTION OF THE ASSESSEE FIRM AND HELD THAT SI NCE THE PROJECT IS COMPLETE 30% AND THE ASSESSEE FIRM IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND FOLLOWING PERCENTAGE COMPLETION METHOD BASIS FOR RECOGNIZING OF THE REVENUE , THE ASSESSEE FIRM HAS TO SHOW PROFITS ON PERCENTAGE COMPLETION BASIS AND OFFER THE SAME FOR TAXATION . THE ASSESSEE FIRM IS SHOWING CLOSING WIP OF RS. 14.11 CRORES AND ADVANCE HAS BEEN RECEIVED OF RS . 1.85 CRORE WHILE NO PROFIT IS OFFERED FOR TAXATION BY THE ASSESSEE FIRM , HENCE THE ASSESSING OFFICER BROUGHT TO TAX ESTIMATED PROFIT @15% ON 30% OF THE TOTA L COST OF WORK - IN - PROGRESS WHICH AMOUNTED TO RS. 63.52 LACS AS BUSI NESS PROF IT OF THE ASSESSEE FIRM BY ADDING TO THE INCOME OF THE ASSESSEE FIRM . 3. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FIRM CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) AND REITERATED ITS SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER . THE ASSESSEE FIRM SUBMITTED THAT IT HAS CARRIED OUT CONSTRUCTION ACTIVITIES OF ITS COMMERCIAL PROJECT AT CHANDIVILI. THE ASSESSEE FIRM SUBMITTED THAT CONSTRUCTION OF THE PROJECT IS COMPLETED 30% BY 31 ST MARCH 2009.THE ASSESSEE FIRM SUBMITTED THAT IT HAS RECEIVED DEPOSIT OF RS. 1.85 CRORE FORM RITESH EXPORTS (WHICH IS A SISTER CONCERN OF THE ASSESSEE FIRM) ON AD - HOC BASIS WHILE THERE IS NO SUCH BOOKING OF SPECIFIC PREMISES IN THE SAID PROJECT. THE A SSESSEE FIRM ALSO SUBMITTED THAT THERE WAS NO ALLOTMEN T LETTER ISSUE D TO RITESH EXPORTS WITH RESPECT TO ANY FLAT IN THE SAID PROJECT. THE ASSESSEE FIRM ALSO SUBMITTED THAT IT HAS DECIDED NOT TO SELL ANY FLAT IN SUCH PROJECT ON OUTRIGHT BASIS RATHER IT IS DECIDED TO LEASE THE SAID PREMISES TO EARN RENTAL INCOM E . THE ASSESSEE FIRM SUBMITTED THAT IT HAS IN FACT REFUNDED THE AMOUNT OF RS. 20 LAC S BY 5 ITA NO 4924/MUM/2012 ASSESSMENT YEAR: - 2009 - 10. PAGE 5 OF 10 CHEQUE TO RITESH EXPORTS ON 15 TH MAY 2009 WHILE RS. 1.65 CRORE S IS CREDITED TO THE ASSESSEE FIRMS PARTNER S CAPITAL ACCOUNT. THE ASSESSEE FIRM SUBMITTED COPIES OF BA NK ACCOUNTS OF THE SAID FIRM AND THE LEDGER ACCOUNTS COPIES TO EVIDENCE THE SAME. THE ASSESSEE FIRM SUBMITTED THAT IT HAS NOT RECEIVED ANY BOOKING TILL THE ASSESSMENT YEAR 2011 - 12. THE ASSESSEE FIRM ALSO SUBMITTED THAT THE TOTAL COST AS ON 31.03.2009 IS R S. 14.11 CRORE S WHILE , WITHOUT PREJUDICE , EVEN IF THE ADVANCE OF RS. 1.85 CRORE IS CONSIDERED THEN IT IS A MEAGER AMOUNT AND NO PROFIT CAN BE BROUGHT TO TAX. THE ASSESSEE FIRM SUBMITTED THAT IT IS ENTITLED TO 58% OF THE AREA WHILE 42% OF THE AREA BELONG ED TO THE OWNERS OF THE LAND AS PER AGREEMENTS WITH THE OWNERS OF THE LAND AND EVEN IF 30% OF THE PROJECT IS COMPLETE IT WILL TANTAMOUNT 30% OF 58% AREA CONSTRUCTED WHICH IS ONLY 17.5% OF THE AREA CONSTRUCTED AND HENCE THE AREA CONSTRUCTED IS LESS THAN 20 %, THEN AS PER GUIDANCE NOTE ISSUED BY ICAI, NO REVENUE CAN BE BROUGHT TO TAX. THE CIT(A) HELD THAT THE REVENUE IS TO BE BOOKED AS PER ACCOUNTING STANDARD 9 AND GUIDANCE NOTICE ISSUE D BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA IN 2006 WHICH WAS ISSUED AFTER CONSIDERING ACCOUNTING STANDARD 9 ISSUED BY ICAI WHICH STIPULATE IN REAL ESTATE SECTOR, THE REVENUE IS TO BE RECOGNIZED ONLY WHEN SELLER HAS TRANSFERRED SUFFICIENT AND SIGNIFICANT RISKS AND REWARDS OF OWNERSHIP IN THE GOODS, TO THE BUYER AND THE SELLER RETAINS NO EFFECTIVE CONTROL OF THE GOODS TRANSFERRED AND THERE IS NO SIGNIFICANT UNCERTAINTY REGARDING REALIZATION OF THE CONSIDERATION FROM THE SALE OF GOODS. TRANSFER OF RISK AND REWARDS SHALL BE THE TIME WHEN THE SELLER EXECUTES LEGALLY ENF ORCEABLE AGREEMENTS WITH BUYER OR EVEN WHERE NO AGREEMENT IS EXECUTED, THE SIGNIFICANT RISKS RELATED TO REAL ESTATE HAVE BEEN TRANSFERRED TO THE BUYER AND THE BUYER HAS A LEGAL RIGHT TO SELL OR 6 ITA NO 4924/MUM/2012 ASSESSMENT YEAR: - 2009 - 10. PAGE 6 OF 10 TRANSFER HIS INTEREST IN THE PROPERTY, WITHOUT ANY CONDITIONS, WHICH DO NOT MATERIALLY AFFECT HIS RIGHT TO BENEFIT IN THE PROPERTY. THE CIT(A) HELD THAT IN THE CASE OF ASSESSEE FIRM EVEN THE UNITS AGAINST WHICH THE ADVANCE OF RS. 1.85 CRORE WAS RECEIVED ALTHOUGH REFUNDED HAVE NOT BEEN IDENTIFIED, NOR ANY AGREEMENT HAS BEEN EXECUTED EVEN THE SALE PRICE IS NOT FIXED , THE UNITS ARE IN THE CONSTRUCTION STAGE AND EVEN THE STAGE OF CONSTRUCTION IS ONLY 30% AS AT 31 ST MARCH 2009 AND THE POSSESSION HAS NOT BEEN GIVEN TO THE BUYER AND THE EFFECTIVE CONTROL IS ALSO WITH THE SELLER AND AS PER THE CIT(A) EVEN AS PER THE AS 9 OR THE GUID ANCE ISSUED BY THE ICAI IN 2006, IT CANNOT BE SAID THAT RISK AND REWARD OF OWNERSHIP ARE TRANSFERRED AS ON 31.03. 2009 BY MERELY RECEIVING DEPOSIT OF RS. 1.85 CRORE S . THE CIT(A) HELD THAT THE EXP ENDITURE INCURRED TILL 31.03.2012 WAS RS. 28.3 0 CRORES WHEREBY THE CONSTRUCTION WAS 90% COMPLETE TILL 31.03.2012 AND DEPOSIT OF RS. 1.85 CRORE S HAS BEEN RECEIVED AS ON 31.03.2009 WHICH IS EVEN LESS THAN 10% OF THE TOTAL PROJECT COST AND HENCE NO INCOME CA N BE BROUGHT TO TAX AS THE CONTENTION OF SECURING AT LEAST 25% OF THE PROJECT SALEABLE AREA IS NOT SECURED BY CONTRACTS OR AGREEMENTS WITH THE BUYERS EVEN TILL DATE . THE CIT(A) HELD THAT EVEN BY APPLYING MATCHING PRINCIPLES OF REVENUE AND EXPENSES, NO REV ENUE CAN BE RECOGNIZED IN THE INSTANT CASE KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE. HENCE , THE CIT(A) DELETED THE ADDITION S OF RS.63,52,000.00 MADE BY THE ASSESSING OFFICER BY ESTIMATING THE NET PROFIT BASED ON CLOSING WIP. 4 . AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 7 ITA NO 4924/MUM/2012 ASSESSMENT YEAR: - 2009 - 10. PAGE 7 OF 10 5 . LD . DR RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND STATED THAT THE ASSESSEE FIRM HAS NOT OFFERED FOR TAXATION ESTIMATED PROFIT ON PERCENTAGE COMPLETION METHOD BASIS WHILE ASSESSEE FIRM HAS RECEIVED 1.85 CRORE S AS ADVANCE AGAINST THE SAID PROJECT WHILE 30% OF THE PROJECT IS DULY COMPLETED AS ON 31.03.2009. HE ALSO SUBMITTED THAT ASSESSEE FIRM IS ENTITLED FOR 58% OF THE AREA WHILE 42% IS TO BE GIVEN TO THE OWNERS OF THE LAN D AS PER AGREEMENT ENTERED BY THE ASSESSING FIRM WITH THE OWNERS OF LAND AND HENCE THE ASSESSING OFFICER HAS RIGHTLY BROUGHT TO TAX THE SAID AMOUNT OF RS. 63.52 LACS BEING 15% OF THE 30% OF THE CONSTRUCTION WHICH IS COMPLETED ON PERCENTAGE COMPLETION METH OD BASIS. . 6 . TH E ASSESSEE FIRM ON THE OTHER HAND, RELIED UPON THE ORDER OF THE CIT(A). THE ASSESSEE FIRM S UBMITTED THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE AS THE ASSESSEE FIRM HAS RECEIVED RS. 1.85 CRORE S FROM ITS SISTER CONCERN RITESH E XPORTS AS DEPOSIT WHICH WAS LATER ON REFUNDED IN M AY 2009 TO THE EXTENT OF RS 20 LACS WHILE BALANCE AMOUNT OF RS.1.65 CRORES WAS CREDITED TO THE PARTNERS ACCOUNT. THE ASSESSEE FIRM THUS SUBMITTED THAT IT HAS NOT SOLD ANY UNIT IN THE SAID PROJECT IN THE AS SESSMENT YEAR 2009 - 10 OR EVEN UPTO THE ASSESSMENT YEAR 2011 - 12 RATHER A DECISION HAS BEEN TAKEN BY THE PARTNERS OF THE FIRM NOT TO SELL THESE CONSTRUCTED AREA RATHER IT WAS DECIDED TO LEASE THE SAID UNITS TO EARN RENTAL INCOME . THE TOTAL WORK IN PROGRESS B EING 90% OF THE WORK COMPLETED AS ON 31.03.2012 WAS 28.07 CRORES , WHILE WITHOUT PREJUDICE , IT WAS SUBMITTED THAT ASSESSEE FIRM HAS ONLY RECEIVED RS. 1.85 CRORES FROM SISTER CONCERN WHICH WAS EVEN REFUNDED IN THE NEXT YEAR, HENCE, HE SUBMITTED THAT NO INC OME CAN BE BROUGHT TO TAX AS ASSESSEE FIRM HAS NOT SOLD ANY UNIT DURING THE ASSESSMENT YEAR. 8 ITA NO 4924/MUM/2012 ASSESSMENT YEAR: - 2009 - 10. PAGE 8 OF 10 HE RELIED UPON THE DECISION OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT V. BOKARO STEEL LTD. (1999) 236 ITR 315 WHEREBY THE HONBLE SUPREME COURT HAS HELD THAT ONLY REAL INCOME CAN BE BROUGHT TO TAX AND HYPOTHETICAL INCOME WHICH DID NOT MATERIALIZE CANNOT BE BROUGHT TO TAX. 7 . WE HAVE CONSIDERED THE RIVAL CONTENTION AND PERUSED THE RELEVANT MATERIAL ON RECORD AND CASE LAWS RELIED UPON BY THE PARTIES . WE HAVE OBSERVED THAT THE ASSESSEE FIRM HAS UNDERTAKEN DEVELOPMENT OF THE PROJECT NEPTUNE INFOTECH IT PARK DURING THE ASSESSMENT YEAR 2009 - 10. THE ASSESSEE FIRM HAS TO RECEIVE 58% OF THE AREA AFTER CONSTRUCTION WHILE 42% OF THE CONSTRUCTED AREA IS TO BE GI VEN TO THE OWNERS OF THE LAND AS PER AGREEMENT WITH THE OWNERS OF THE LAND . THE ASSESSEE FIRM HAS SPENT 14.11 CRORE S TILL 31.03.2009 AND T HE ASSESSEE FIRM RECEIVED RS. 1.85 CRORE S AS DEPOSIT FROM ITS SISTER CONCERN, RITESH EXPORTS WHICH WAS LATER ON REFUN DED TO THE TUNE OF RS. 20 LAC S IN M AY 2009, WHILE THE BALANCE OF RS.1.65 CRORES WAS CREDITED TO THE PARTNERS ACCOUNT. THE A SSESSEE FIRM HAS NOT SOLD ANY UNIT TILL ASSESSMENT YEAR 2011 - 12 WHILE THE TOTAL WIP WAS 28.3 0 CRORE S AS ON 31.03 .2012 WHEREBY 90% OF THE PROJECT WAS COMPLETED WHILE THERE WAS NO SALE OF UNIT TILL 31.03.2012. SINCE THE ASSESSEE FIRM HAS NOT SOLD ANY PORTION OF THE CONSTRUCTED AREA , NO HYPOTHETICAL INCOME CAN BE BROUGHT TO TAX AS IN FACT NO REAL INCOME HAS ACCRUED TO THE A SSESSEE AS PER THE RATIO OF DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT V. BOKARO STEEL LTD. (1999) 236 ITR 315 WHEREBY THE HONBLE SUPREME COURT HAS HELD AS UNDER: - IN THE ASSESSMENT YEAR 1971 - 72, THE ASSESSEE HAD SHOWN IN ITS BOOKS OF ACCOUNT A SUM OF RS. 7,39,232 AS INCOME FROM INTEREST RECEIVED FROM HINDUSTAN STEEL LTD. FOR THE EIGHT LOCOMOTIVES SUPPLIED BY THE ASSESSEE - COMPANY TO THEM. THE ENTRY IN THIS REGARD WAS 9 ITA NO 4924/MUM/2012 ASSESSMENT YEAR: - 2009 - 10. PAGE 9 OF 10 REVERSED IN THE NEXT YEAR SINCE HINDUSTAN STEEL LTD. HAD REPLACED THE EIGHT L OCOMOTIVES LENT BY THE ASSESSEE - COMPANY TO IT BY NEW ONES. THE ENTIRE NATURE OF THE TRANSACTION WAS CHANGED BETWEEN THE PARTIES. THERE WAS A RESOLUTION OF THE ASSESSEE - COMPANY IN THIS REGARD AND THE INCOME FROM INTEREST DID NOT RESULT AT ALL AS THE ORIGINA L AGREEMENT CEASED TO BE OPERATIVE AB INITIO. THE ENTRY IN THE BOOKS WHICH WAS MADE WAS ABOUT A HYPOTHETICAL INCOME WHICH DID NOT MATERIALISE AND THE ENTRY WAS REVERSED IN THE NEXT YEAR. BOTH THE TRIBUNAL AS WELL AS THE HIGH COURT HAVE HELD THAT SINCE THIS ENTRY REFLECTED ONLY HYPOTHETICAL INCOME, IT COULD NOT BE BROUGHT TO TAX AS INCOME. ONLY REAL INCOME CAN BE BROUGHT TO TAX. ------- ------- ------ - IN THE PRESENT CASE ALSO, THE ENTRY WHICH WAS INITIALLY MADE AS INTEREST WAS REVERSED THE NEXT YEAR BECAUSE IN FACT THE NATURE OF THE TRANSACTION WAS CHANGED AND THE ASSESSEE DID NOT RECEIVE ANY REAL INCOME. THE HIGH COURT HAS, THEREFORE, RIGHTLY HELD THIS ENTRY AS NOT REFLECTING THE REAL INCOME OF THE ASSESSEE AND, HENCE, NOT EXIGIBLE TO INCOME - TAX. 8 . THUS, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) QUA THIS ISSUE AND UPHELD THE SAME. HENCE, THE ADDITIONS OF RS.63,52,000.00 MADE TO INCOME OF THE ASSESSEE FIRM AS BUSINESS PROFIT OF THE ASSESSEE FIRM MADE BY THE ASSESSING OFFICER BY ESTIMATING PROFIT @15% ON 30% OF THE TOTAL COST OF WORK - IN - PROGRESS IS HEREBY DELETED. 9 . IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 8 T H DAY OF SEPTEMBER 2015. S D / - (JOGINDER SINGH) S D / - ( RAMIT KOCHAR ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 2 8 /09/2015 S.K.S., SR . P.S/. . . 10 ITA NO 4924/MUM/2012 ASSESSMENT YEAR: - 2009 - 10. PAGE 10 OF 10 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT, MUMBAI. 4. / CIT(A) - , MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI