TaxTMI 
TaxTMI 
2011 (1) TMI 132
X X X X Extracts X X X X
X X X X Extracts X X X X
....ear of the assessee to receive revenue. 3. The CIT(A) ought to have appreciated the fact that the method adopted by the Assessing Officer is in vogue in assessing the revenue in Real Estate business." 3. Facts of the case in brief are that the assessee is engaged in the development of Biotech Park and has been allotted 250 acres of land at Turkapally Village, Shameerpet Mandal, Rangareddy District, Andhra Pradesh. Assessee has been mandated by the Memorandum of Understanding (MOU) with the Government of Andhra Pradesh to develop an integrated Biotech park by providing all necessary infrastructures including incubation centre for the use of Biotech industry. The developed land would be transferred to end users on free-hold basis with t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r consideration, to the assessment year 2006-07 to claim and get away with the deduction under section 80-IA in respect of this income also, in that year. He accordingly, proceed to tax the sale consideration in respect of two plots sold during the year, after deducting the proportionate cost of development on the basis of work-in-progress done till the end of the year under consideration, arrived at Rs. 1.81 crores, and accordingly determined the income of the assessee from the sale of plots at Rs. 1,24,94,587. The Assessing Officer thus completed the assessment on a total income of Rs. 1,24,94,587 as against nil income returned by the assessee, vide order of assessment dated 24.12.2007 passed under section 143(3) of the Act. 4. On appe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ents and submitted that the impugned order of the CIT(A) be set aside and that of the Assessing Officer be restored. 6. Learned counsel for the assessee on the other hand, strongly supported the order of the CIT(A) and submitted that the assessee was obliged to deliver the plots to the buyers in such a state not only within the plot but also all the common facilities assured at the time of sale or MOU with the Government. He submitted that mere sale and registration of the plots would not tantamount to realisation of revenue leaving no further obligation on the assessee. He submitted that the sale deeds executed by the assessee in favour of the buyers of the two plots during the year under consideration, were subjected to terms specified....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessee was obliged, in terms of the MOU it has entered into with the State Government, to deliver the plots to the buyers in such a state not only within the plot but also all the common facilities assured at the time of sale or MOU. Further, by the end of the previous year, the assessee was yet to complete its obligations to the buyers and the risks and rewards are not yet transferred on the said sale of property. Hence, the assessee, as rightly held by the CIT(A), was justified in not recognizing the revenue. Further, learned counsel submitted that since the assessee is in the business of setting up of a bio-tech park involving various activities from the drawing board stage to establishing hi-tech, sophisticated scientific equipmen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ition, he placed reliance on the following decisions :- (a) Taparia Tools Ltd. v. JCIT (260 ITR 102)-Bom. (b) CIT v. Builahari Investments (299 ITR 1)-SC (c) Calcutta Co. Ltd. v. CIT (37 ITR 1)-SC (d) Madras Industrial Investment Corporation Limited v. CIT (225 ITR 802)-SC (e) JK Industries Ltd. v. Union of India (297 ITR 176)-SC Learned counsel for the assessee also submitted that books of account of an assessee can be rejected by the Assessing Officer only in case he is not satisfied about the correctness and completeness of the accounts of the assessee. However, in the present case, there is no such finding by the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....developmental works not only within the sold plots but also to provide for the common facilities for the entire park, and then only deliver the possession of the plots sold to the parties. That being so, assessee was justified in postponing the recognition of the income on the sale of plots till the delivery of the plots takes place after the development works are over. The audited financial statements of the assessee together with the notes thereunder clearly corroborate with the claim of the assessee of having deferred the recognition of income in respect of the sale of plots during the year. Facts of the case and the nature of business carried on by the assessee clearly indicates that the assessee was holding the plots in question as its....