AI Drafter 
TaxTMI 
TaxTMI 
2014 (10) TMI 533
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....the business of building construction and real estate. For the year ending on 31.3.2000, the assessee had filed its return of income on 29.11.2000 declaring a total loss of Rs. 7,14,700/-. The return filed was processed and the Assessing Authority completed the assessment under section 143(3) of the Act by disallowing interest paid by the assessee on the loans taken to an extent of Rs. 10,73,594/- on the ground that the assessee had given interest free loans to sister concerns and associate concerns and the relatives of the Directors. The Assessing Authority has also brought to tax the amount received from M/s.Prestige Constructions to an extent of Rs. 4,04,40,000/- shown in the assessee's balance sheet as a sundry creditor. By virtue o....
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....the assessment year 2000-01. 3. The assessee preferred an appeal against the said order before the Commissioner of Income Tax (Appeals). The Appellate Authority on a careful examination of all the agreements held that the Assessing Officer is not justified in bringing to tax the income from nomination fees in respect of business venture at Bangalore amounting to Rs. 4,04,40,000/- for the assessment year 2000-2001 as the said income falls for consideration for the assessment year 1999-2000 only. Accordingly, the addition made for Rs. 4,04,40,000/- was deleted and the Assessing Officer was directed to recompute the interest chargeable under section 234B of the Act. 4. Aggrieved by the said order, both the assessee as well as the revenue....
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.... assessee from M/s.Prestige Constructions, as per agreement dated 25.6.1998 and supplement agreement dated 25.6.1998, is assessable in the assessment year 2003-04 on Project Completion Method, and not in the assessment year 1999-00, even though the assessee was not a Builder for relevant project, as assessee is not entrusted with construction work in the proposed project but represents only a Confirming Party to these agreements? 2. Whether on the facts and circumstances of the case, the Tribunal was right in law in coming to the conclusion that nomination fee received by the assessee could not be brought to tax in the assessment year 1999-00 under Section 2(47)(v) of the Income Tax Act in the light o....
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....-up area. It is only when the said built up area is handed over to the assessee in terms of the Complete Project Method, the assessee has offered the said income to tax for the assessment year 2003-04 and therefore, the Tribunal was justified in upholding the claim of the assessee by setting aside the order passed by the lower authorities and therefore, he submits that no case for interference is made out. 9. The material on record discloses that the memorandum of understanding came to be entered on 30.1.1995 under which the assessee entered into agreement with the owner. The terms of the agreement makes it clear, the assessee has to identify the purchasers for the owners. Thereafter, on identifying such owners, a Joint Development Agree....
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.... the said agreement as on the date the contract was completed by handing over the constructed area or on the day the agreement was entered into as he was following Mercantile System of Accounting. 10. Accounting Standard (AS) 7 applies to Complete Project Method. The said system deals with accounting for construction contracts in the financial statements of enterprises undertaking such contracts i.e., by the contractors. It also applies to enterprises undertaking construction activities of the type dealt within this statement not as contractors but on their own account as a venture of a commercial nature where the enterprise has entered into agreements for sale. In other words, a person who enters into such contract should undertake the ....
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....en the said amount is due to the assessee, a portion of which was already paid and a portion of it is payable in the near future as per the dates prescribed, the amount mentioned in the said agreement accrued on 25.6.1998 and therefore, the said amount should have been offered to tax for the assessment year 1999-2000. That is precisely what the Appellate Authority the Commissioner of Income Tax (Appeals) has held. The fact that though the parties entered into agreement in 1995, there were modifications, alterations and supplementary agreements also came to be executed. Finally, the terms between the parties were crystallized under the agreement dated 25.6.1998. Therefore, when the assessee was following Mercantile System of Accounting, he s....