TaxTMI 
TaxTMI 
2014 (3) TMI 1018
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....orporated on 21.3.2006 and is engaged in the business of real estate development. During the year, the assessee purchased 16.33 acres of land amounting to Rs. 60.23 crores. It has entered into a Development Agreement with M/s DLF Commercial Projects Corporation (Developer), a partnership firm and M/s Felice Real Estate Ltd. (confirming party) dated 5.12.2006. The assessee company, EEDPL, has also received Rs. 25 crores as interest free performance deposit from the developer. Salient features of the Agreement are as follows: 1. EEDPL shall acquire ownership of land in Dist.Gurgaon, the development rights which shall be granted to the Developer for a consideration of Rs. 2.10 crores per acre of the land. 2. The consideration shall be paid ....
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....EDPL shall have the right but not the obligation to terminate the agreement. 7. The developer has the right to terminate the agreement under two conditions - a) EEDPL failing to acquire the scheduled property; (b) EEDPL making false representations and warranties in respect of title to property, in which case the consideration, if any received, and interest free performance deposit shall be refunded by EEDPL. 8. EEDPL shall not be entitled to terminate the agreement for any reason whatsoever except where the developer fails to obtain the license and also does not exercise the option to purchase the property. 3. The A.O. at para 2 last page of his order held as follows. "In conclusion, it has to be stated that the agreemen....
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.... the case, the learned CIT(A) has erred in deleting addition of Rs. 34,29,49,000/- made on account of accrued income on grant of development rights ignoring that - a) the said addition of Rs. 34.29 crores was strictly made in accordance with the development agreement dated 05.12.2006 entered with M/s DLF Commercial Projects Corporation (Developer). The said agreement (Article 2.1) provides for grant of an exclusive license to the developer from the date of purchase of the land by the assessee & article 5.1 provides that in consideration of the assessee transferring the exclusive development rights over the property the developer shall pay to the assessee the consideration within two years from the effective date sum ofRs. 2.10 crore....
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....nt, the mere possibility of a future contingency preventing the other party from performing its obligation cannot have the effect of postponing the date of the agreement coming into force or the date of accrual of consideration of the agreement, especially when such a condition is not recognized as a condition precedent in the agreement between the parties themselves. f) the assessee had received a substantial part of the consideration under the guise of interest free deposit though the income accruing to it was the consideration 2.10crrores per acre of the property acquired by it. f) the Assessing Officer has aptly cited the decisions in the cases of 113 ITR 307 (SC), 126 ITR 599 (SC) and 254 ITR 454 while making the said addition on acc....
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....he issue in question is covered in favour of the assessee and against the Revenue. 7. After hearing rival contentions we hold as follows. 8. We first take up revenue's appeal. We find that the Assessing Officer's observations were verbatim identical with the observations made in the Assessment Year 2007-08. The Tribunal at pages 18 to 20 paras 12 to 16 held as follows. "12. From the above, it is evincible that the ld. CIT(A) has duly taken into consideration all the relevant articles of the Development Agreement entered into by the assessee with the developer. Now, obviously, even as per the agreement, no development right comes into existence till the licence is granted. Indisputably, till such time, the nature of the exact development ....
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....wn to be representing part of sale consideration for the development rights. It cannot do so, since, as observed, no such development rights came into existence during the year. 14. All the above facts have correctly been taken into consideration in the right perspective by the ld. CIT(A) while deciding the issue in favour of the assessee. 15. Apropos the case laws relied on by the Department, none of them are applicable to the facts present here. In all those cases, there was actual physical parting of possession in favour of the developer which is not so herein. 16. In view of the above, finding no error whatsoever with the order of the ld. CIT(A), we uphold the same rejecting the grievance sought to be raised by the Department by way ....