TaxTMI 
TaxTMI 
2017 (2) TMI 67
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...., AO rejected method of accounting on the ground that profit from one of its projects is not offered to tax in the year under consideration by observing that project was completed in the Assessment Year 2011-2012 only. 5. The AO estimated income of the project at Rs. 58,97,073/-. During the course of the assessment proceedings assessee submitted occupancy certificate (O.C.) dated 20.05.2011 issued by CIDCO. From the said O.C., AO noted that CIDCO had inspected project of the assessee on 07.03.2011 and therefore he came to the conclusion that assessee's project is completed on that date. He also observed that as on March 31,2011, 95.83% of the project was completed and assessee had received around 63% of the sale consideration. AO, therefore, held that year of accrual of income is A Y 2011-2012 and not AY 2012-2013 as declared by the assessee. 6. By the impugned Order CIT(A) deleted the addition after observing as under:- 4.4 I have considered assessment order and the submissions of the appellant carefully. In the case on hand, the undisputed fact is that the assessee has been consistently following a particular method of accounting viz project completion method of accounting....
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....hat the policy of law 'is that there must be. a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set eat rest judicata and quasi-judicial controversies as it must in other sphere of human activity.(p. 10) Following the above decision the Delhi High Court in the case of CIT v. A.R,J. Security Printer and CIT v. Neo Poly Pack (P.) Ltd. [2000] 245 ITR 4922 (Delhi) held that even when the doctrine of res judicata does not apply to income-tax proceedings, where an issue has been decided consistently in a particular manner for earlier assessment years, the same view should prevail, even during the subsequent years unless there is: a material change in the facts. The law is, therefore, fairly well settled. For rejecting the view taken for the earlier assessment years, there must be a material change in the fact situation. There is no gainsaying that the previous view will have no application even in cases where the law itself has undergone a change but before an earlier view can be upset or digressed from, one of the two must be demonstrated, namely, a change in the fact s....
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....erms of agreement for sale, they are advances and the same cannot be appropriated as income till the transaction is complete by at least handing over of possession. Even if a builder has right to receive progress payments in terms of the agreement, they are not due as income but as advances and it accrues as income only on completion of transaction. 4.11- Undoubtedly possession to all the flat owners of Balaji Avenue was not handed over by the appellant in the year under consideration and the actual possession was handed over in FY 2011-2012 i.e. A Y 2012-2013. Therefore, I hold that appellant was right in not recognizing income of Rs. 58,97,073/- in the year under consideration in the absence of transfer of substantial risk and reward associated with the project. AO was therefore not justified in bringing the said sum to tax in AY 2011-2012 merely on the basis of inspection conducted by CIDCO authorities. This ground of appeal is decided in favour of the assessee. 7. Against the above order of CIT(A), revenue is in further appealed before us. 8. It was contended by learned DR that the assessee has completed this project and sale amount was also received by the assessee more t....
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....#39;s architect shows that the completion certificate was submitted on 24-4-2006, which date falls within the year ended 31-3-2007, relevant to the assessment year 2007-08. The letter of the Executive Engineer says that the certificate has been accepted, subject to submission of certificate u/s.270A of the MMC Act within 3 months. 10. So far as the handing over of the possession is concerned, the assessee has placed the copies of the letters from page 53 onwards. A perusal thereof shows that in all cases possession has been handed over after 31-3-2006, mostly in the months of May, June and even November 2006. Page 103 of the paper book is a certificate issued by the Hydraulic Engineer's Department of the Brihanmumbai Mahanagarapalika on 20-6- 2006, to the effect that adequate water supply has been provided in the premises. Thus, even the water supply has been given only in the previous year ended 31-3-2007, relevant to the assessment year 2007-08. It cannot be postulated that possession was handed over long before the water supply was provided. 11. The learned Sr.DR pointed out from the details given in page 34 of the paper book that some flats had been registered in the na....
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....ns, we accept the contentions of the assessee. The alternative plea of the assessee that in case the addition is confirmed in the year under appeal, directions should be issued for deletion of the profits from the project in the assessment order for the assessment year 2007-08 becomes infructuous. 14. The appeal is allowed with no order as to costs. 10. Learned AR also relied upon the order of the tribunal in the case of Champion Construction Company, 1983 ITR 495 wherein under similar facts Tribunal held as under: 18. We have examined the facts of the case from this point of view. We find that out of the total accommodation of 58,970 sq.f.t. constructed, the assessee was able to sell only 25,530 sq.f.t. during the previous year relevant for the assessment year 1977-78. Neither the construction of the multi-storeyed building was complete nor even the half portion of the building sold. The net sale proceed received were much less than the total expenditure/cost incurred by the assessee up to date. In the circumstances, so far as the assessment year 1977-78 is concerned we accept the assessee's' submission that it would ,be .in order if no profits or losses are estimated....
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....#39; in Rs. Per sq. ft. The graph was enclosed by AO at Annexure-III. 13. As per the graph, the AO included that there is huge variation in sale price of different flats, the AO also observed that within a gap of few days / weeks, the price variation is very high. 14. The AO finally observed that annexure-II & annexure-Ill show that there is large variation in the price between the flats which were booked in the period 31.03.2007 to 08.06.2009. Similarly, large variation is there in the sale rate of flats which were booked in the period 10.08.2009 to 11.3.2011. Large variation in rates is evident all along the graph. In the period 31.03.2007 to 06.06.2008, total of 24 flats are booked wherein price varied from Rs. 1,110/- to Rs. 8,185/- per Sq..ft. These variations do not follow any pattern or logic and these points to the fact that only a fraction of actual sale proceeds is accounted in the books of account. Moreover, the assessee did not give for variation in the rice of each flat. 15. In view of the detailed working given by the AO at page 10 to 16, the AO reached to the conclusion that the assessee took large portion of sale proceeds in cash which remained unaccounted. So the....