2018 (11) TMI 1341

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....ellant could not have followed cash system of accounting for Hadapsar project, without appreciating that the method of accounting followed by the assessee was fully permissible in law? II. Whether on the facts and circumstances of the case, the ITAT ought to have held that the amount of Rs. 10 crore did not accrue in AY 200708 in view of the facts that: (a) the relevant transactions could be completed only after the repeal of the Urban Land Ceiling Act, which repeal took place after the relevant year; (b) s.2(47) relied on by the AO was admittedly not applicable as the present case was not one of transfer of capital assets; and (c) under the relevant agreements, the amount of Rs. 10 crore did not at all fall du....

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....nal. 7. In this context, the above noted questions have been raised by the assessee in the present tax appeal. Learned counsel for the assesee argued that there is no prohibition for the assessee following mercantile system or project completion system in one project and the cash method of accounting in the another. Learned counsel further argued that the land in question was within the purview of Urban Land Ceiling Act. Such Act was abolished in the State of Maharashtra only with effect from 29th November, 2007. On the date of assignment, therefore, no rights accrued in favour of assignee. It was, therefore, that once the Urban Land Ceiling Act was abolished, the parties executed a sale deed in favour of the purchaser in which the asses....

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.... other projects and make a departure only for one of the projects by changing the system of accounting. The Tribunal, therefore, correctly held this issue against the assessee. 11. We, therefore, hold that the assessee was bound to follow the mercantile system of accounting and offer the income to tax on the basis of accrual and not actual receipts. The assessee, however, argued that the assignment under which such accrual arose itself was invalid and therefore, it cannot be stated that accrual of income crystallized till the Urban Land Ceiling Act was repealed and sale deed was executed. There are many short-comings of this contention of the assessee. Firstly, the assessee had claimed to have acquiesced certain rights in the property in....