TaxTMI 
TaxTMI 
2018 (12) TMI 910
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....owner of the project wherein it has 14% right and interest in the entire project and according to him, the assessee should have earned 14% of the entire sale consideration realized on sale of units rather than actual sale consideration realized. For this assessee has raised the following ground No. 1: - "1. The learned Commissioner of Income-tax (Appeals) erred in upholding the action of the learned Assessing Officer iii making an addition of a sum of Rs. 6662,620/- on the ground that the appellant is a co-owner of the project wherein it has 14% right and interest in the entire project and the appellant should have earned 14% of the entire sale consideration realized on sale of all units rather than actual sale consideration realized I by the appellant on the sale of units which Were allocated to the appellant in pursuance of Deed of Declaration dated 02/02/2008." 3. Briefly stated facts are that the assessee is carrying on the business of real estate & development/construction of property. The assessee undertook a project of construction of 13 storey building known as H&M towers, situated at Bandra West, Mumbai along with four other co-owners. The assessee is one of th....
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....bsp; 4 AASTITVA 129.46 9.080989386 129.46 TOTAL 9.080989386 5 SHILPI 129.46 9.080989386 129.46 Total 9.080989386 6 Hemani V Gowani 129.46 9.080989386 129.46 Total 9.080989386 7 Hemani V Gowani 111.54 9.080989386 111.54 Total 9.080989386 8. Hemani V Gowani 47.62 1.712.754512 47.62 9 Hemani V Gowani 129.46 9.080989386 129.46 Total 9.080989386 10 Arti Kothari 129.46 9.080989386 129.46 &....
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.... consideration of Rs. 48,98,60,000/-. The Unsold stock of the project is 47.62 sq. mtrs.., the sale consideration receivable from the unsold stock is required to be considered to compute the total consideration of the project. It is seen that the latest tvo events of sale of unit at 13th floor is occurred on 23.02.2011 @ Rs. 4,94,658/- per sq mtrs and another Unit at 2nd floor sold on 28.06.2010 @ Rs. 3,86,220/-. Considering the current scenario in the real estate market vis-à-vis location of the unit -8 i.e. 9th floor, the realizable value of the unsold stock is adopted at Rs. 4,00,000/- per sq. mtrs. Accordingly total sale consideration of the project is computed as under Total consideration received on account of sale of area 1377.76 sq. mtrs Rs. 48,98,60,000/- Add: Consideration receivable of the unsold stock 47.62 x 400000 Rs. 1,90,48,000/- Total consideration of the Project Rs. 50,89,08,000/-" 7. The AO noted that the assessee's right/ interest is oniy to the extent of 14%, whereas the assessee has disclosed its share of consideration of receipts at 12.69% of the total consideration of the project. According to AO, assessee's actual share of consid....
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....ddition of t 66,62,620/- to the total income of the assessee. It is seen that the AO has rightly noted that the assessee had 14% share in the property where as per the details on record the company had received only 12.69% in the distribution of profit, whereas the assessee had claimed 14% of the expenses in its books. It is noted that the assessee has not shown the full profit accrued to it as per its share in the project which is 14%. The working of the 40 in bringing to tax 14% of the project receipts in the hands of the assessee is found to be correct and the same is upheld. However there is merit in the alternate ground of the assessee that profit of unsold units cannot be brought to tax till the time of realization of money from sale of such units. Accordingly, the AO is directed to exclude the profit of unsold units from the income of the assessee for the current year and bring this income to tax in the hands of the assessee in the year in which these units are actually sold. Accordingly these grounds of appeal are partly allowed." Aggrieved, now assessee is in second appeal before Tribunal. 9. We have heard rival contentions and gone through the facts and circumstance....
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....rnished the details of comparative chart of sale consideration of all units during the course of assessment as well as appellate proceedings. These are reproduced in the order in above para 5 at page 4. We find from the facts of the case that the AO and CIT(A), based on the above chart came the conclusion that the assessee should have considered 14% income of the total consideration realized on sale of all units. According to revenue, the assessee has shown less income on sale of units allotted which are at lower floors compared to sale consideration of upper floors and accordingly allocated 14% of entire sale consideration realized on sale of all units to determine the share of the assessee in the entire project. 12. We have gone through entire facts and noted that the action of the AO in allocating 14% total consideration realized on sale of all the units of the project is wrong and contrary to the Deed of Declaration dated 02/02/2008 entered into by the assessee with other co-owners. We are of the view that factually once the units have been allotted to each co-owners, it is upto each co-owner to decide at which price, at which time or at which such other conditions it want t....
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....e has been accepted by the department. Hence, we delete the addition made by AO and confirmed by CIT(A). This issue of assessee's appeal is allowed. 15. The next issue in ITA No. 3613/Mum/2017 for AY 2011-12 of assessee's appeal is as regards to the order of CIT(A) confirming the action of the AO in directing the AO to make addition of 14% share in the unsold units in the income of the assessee in the year in which such unit is actually sold. For this assessee has raised the following ground No.2: - "2. The learned Commissioner of Income-tax (Appeals) erred in holding that the 14% share in unsold units of the project of Rs. 2646,720/- to be added to the income of the appellant in the year in which such unit is actually sold. The appellant submits that the learned Commissioner of Income-tax (Appeals) failed to appreciate that the appellant does not have any right or interest in the unsold unit as per Deed of Declaration dated 02/02/2008." 16. We find from the observations of the CIT(A) that he has directed the AO to exclude the profit of unsold units from the income of the assessee from the current year and bring this income to tax in the hands of the assessee in the ....