TaxTMI 
TaxTMI 
TaxTMI 
2019 (12) TMI 211
X X X X Extracts X X X X
X X X X Extracts X X X X
....TA No.73/Ahd/2016 by proposing the following questions, stated to be substantial questions of law:- [A] "Whether Appellate Tribunal has erred in law and on facts in deleting the addition to Rs. 3,13,18,468/- made on account of sale of land by way of Development Agreement?" [B] "Whether Appellate Tribunal has erred in holding that the Assessing Officer ought not to have applied Sec.2(47) whereas the Assessing Officer has only made a reference to Section 2(47)(v) and made addition to business income?" [C] "Whether Appellate Tribunal has erred in law and on facts in not appreciating that transfer of development right does not result in a business transaction and consequently business income during the year?" 2.The assessment year is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct land was held by the assessee as stock in trade and not as a capital asset as defined under section 2(47) of the Act. The Revenue carried the matter in further appeal before the Income Tax Appellate Tribunal, which dismissed the appeal and upheld the order passed by the Commissioner (Appeals). 5.Mrs. Mauna M. Bhatt, learned senior standing counsel for the appellant, invited the attention of the court to the findings recorded by the Assessing Officer in the assessment order, to submit that the Assessing Officer upon examining the development agreement has found that the respondent assessee has granted all the rights of development and construction on the subject land to the developer. Further, all the rights for booking/selling the unit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....loper only nominates the buyers. According to the Assessing Officer all the powers like deciding the terms and conditions with the prospective buyers, deciding the prices and all other matters got vested in the developer and the assessee retained no right at all in this respect. The power of selling the units was given to the developer as an independent owner of the developed property and not as an agent of the assessee. It was submitted that in view of above, the Assessing Officer has found that the assessee has not included the sale consideration of the subject land amounting to Rs. 3,86,02,600/- in its books of account which was sold by virtue of the development agreement. It was submitted that in view of the findings recorded by the Ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....), after considering the submissions advanced on behalf of the assessee as well as the terms and conditions of the development agreement, found that the developer was given an authority to construct the flats on the subject land and finalise the buyers for such flats as well as the authority to decide the terms of sale price with the buyers. However, clause 5 of the development agreement clearly stated that the sale deed is to be executed by the assessee in favour of the proposed members. The Commissioner (Appeals), accordingly, found that from this condition it is clear that the assessee has merely transferred the development rights in land to Balaji Associates and not the possession of the land, as the final authority to sign the sale dee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ostponed recognition of revenue on the basis of completion of work by the developer as the same was not determinable with reasonable certainty till the construction of the flats by the developer. He, accordingly, was of the view that in terms of the development agreement, the assessee had correctly taxed consideration of development agreement on proportionate basis as and when the sale-deed is executed in favour of proposed buyers as transfer of proportionate land took place only when the assessee transferred the constructed property/ flats by way of sale-deed. He, accordingly, held that the assessee had correctly recognised revenue on a year to year basis and further found that the assessee had duly offered the income from profit on sale o....