TaxTMI 
TaxTMI 
2020 (5) TMI 653
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....erefore was liable to offer this amount for taxation as income from capital gains. (2) Whether on the facts and circumstances of the case and in-law, the learned CIT(Appeal) erred in deleting the addition made on account of sale of development rights amounting to Rs. 5,40,00,000/- without appreciating the fact that this amount had accrued to the assessee on account of transfer of its rights in the property and therefore this amount cannot be treated as an advance in the nature of capital assets. (3) Whether on the facts and circumstances of the case and in-law, the learned CIT(Appeal) erred in deleting the addition made on account of sale of development rights amounting to Rs. 5,40,00,000/- without appreciating the fact that the assessee had submitted the modified deed for transfer of the property at the fag end of the assessment proceedings and therefore the said deed was not verified during the assessment proceedings. (4) Whether on the facts and circumstances of the case and in-law, the learned CIT(Appeal) erred in deleting the addition made on account of sale of development rights amounting to Rs. 5,40,00,000/- without appreciating the fact that the a....
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....upying the said property vacate the promises, and it was further provided that in case the assessee is unable to get even 25% of the slum dwellers occupying the said property even within 5 years to vacate the occupied property, entire money will have to be refunded to Shivalik Ventures Pvt Ltd, though without any interest, within 60 days of the completion of five years time limit. It was further explained that even today the assessee has not been able to get the occupants of property to vacate the property, and, as such, no income has arises in the hands of the assessee. This explanation, however, did not satisfy the Assessing Officer. He was of the view that the "assessee is following mercantile method of accounting" under which "the transactions are recognized as and when they take place" and "under this method, the revenue is recorded when it is earned and the expenses are reported when they are incurred". It was observed by the Assessing Officer that "the assessee has already received an amount of Rs. 86,40,000 during the year, and the balance amount will be received by the assessee in instalments after the fulfilment of the conditions as mentioned in the agreement". It was als....
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....he year in which the assessee renders service to the payee. 5.3.13 In K.K. Khullar V. Deputy Commissioner of Income Tax - 2008 (1) TMI 447- ITAT Delhi-I the assessee received certain amount for services to be performed over a period of time. The amount relatable to the services rendered in the year under consideration was shown as income, the reason being that the assessee became entitled to receive that amount from the client in respect of the services rendered. In other words, the High Court held that debt to the extent of the amount pertaining to services rendered only got vested in the assessee. The rest of the amount was taken as liability to be adjusted in subsequent years as and when the service was rendered. It is but clear that the excess amount would have to be returned in case the service was not performed in subsequent year and therefore in respect of such amount no debt came into existence in favour of the assessee. Therefore this amount did not become the income. The High Court was of the view that the Commissioner (Appeals) erred in finding that the assessee was following the hybrid system of accounting on the ground that the whole of the amount received fro....
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.... until the certainty is established. 5.2.19 Having regard to the facts, legal analysis and judicial precedents, I am of the view that the income has not accrued to the assessee in the year in appeal and hence, the addition made by the AO is to be deleted. These ground of appeal are allowed. 4. The Assessing Officer is aggrieved of the relief so granted by the CIT(A) and is in appeal before us. 5. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 6. It is important to understand the nature of arrangement under which the assessee was to receive Rs. 5.40 crores towards the transfer of development rights. It was a joint venture arrangement between the assessee and Shivalik Ventures Pvt Ltd. There were six cooperative societies, names and details of which were set out in this joint venture agreement, which were formed by certain slum dwellers and these slum dwellers were in use and occupation of certain area of land "seized and possessed of, or otherwise well and sufficiently entitled" by the Maharashtra Housing Area Development Authority. These slum dwellers, who wer....
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....hall be bore and paid by the New Tech Developer and furnish the said NOC (No Objection Certificate) to Shivalik. 6.4 They shall cause to shift to all the slum dwellers from the said property to the temporary alternate accommodation vacating the said Property and hand over the same to the Joint Venture for re-development in accordance with this agreement. 6.5 They shall cause to shift all the Slum Dwellers/Occupants from temporary alternate accommodation to permanent accommodation constructed. 7. What was to be received by the assessee was from a joint venture, in which assessee itself was a participant, but, under the said arrangement, it was to be entirely funded by Shivalik Ventures Pvt Ltd. The essence of the arrangement was the performance of obligations by the assessee so far as the above obligations are concerned. In our humble understanding of the situation, while the assessee was to help the assessee get the development rights in favour of the joint venture, the payment was to be received by hum "as original developer appointed by the said societies" and this payment cannot be read in isolation with all its obligations under the joint venture arrangemen....
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....tion that is fastened to the receipt to provide services in future over the term of contract. It is, therefore, not the right to receive simplictor, but the right to receive the same in income character and without strings of future obligations, de hors the actual receipt, which is relevant for accounting for the same as income. Even under mercantile method of accounting, the relevant point of time is not the actual receipt of income but the point of time when right to receive that income, in income character, crystallized. Just because someone is following mercantile method of accounting, that person cannot be forced to account for the monies, as income, even when these monies are received for performance of obligations in future. All it says that once someone has earned the right to receive the money in income character, its immaterial, for recognition of the same as income, as to whether the income is received or not. As held by Hon'ble Supreme Court, in the case of CIT Vs Shoorji Ballabhdas & Co [(1962) 46 ITR 144 (SC)], "Income-tax is a levy on income. No doubt, the Income-tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accru....
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....ing pronounced today on 14th day of May, 2020, much after the expiry of 90 days from the date of conclusion of hearing. We are also alive to the fact that rule 34(5) of the Income Tax Appellate Tribunal Rules 1963, which deals with pronouncement of orders, provides as follows: (5) The pronouncement may be in any of the following manners:- (a) The Bench may pronounce the order immediately upon the conclusion of the hearing. (b) In case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date for pronouncement. (c) In a case where no date of pronouncement is given by the Bench, every endeavour shall be made by the Bench to pronounce the order within 60 days from the date on which the hearing of the case was concluded but, where it is not practicable so to do on the ground of exceptional and extraordinary circumstances of the case, the Bench shall fix a future day for pronouncement of the order, and such date shall not ordinarily (emphasis supplied by us now) be a day beyond a further period of 30 days and due notice of the day so fixed shall be given on the notice board. 8. Quite clearly, ....
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....ing disruption in the functioning of judicial machinery, that Hon'ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6-5-2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that "In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown". Hon'ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, "It is also clarified that while calculating time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly", and also observed that "arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020". It has been an unpreced....