TaxTMI 
TaxTMI 
2017 (2) TMI 1551
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....efore ld. CIT(A), who vide order dt. 20.01.2015 in Appeal No. (PN/CIT(A)-12/DCIT Cent Cir 2(2)/308/2013-14) dismissed the appeal of the assessee. Aggrieved by the order of ld. CIT(A), assessee is now in appeal before us and has raised the following grounds: "1. The learned CIT (A) erred in confirming the addition of Rs. 20 Crs. to the total income of the appellant. 2. The learned CIT (A) failed to appreciate that- a. As per the MOU and the sale deed of land by the appellant to Symbiosis, a sum of Rs. 20 Crs. was payable to the appellant only after certain events like obtaining Preliminary plan sanction and also for obtaining the final plan sanction with FAR of 1.5 and thus, till then, the above sum of Rs. 20 Crs. did not accrue to the appellant as income. b. Till the end of this year, only the sale deed was executed by the appellant with Symbiosis for sale of land and both the Preliminary and final sanction of building plan with 1.5 FAR was not received and therefore, the additional consideration of Rs. 20 Crs. As per the MOU and the sale deed had not accrued to the appellant and thus, it was not taxable in this year. c. Simply because, the app....
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....er preliminary plans are sanctioned. 4) Rs. 11 crores after final plan sanction with full utilization of F.A.R. i.e., 1.5. It was further submitted that since the preliminary plan and final plan with F.A.R. of 1.5 could not be completed, the assessee did not had a right for receipt of Rs. 20 crores and therefore the same was not recognized as revenue in the year under consideration. The submission of the assessee was not found acceptable to the AO as he was of the view that in the present case, transfer of the Capital Asset was completed as per the provisions of Sec. 2(47) of the Act and since the sale deed has been registered on 02.02.2012 and therefore absolute rights have been transferred by the assessee and therefore the profit arising out of the transfer was taxable for the year under consideration. He accordingly brought to tax at Rs. 20 crores. Aggrieved by the order of AO, assessee carried the matter before ld. CIT (A) who upheld the order of AO by holding as under : "2.1.7 I have carefully considered the facts and the arguments of the Appellant. The Appellant has stated that it has not only purchased the land but has also purchased building along with....
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....ion of Rs. 120,00,00,000/- (Rupees One Hundred Twenty Crores Only) and which aforesaid plot No. 11 is more particularly in the Schedule-III written hereunder and herein after is referred as the "SAID PROPERTY". 1. PAYMENT OF CONSIDERATION:- As stated in preamble paragraph No. 'J' hereinabove written. the agreed consideration of the Said Property agreed between the Vendor No. 2 on one hand and Purchaser herein on other hand, is Rs. 120,00,00,000/- (Rupees One Hundred Twenty Crores Only) and which is paid by the Purchaser to the Vendor No. 2 by Cheque No. 782601 dated 6/2/2012 for amount of Rs. 80,00,00,000/- (Rupees Eighty Crores only), Cheque No. 782603 dated 18/04/2012 for amount of Rs. 20,00,00,000/- (Rupees Twenty Crores only), Cheque No. 782604 dated 18/07/2012 for. amount of Rs. 9,00,00,000/- (Rupees Nine Crores only) and Cheque No. 782606 dated 13110/2012 for amount of Rs. 11,00,00,000/- (Rupees Eleven Crores only) all cheques drawn on Bank of Maharashtra, Balbharti Branch. Subject to the realization of the above mentioned cheques on due dates, receipt of Rs. 120,00,00,000/- (Rupees One Hundr....
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.... reproduced by the learned AO in the assessment order, leave no doubt that the Appellant would receive Rs 120 cr on transfer of land. The Appellant wishes that the MOU also be referred as it provides payments to be made on achievement of milestones.. However, according to me, MOU, transfer of the property has taken place, provides payment of 120 cr only for milestones. transfer of land. Therefore, for considering taxability of Rs 120 cr, it is to be seen as to whether entire amount has accrued to the Appellant or not during the year under consideration. 2.1.11 The Appellant has stated that it has not transferred capital asset, hence defmrtion of transfer as provided in section 2(47) which is, meant for capital assets is irrelevant. I agree with the Appellant that the Appellant has transferred stock-in-trade. However, the fact remains that the Appellant has sold its stock-in-trade during the year under consideration and stock-in-trade being immovable property - land - was required to be registered under Registration Act, for completion of transfer under Transfer of Properties Act, 1853. According to transfer of Property Act, 1853 sale is complete with the registration of land as ....
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.... educational building was 1.5. For using the FAR 1.5 it was necessary to transfer the land in the name of Institute. Assessee had entered into registered sale deed on 02.02.2012 in part performance of M.O.U. The M.O.U which was an integral part duly provided with the sale consideration of Rs. 120 crores and was to be paid as per the terms stipulated in M.O.U. He further submitted that the conditions pertaining to the execution of sale deed and the transfer the name of purchaser by 7/12 extract was completed prior to 01.12.2012 and therefore assessee had received Rs. 100 crores and the same was offered as income. Since the assessee could not get the preliminary plan sanctioned with full utilization of F.A.R. of 1.5, the stipulated conditions were not fulfilled and therefore Rs. 20 crores did not become due to the assessee and therefore it was not recognized as Revenue. He further submitted that the preliminary plans were sanctioned during the financial year 2013-14 i.e., the assessment year 2014-15. He further pointed to the various clauses of M.O.U which are placed in the paper book and submitted that the sale agreement has to be seen along with M.O.U and constructio....
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.... as per the Transfer of Property Act, on registration of sale, the amount accrued to the assessee. He therefore submitted that the AO has rightly made the addition. He thus supported the order of AO. 6. We have heard the rival submissions and perused the material on record. The short issue in the present case is whether the amount of Rs. 20 crores which admittedly has not been received by the assessee during the year under consideration is taxable in the year under consideration as accrued receipt. It is an undisputed fact that as per the MOU dt.02.02.2012 assessee had agreed to sell land having area of 19,500 sq.mtrs along with constructed educational building by consuming maximum permissible FAR. The consideration that was agreed to be paid to the assessee was inclusive of the land cost, construction cost and all other development expenses and for which it was agreed that assessee would be paid Rs. 120 crores of which 80 crores was to be paid at the time of execution of sale deed, Rs. 20 crores to be paid after reopening the 7/12 extract in the name of purchaser, Rs. 9 crores to be paid after preliminary plan sanctioned and Rs. 11 crores to be paid after....