AI Drafter 
TaxTMI 
TaxTMI 
2025 (8) TMI 756
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....our commercial properties bearing Unit Nos. LG-1, LG-14, 3F-1 and 3F-27 located in "Hi-Life Mall" at Santacruz (West), Mumbai. This Mall was developed by the assessee in collaboration with other developers. As per records, the occupancy certificate for the completed project was granted by the Municipal Corporation of Greater Mumbai on 17.07.2007. 4. Despite the completion of the project, the assessee was unable to sell the said units for a prolonged period of over six years due to certain commercially adverse conditions, most notably the lack of an adequate approach road to the Mall which severely restricted access and rendered the project commercially unattractive. The assessee had during this entire period attempted to market and sells the units, including during the pre-completion phase, which is a common practice in real estate development in metropolitan cities such as Mumbai. However, these efforts did not yield success. Faced with a prolonged holding period and the attendant financial constraints, the assessee, exercising commercial prudence, decided to liquidate the unsold inventory through a bulk, distress sale. A deal was accordingly negotiated with M/s Nisar Realtors ....
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....LG-1 Lower Ground 1262 395,59,000 376,72,000 18,87,000/- 2 LG-14 Lower Ground 746 233,86,000 222,70,000 11,16,000/- 3 01 Third 1753 369,50,000 351,90,000 17,60,000/- 4 27 Third 436 91,90,000 87,53,000 4,37,000/- From the above table it was observed that there was huge difference between the market values of these units and the agreement value. In relation to the above, the AR of the assessee was asked to explain the difference along with the actual amount offered in the profit and loss account for the Assessment Year 2015-16. 4.3 In response to the above query, assessee filed reply in tabular form as required. The details filed by assessee is reproduced as under: Transaction Amount Transaction Date Sale offered in FY 2013-14 Agreement Date Agreement Value Market Value LG-01, Kiran N Nisar, Leena K Nisar 395,50,000 03/03/2015 233,50,000 31/12/2014 376,72,000 395,59,000 The said unit was allotted on 17. 07. 13 at a lump sum value of Rs. 2,33,50,000 and sale was offered of Rs. 2,33,50,000 in FY 2013-14 however there was a revisio....
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....nt/alterations to be executed by the assessee. However, due to diverse reasons the assessee could not execute the additional work. Hence no revenue accrued in the hands of assessee. 4.4. From the above submission made by assessee it was found that each unit can be categorized into three parts for the purpose of amount of transfer: these are the Market Value, Agreement Value and the Amount Offered in profit and loss account. In this regard following observations were made: 4.4.1. It was observed that the market value of each unit is higher than what is registered in the agreement 4.4.2. it was observed that the agreement value of each unit is higher than what is offered in the profit and loss account. 4.4.3. Therefore, it is clear that assessee has offered a substantially lower amount in the profit and loss account as income in the AY 2014-15 (as claimed by the assessee). 4.5. Considering the above submissions made by the assessee it is clear that the income should have been offered on the Market Value of these units as per section 43CA of the IT Act, however there is a substantial difference in the amount which was not offered for the in....
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....onfirmed the addition in the present year, i.e. AY 2015-16, on the ground that the agreement was registered in this year. No appeal has been preferred by the Revenue against the deletion made by the CIT(A) in AY 2014-15, which has since attained finality. 10. The ld. Counsel for the assessee Mr. Bindal submitted that ld. AO himself was not sure whether the income was to be assessed in the A.Y.2015-16 or in the preceding A.Y.2014-15. Here the actual transfer of flats in terms of definition u/s. 2(47)(v) had already taken place in the AY 2014-15 and that is the reason why ld. AO has issued a notice u/s 148 of the Act for the AY 2014-15 and completed assessment u/s 147 vide assessment order dated 18.11.2019, wherein the addition was made which has been assessed in AY 2015-16 i.e. the difference of amount of Rs. 3,56,85,000/-as per the ready reckoner rates and sales value was thus assessed. The very said amount has been assessed on substantive basis in both the AYs i.e. AY 2014-15 and AY 2015-16. A copy of the assessment order has been placed in the paper book before us. 11. The ld. counsel for the assessee drew our attention to the provisions of section 2(47)(v) of the Act, whic....
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.... account but also accepted by the Assessing Officer himself while initiating reassessment for AY 2014-15. 16. Once the property has been sold in the F.Y.2013-14 (relevant to A.Y.2014-15) and possession was handed over and the entire receipt of sale consideration was received and booked as income in A.Y.2014-15 then there was no reason as to why ld. AO is taxing the difference amount between the sale consideration and the ready reckoner in A.Y.2015-16, when the actual transfer of property took place on 13.07.2013. 17. The legal position on this point is equally well-settled. Section 2(47)(v) read with section 53A of the Transfer of Property Act leaves no room for ambiguity. Once possession is handed over in part performance of a written agreement for consideration and the transferee is willing to perform their obligations, the transaction qualifies as a transfer for the purpose of taxation. The formal registration of the agreement at a later date, being merely a procedural formality, cannot defer the taxability of the transaction. 18. The Revenue's conduct in this case is also materially significant. Having assessed the income in AY 2014-15 and failed to pursue its appeal a....