TaxTMI 
TaxTMI 
2026 (7) TMI 1898
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....("DUL"), whereby exclusive development rights in the land were vested in DUL. During the relevant previous year, a portion of the land measuring 2.609 acres was compulsorily acquired by the Land Acquisition Collector, Gurgaon for compensation of Rs. 24,24,99,999/- alongwith interest of Rs. 4,33,70,851/- which was received by the assessee. In terms of the Development Agreement, the assessee retained the cost of acquisition of land together with the interest component aggregating to Rs. 14,14,81,614/-while the balance amount of Rs. 14,43,89,236/- attributable to the development rights was transferred to DUL, which duly accounted for and offered the said amount to tax in its return of income. The Assessing Officer, however, disallowed the said payment and assessed the entire compensation in the hands of the assessee on the ground that the amount paid to DUL was not an allowable deduction. 3. Aggrieved against the above order, assessee is in appeal before the ld. CIT(A). After going through the submissions before him, ld. CIT(A) confirmed the order of the Assessing Officer. 4. Aggrieved with the above order, the assessee is in appeal before us raising following grounds of appeal ....
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....pting the said income which is placed at PB Pgs 39 to 58. Consequently, the impugned addition in the hands of the assessee resulted in double taxation of the same income despite there being no loss to the Revenue. He placed reliance on the decision of the Coordinate Bench in Chrysilla Builders & Developers Pvt. Ltd. v. PCIT in ITA No.4139/Del/19 order dated 07.05.2025) and the judgment of the Hon'ble Supreme Court in CIT v. Excel Industries Ltd. 358 ITR 295(SC) to contend that a revenue-neutral transaction could not be subjected to taxation twice. It was also pointed out that under identical facts, assessments of other group land holding companies had been completed at the returned income, and therefore, on the principle of consistency also, the addition deserved to be deleted. The orders u/s 143(3) passed in the case of group concerns are placed at PB Pg 59 to 64. It was submitted that such agreement were executed between different entities of the group based on commercial and business expediency and same has neither resulted in tax benefit to the contractual company nor loss to the revenue. 6. On the other hand, ld. DR strongly supported the orders of the Assessing Officer....
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....bligations under the Agreement. Article 10 DEVELOPMENT RIGHTS 10.1 The Developer shall be entitled to undertake the development and construction work on the Scheduled Land in such manner it deems fit and always in accordance with the applicable laws' and REDPL shall not grant or create any third party rights or interest in respect of development of the Scheduled Land. The Developer may undertake the same either by itself or through competent contractors and sub-divide the work or appoint sub-contractors, as it may deem fit and proper. The Developer shall be entitled to exploit the maximum permissible F.A.R. 10.2 Notwithstanding anything contained lo the contrary, the Developer shall alone be entitled to determine the name of the Buildings. 10.3 The Parties have agreed that a fixed consideration is payable for the grant of development rights and REDL shall have no interest in the Buildings and/or plotted area developed on the Scheduled Land" 8. The facts giving rise to the controversy are largely undisputed. The assessee is a land holding company engaged in acquisition and holding of land as stock-in-trade. A parcel of land measuring 2.609 acr....
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....Article 10 of the Development Agreement specifically conferred exclusive development rights upon DLF Utilities Ltd. and simultaneously imposed corresponding obligations regarding development, approvals, licences, expenditure and commercial exploitation of the land. Thus, from the inception of the transaction, DLF Utilities Ltd. had substantial economic and commercial interest in the property whereas the assessee retained only such rights as were contractually specified in the Development Agreement and supplementary agreement. 12. In our considered opinion, once it is established that the consideration received upon compulsory acquisition was required to be apportioned in accordance with the pre-existing contractual obligations, the amount transferred to DLF Utilities Ltd. cannot be disallowed merely on the ground that no development activity under the agreement had taken place without considering the surrounding circumstances as already discussed above. Moreover, since the commercial interest in the land vested with DLF Utilities Ltd., it can safely be said that the amount was transferred under an overriding contractual obligation created between the parties. 13. We also find....
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.... to the assessing officer to make disallowance in the case of assessee which is inconsistent and self defeating. 16. The Coordinate Bench of this Tribunal in the case of Chrysilla Builders & Developers Pvt. Ltd. v. PCIT in ITA No.4139/Del/2019 order dated 07.05.2025arising from an identical business model of the same group, has categorically held that where the developer had offered the amount to tax and the Revenue had suffered no prejudice, the arrangement could not be disregarded and the exercise sought to be undertaken by the Department was wholly revenue neutral. The Tribunal further relied upon the judgment of the Hon'ble Supreme Court in CIT v. Excel Industries Ltd. for holding that no useful purpose would be served by taxing the same receipt twice in different hands and revenue must not engaged in fruitless litigation. 17. The facts before us are materially identical as the recipient company i.e. M/s. DUL has offered the impugned receipt to tax and the Department has accepted such assessment. Therefore, sustaining the addition in the hands of the present assessee would inevitably result in double taxation of the same income, a consequence which is impermissible in....
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....rring the amount to DUL. Thus, this is not a case of application of income after accrual, but a case where the income itself accrued directly to another person by virtue of an overriding title. The principle laid down in Tuticorin Alkali Chemicals dealing with taxation of independent income has, therefore, no application. (ii) CIT v. Perlo Telecommunication and Electronic Components India (P.) Ltd. [2022] 141 taxmann.com 388 (SC) 22. At the outset, we find that the citation quoted by the ld. DR only pertains to notice issued by the Hon'ble Apex Court and the same does not contain any judgment or finding and it appears that the matter is still sub-judice. In any case, the dispute before the Hon'ble Supreme Court arising from the under lying order of Hon'ble Madras High Court is regarding allowability of an expenditure based on revised computation of income filed before AO and not by way of revised ITR. The said decision has no application to the facts of the present case. (iii) Lachminarayan Madan Lal v. CIT (1972) 86 ITR 439 (SC) 23. Similarly, the reliance upon Lachminarayan Madan Lal is misconceived. In that case, the Hon'ble Supreme Court upheld disallowance of c....