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2018 (7) TMI 1169 - ITAT MUMBAIRent received - treated as income from house property and the assessee’s treatment of crediting the same towards work-in-progress is justified - Held that:- We note that the assessee’s business is development of property. For the same property, for getting vacation, the sums paid are being debited to the work-in-progress which is being accepted by the Assessing Officer. However, pending vacation, the rent receipt from the tenants of the said property is not being given the same treatment by the Assessing Officer. He is treating the same as income from house property. In our considered opinion, the rent received is inextricably linked with the business of the assessee, i.e., development of the property. Hence, in our considered opinion, the rent received cannot be treated as income from house property and the assessee’s treatment of crediting the same towards work-in-progress is justified. For this proposition, the case laws relied upon by the ld. Counsel of the assessee referred in the submissions hereinabove are germane and support the case of the assessee, particular the case law from the Hon'ble Bombay High Court in the case of Lokholdings (2008 (1) TMI 365 - BOMBAY HIGH COURT) is of particular emphasis. - Decided in favour of assessee Income from assignment of Development Rights of Chaudhary Plot at Thane - Value of constructed area to be acquired pursuant to the development agreement - Held that:- The assessee entered into an agreement for the receipt of ₹ 300 lacs on 28.11.2011 in lieu of the carpet area it was entitled as per the agreement for sale. The assessee offered the same for taxation in assessment year 2012-13. The above was not accepted by the authorities below. The Revenue is of the view that the assessee should have accounted for the value of constructed area to be acquired pursuant to the development agreement. However, the assessee’s plea is that no construction work had commenced and even the plan of the project was not approved. Hence, it has been claimed that there is no question of accrual of income during the year. For this proposition, reliance has been placed by the tribunal decisions. Further, the claim of the assessee is that the agreement to sale the development right in the said property is related to assessee’s stock-in-trade and, hence, since the stock-in-trade is to be valued at cost or net realizable value, no profit can be attributed by the assessee in this regard. Assessing Officer shall examine as to whether the assessee’s claim that during the year neither the plan of the project was approved nor any construction was started. If the said claim is true, the ratio from the tribunal’s decisions referred by the assessee in the submissions hereinabove will follow. The assessee cannot be fastened with liability for taxation on hypothetical income. Accordingly, we remit the issue to the file of the Assessing Officer with the above directions.
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