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2016 (1) TMI 175 - AT - Income TaxEstimation of income at 8% - Held that:- A.O. could not reject the books of account and estimate the income at 8%, without there being any basis in doing so. In view of the above, we agree with assessees grounds on the issue and delete the estimation of income as made out by the A.O. It is also seen that in A.Y. 2005-06 assessee declared income at more than 8%. As assessee’s business income varies on year to year basis and the assessee is disclosing the incomes on the basis of the entries in the books of account, there seems no justification in rejecting the books of account on assumptions and presumptions. In view of this, keeping the above facts in mind and principles of law, we cannot approve the rejection of books of account and estimation of income in the impugned assessment years - Decided in favour of assessee. Accrual of income - Addition on the basis of receipts from M/s. SSCPL - Held that:- What A.O. has done in the assessment is to bring to tax the amounts received by the assessees on the basis of receipt in respective assessment years, ignoring that if it is a capital gain transaction on transfer of property, the capital gains occurs when the transfer is complete or deemed to be complete. If the terms of agreement have been fulfilled by the developer/ builder, the capital gain is to be brought to tax in the year in which the agreement was concluded i.e., in this case in the year 2007-08. In case the terms of the agreement are not fulfilled and the agreement has not been implemented as per the terms, then, there can be no transfer in strict sense, capital gain does not arise even though certain advances were received. If it is a business transaction, A.O. missed the point that assessees herein have paid an amount of ₹ 20 lakhs at the time of agreement as initial payment which will be a deduction, along with subsequent expenditure if any, so as to arrive at the correct income. Just because the parties herein have received certain amounts in different assessment years, they cannot be brought to tax on receipt basis without understanding the nature of payments. In view of this, without giving any findings on the respective contentions, we are of the opinion that these issues are to be examined in detail to arrive at proper conclusions. Therefore, in the interest of both parties, we restore the issue to the file of A.O. to re-examine The contention that agreement has not been fulfilled because no permissions have been received and land was not developed also requires examination by the A.O. It is also to be verified whether the amounts received by the assessee is over and above the amounts payable as per the agreement or not. In such case, the nature of receipt by the assessees has to be examined vis-à-vis entries and claims made in the case of SSCPL who paid the amounts by way of cheques. - Decided in favour of assessee for statistical purposes
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