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2017 (4) TMI 165 - AT - Income TaxMethod of recognising the income for the assessment to tax in respect of sale of plots - Held that:- The appellant firm had recognised the income in respect of sale of plots by adopting completed contract method, whereas, the Assessing Officer is of the view that income should be offered to tax received on year to year basis based on the stage of receipt of consideration, irrespective of the fact that the title in the plots have been passed on the buyer or not. It is an undisputed fact that the plots forms a part of stock-in-trade in the business of appellant- firm and are immovable properties. The title in the immovable property can be passed on only in terms of the provisions of the Transfer of Property Act. Thus the provisions of section 2(47) of the Act have no application to the transactions of stock-in-trade. In this case, the stock-in-trade in immovable property and the title in immovable property can be transferred or alienated in accordance with the provisions of the Transfer of Property Act. The right, title or interest in the immovable property can be transferred only by way of registering the conveyance deed executed in this behalf. Even the Accounting Standard-9 dealing with the recognition of income also lays down that the income in respect of transfer of immovable property can be recognised only when the risks, rewards and ownership of the property is transferred to the buyer. Therefore in our considered opinion, the matter requires a fresh examination by the Assessing Officer in the light of the above position of law. Therefore, we remand this matter back to the file of the Assessing Officer with a direction that the income in respect of sale of plots can be recognised only in the year in which conveyance deed executed is registered in favour of the buyers and to allow the development expenditure incurred as expenditure or the expenditure likely to be incurred on the plots sold as expenditure.
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