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2020 (7) TMI 217 - AT - Income TaxAccrual of income - Income earned from the stated project - gains would be chargeable to tax as Business Profits OR capital gain - as per AO assessee transferred his right of development during the year under consideration and possession has also been handed over and has received part consideration - As per CIT-A entire consideration is not taxable during the year - deduction u/s 40A(3) - CIT(A) has held that the provisions of Sec.2(47)(v) defining the term transfer would not be applicable since the income was assessed as Business Income - HELD THAT:- CIT(A) has clinched the issue in correct perspective. The assessee was engaged as civil contractor and the income earned from the stated project was assessed as Business Income. Therefore, the term transfer as defined in Sec.2(47)(v), would not apply since the same is applicable only in case of capital assets held by the assessee. The development rights were held as business assets. Proceeding further, it is evident from the terms of the Joint Venture Agreement that only part income accrued to the assessee on execution of the project agreement. The balance consideration was conditional receipt and was to accrue only in the event of assessee performing certain obligations under the agreement. Another pertinent fact to be noted is that the payments received in subsequent years have already been offered to tax. The same was in line with assessee’s arguments that the balance receipts were conditional receipts. The response by M/s Shivalik also confirmed the same. Therefore, no fault could be found in the impugned order in estimating the income @10% of gross receipts. Once the income is estimated, no further disallowance u/s 40A(3) would be warranted. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [2020 (5) TMI 359 - ITAT MUMBAI]
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