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2021 (12) TMI 799 - AT - Income TaxAddition of different amounts made towards amount received for sale of Transferable Developmental Rights (TDR) - Income or current liability - why the amount received from sale of TDR should not be treated as income of the assessee in the respective assessment years? - assessee submitted that since it is following percentage completion method for recognizing the revenue from the SRA project and since 25% of the total estimated project is not completed till date, TDR cannot be treated as income but has to be shown as a current liability - whether the amount received by the assessee from sale of TDR granted in respect of the SRA project is taxable in the year of receipt or the assessee’s method of revenue recognition following percentage of completion method is acceptable? - HELD THAT:- Tribunal in [2019 (3) TMI 1942 - ITAT MUMBAI] held that the percentage completion method followed by the assessee is a well recognized method as per ICAI guidelines and judicial precedents - the sale of TDR cannot be considered in isolation of assessee’s obligation under the SRA agreement to complete the SRA project. On analyzing the agreement with SRA, the Bench has observed that the assessee was under obligation to complete the project as per the agreement. The Bench has also observed that the TDR was granted to provide finance to the assessee to complete the project. Thus, assessee’s income from TDR cannot be considered independently without taking the corresponding expenses, more so, when the TDR receipts are directly linked to the execution of the project. The Bench has held that since income from TDR is inextricably linked to the project and its cost, the cost of building has to be deducted against the income from sale of TDR. Though, the assessee has earned income from sale of TDR, however, no income from the SRA project, as yet, has been offered to tax. It is a fact that while deciding the appeals against the orders passed u/s 263 of the Act in assessment years 2012–13 and 2013–14 the Tribunal [2019 (3) TMI 1942 - ITAT MUMBAI] has recorded certain finding touching upon the merits of the issue, which, indeed, are favourable to the assessee. Admittedly, aforesaid order of the Tribunal was not available either before the Assessing Officer or learned Commissioner (Appeals). Therefore, applicability of the aforesaid order of the Tribunal to the facts of the present case needs to be examined. This is so because, the order passed by the Tribunal was in the context, whether the revisionary authority has correctly exercised jurisdiction under section 263 of the Act to revise the assessment orders. In view of the aforesaid, we set aside the impugned order of learned Commissioner (Appeals) and restore the issues back to the Assessing Officer for fresh adjudication - Assessee appeals are allowed for statistical purposes.
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