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2022 (8) TMI 685 - AT - Income TaxAccrual of income - treating of advances received by the assessee from flat buyers as income of the assessee for AY 2006-07 - selection of Project Completion Method or Completed Contract Method - as per DR advance received against sale of the flat should have been assessed in the year of the receipt as same became income of the assessee on receipt of the said advance - development agreements entered into by the owners of the land and the developer - HELD THAT:- CIT(A) in his detailed finding held that land in question was not transferred to the developer till completion of the construction and therefore entire risk of the project remained with the landowners including the assessee, therefore, he justified in adoption of completed contract method (or Project Completion Method) followed by the assessee. For assessment year 2007-08 and 2008-09 the Ld. CIT(A) has followed his finding in assessment year 2006-07. We further note that that assessee has already paid tax on the advance received against the sale of flat in assessment year 2008-09 and 2009-10. CIT(A) has pointed out that the land in question was treated as a stock in trade by the assessee in its books of accounts and therefore transfer of the same was not liable to be taxed as capital gain. Hon’ble Supreme Court in the case of Seshasayee Steal Private Ltd [2019 (12) TMI 702 - SUPREME COURT] considered a development agreement granting permission to start advertising, selling and construction and permitted to execuate sale agreement to the developer. The Hon’ble Supreme Court held that such permission is not possession under section 53 of the transfer of the property Act. We concur with the finding of the Ld. CIT(A) that possession of land has been handed over to the prospective buyers consequent to the conveyance in favour of co-operative Society of flat owners. The Ld. CIT(A) has further held that the assessee was regularly following accounting method of Completed Contract Method consistently from year to year. The Ld. CIT(A) has further observed that in the case of the developer also Contract Completed Method has been accepted. The Ld. DR has not controverted any of the above factual finding of Ld. CIT(A). No error in the finding of the Ld. CIT(A) in upholding the Project Completion Method or Completed Contract Method followed by the assessee for declaring income from the project under reference. The grounds of the appeal of the revenue in all the three years are accordingly dismissed.
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