9911796707
TMI Blog2012 (6) TMI 440X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by Municipal Corporation of Greater Mumbai (MCGM) at Worli. In Financial Year 2005-06, MCGM came up with a proposal that if assessee was ready to handover the possession of transit buildings it would grant TDRs. In terms of the said scheme, the assessee received TDR measuring 15308 sq.m. vide certificate No.SRA526 dated 2.10.2005 and another TDR measuring 4690 sq.m. vide certificate No.SRA594 dated 3.6.2006. The TDR dated 2.10.2005 had been sold by the assessee for a sum of Rs.9,92,04,469/- and the TDR dated 3.6.2006 had been sold for Rs.5,55,86,123/-. Both TDRs were sold during the same Financial Year in which these were received i.e. Assessment Years 2006-07 and 2007-08 respectively. The assessee explained before the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also submitted that the expenses had been incurred towards construction of transit camps from Assessment Years 2004-05 to 2007-2008 which had been added to WIP. The cost of construction of transit camps was cost of TDR as latter had been received in exchange of transit camps. The cost incurred was more than TDR receipts and therefore there was net income and rather it was loss. The assessee also furnished the year-wise expenditure incurred from Assessment Year 2004-05 to 2007-08 in support of the plea raised. The assessee also referred to the decision of Mumbai Bench of the Tribunal in the case of Jethlal Mehta vs. DCIT (2005) 2 SOT 422 in which it was held that in case any TDR was generated in lieu of plot or building, then cost of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year in which the project was completed. The CIT (A) accordingly deleted the addition made by Assessing Officer on account of TDR receipt in Assessment Year 2006-07. The CIT (A) also held that since project of transit camp was completed in Assessment Year 2007-08, the Assessing Officer will work out the income in Assessment Year 2007-08 by considering entire income and expenditure pertaining to the project from Assessment Year 2003-04. Aggrieved by said decision the revenue is in appeal. 5. Before us the ld. AR reiterated the submissions made before the lower authorities that the assessee was implementing a slum rehabilitation project and as part of the project the assessee had to construct the transit buildings for shifting the slum dw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income from TDR and therefore, even on this ground no income could be assessed. It was argued that Assessing Officer was not correct in assessing the income from TDR without giving credit for expenses incurred. It was also submitted that in case income from the completion of transit buildings for which TDRs had been received were computed in Assessment Year 2007-08 entire expenses since the beginning had to be held as allowable as rightly held by the CIT(A). 6. The ld. DR on the other hand supported the order of the Assessing Officer. It was argued that the assessee had been receiving amounts from time to time and therefore the income has to be computed on the basis of partial completion method. It was also submitted that the TDRs had bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rogress. The assessee had therefore not declared any income. Alternatively, it has also been submitted that TDRs had been received in lieu of handing over of constructed transit buildings to MCGM and therefore, cost of TDRs were the cost of completed constructed buildings which was more than the income from TDR, and therefore on this ground also there was no net income from the TDR. 8. On careful consideration of the entirety of the facts and circumstances we are of the view that approach adopted by the Assessing Officer for assessing the income from TDR independently without deducting the expenses incurred is not justified. The assessee has been following project completion method which is an accepted method of accounting in construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Assessing Officer has not given any finding regarding the year of completion of the project. Though the CIT(A) has held that the project was completed in Assessment Year 2007-08, he has not given any basis of such finding not any such specific plea was taken by the assessee before CIT(A). This aspect therefore requires verification. The construction of the transit buildings was only a part of the project. The actual year of completion of the project is required to be verified. We therefore, restore this aspect to the file of the Assessing Officer for fresh order. In case on verification it is found that the project was completed in 2007-08, Assessing Officer will compute the income from project after taking into account entire expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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