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Commissioner of Income Tax-IV Versus M/s Ethan Estates Developers Pvt. Ltd.

2016 (9) TMI 263 - DELHI HIGH COURT

Accrual of income - accrued income on grant of development rights - Held that:- In the instant case, since no sale occurred, no income can be said to have accrued to the assessee.The assessee's submission that sale is deemed to have taken place when proper conveyance is executed, in the circumstances is sound. In the absence of any sale, the revenue's attempt to bring to tax the advances received by the assessee must also fail, given that such advances were not towards any income that the assess .....

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- ITA 583/2016 & C. M. No. 29420/2016 - Dated:- 12-8-2016 - S. Ravindra Bhat And Deepa Sharma, JJ. For the Appellant : Mr.Zoheb Hossainn, Sr.Standing Counsel, Mr.Deepak Anand, Jr.Standing Counsel and Mr.Prashant Meharchandani, Advocate For the Respondent : Ms. Kavita Jha and Ms. Mehak Gupta, Advocates ORDER 1. The question of law sought to be urged in the revenue s appeal is whether the receipts in the hands of the respondent-assessee to the tune of ₹ 58,03,59,600/- in fact amounted to ac .....

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ent rights of the land had to be given to the developer on a consideration of ₹ 2.10 crore per acre. The consideration was to be paid to the assessee within two years from the effective date . That event i.e. the effective date in terms of Article 1.1 of the agreement was the date of completion of purchase of property including mutation in the name of the assessee in the revenue s record. The development rights of the land amounting to ₹ 34,29,49,000/- was brought to tax by the Asses .....

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e point of sale of development rights, upon acquisition of license described the transaction and that treating the amount received prior to that event could not be brought to tax as income. The relevant discussion - after noticing the ITAT s conclusions on this aspect are as follows: 13. The concurrent findings of fact of the CIT(A) and the ITAT affirm that the LOCs had not acquired any development rights during the concerned assessment years. In such a situation, it is inconceivable as to how t .....

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inancial statement for AY 2008-09 states that [s]ale of development rights is recognized on accrual basis in the financial year in accordance with the terms of the agreements entered into with the customers . According to the Revenue, the alleged sale by the assessee to M/s DLF Ltd. and CBDL was of development rights acquired from LOCs. However, as held above, since no rights were in fact sold in the two assessment years in question by the assessee to either M/s DLF Ltd. or CBDL, no income from .....

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