9911796707
TMI Blog2017 (4) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... and agreement value in respect of flat Nos. 701 and 702, as income. 2. The learned Assessing Officer has failed to appreciate that the accounting standard issued by Institute of Chartered Accountants of India, which is duly followed by the appellant. The learned Assessing Officer has failed to appreciate that there is a cancellation of agreement in respect of flats Nos. 701 and 702 and also made the addition on the basis of agreement executed by appellant in respect of the said flat. 3. The learned Assessing Officer has failed to consider the system of percentage completion method. 2. Rival contentions have been heard and record perused. 3. Facts in brief are that assessee is a Private Limited Company engaged in business of builder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Condition No. (iii): It is not unreasonable to expect ultimate collection. 7. In terms of the above guiding note, learned AR pleaded that assessee was not liable to offer taxes in respect of the proposed construction on 7th Floor. As per the terms of the agreement, developer was retaining the effective control. Developer had to perform substantial act and was obliged to get these flats approved from the government department MCGM for its legal ownership. Hence, the condition No. (i) was not satisfied. (ii) Due to lack of availability of FSI in the financial year, plan for the 7th floor of the building was not approved by the Government Department MCGM and hence significant uncertainty crept into the agreements due to non-approval by gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties dated 18-07-2008. The Assessee Company has to abide with the provisions of law while constructing the new building by way demolishing the old building and getting the building plans approved from MCGM was the essence of contract. On receipt of the development rights from the said society the Assessee Company has got the building plan approved on 08-08-2008 which is ground to 3rd floor of the building from the MCGM as per 1 FSI under the provisions of DCR 1991. The copy of IOD and Approved plan upto 3rd floor dated 08/08/2008 was filed before the lower authorities. As per the provisions of the said DCR the Assessee Company was allowed to construct further 4 upper floors after obtaining further approvals from the MCGM which is to be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding. In the case of assessee, it has proposed to construct 7 storey building and due to decision implemented by the MCGM against the Bombay high court order the assessee company ended with the building FSI upto 6th floor only because of non exemption of common areas like Staircase, Lift and lobby from the FSI. The copy of Amended approved plan upto 6th floor dated 13-09-2010 considering Staircase, Lift and lobby area into FSI was filed by assessee before the lower authorities. 11. The assessee company prior to the purchase of TDR and the Bombay high court order has already entered into the agreements to sell with prospect purchasers for the flats proposed to be constructed on the 7th floor of the building. These agreements were subject to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to construction of flats no. 701 and 702 the booking amount received against these 2 flats was kept under head Advance received in the balance sheet. As per the understanding of AS-9 the revenue should be booked when all the following 2 conditions are satisfied. (i) the seller has transferred to the buyer all significant risks and rewards of ownership and the seller retains no effective control of the real estate to a degree usually associated with ownership. (ii) No significant uncertainty exists regarding the amount of consideration that will be derived from the real estate sale. Hence, in case of flat No. 701 and 702 none of the above conditions were satisfied and therefore the stand taken by the assessee company of postponing reve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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