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TMI Blog2020 (5) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... o non-refundable security deposit which was added by the Assessing Officer as undisclosed receipts. 2. The facts in brief are that assessee-company is engaged in the real estate business and has filed its return of income on 16.07.2014 at an income of Rs. 36,47,140/-. A survey was also carried out on 25.04.2013, during the course of which, an agreement dated 07.11.2012 between the assessee-company and M/s. Krrish Greenhomes Pvt. Ltd. was found. As per the terms of agreement dated 07.11.2012, specifically clause no.3.7, Assessing Officer deduced that the developer had paid sum of Rs. 5 crores as a non-refundable deposit which has not been taken as receipt by the assessee and instead it has treated as advance. The Assessing Officer thus add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anted by the competent authority; (v) the rights and entitlements of KGHPL was to come into force and be effective upon the grant of letter of intent/LOl from DTCP for setting up of residential group housing colony on the land and KGHPL was to carry out all acts for the development and construction of the Project at its costs and expenses including all fees such as EDC/IDS etc and/or charges including service tax, bank guarantee for EDC/IDC, interest and penalty; (vi) in consideration of the grant/transfer/assignment of the rights, titles, interest and entitlements, including the Development Rights, by the appellant to the KGHPL the developed and constructed/built-up area in the Project alongwith the land was to be shared in the ratio o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s alive and subsisting. In the agreement it was also provided that considering that KGHPL will be investing substantial sums of money, notwithstanding anything contained herein, neither party shall be entitled to terminate this Agreement for any reason whatsoever if the LOI for group housing is granted/accorded for development/construction of a residential group housing colony on the land." 4. Before the Ld. CIT (A), it was further submitted that necessary approvals took lot of time and no activity was carried out on the project and no revenue has been generated from the said project. Accordingly, if no services have been rendered then even on accrued system of accounting, said advance cannot be brought to tax in this year. It was furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d interim order on 03.05.2016 restraining the appellant from creating any third party rights in respect of the 10.89 acres of the above land or enter into arrangement or agreement of whatsoever nature for the sale/transfer or disposal of the said land and retrained the appellant from disturbing the possession of the suit property, and the matter was listed for hearing on 17.05.2016 but has been adjourned to July 2016 and is still pending. While the primary claim of the appellant is that since KGHPL did not pay Rs. 19.00 crore as EDC/IDC charges (later revised to Rs. 43.00 crore) it led to delay in sanction of the building plains and obtaining approval/sanction for residential housing colony and the development of the property was not undert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch other, the service to be rendered by KGHPL/HCIPL or the appellant is still in a limbo the project having not taken off as yet, and therefore treating the said amount of Rs. 5.00 crore as revenue receipt being contingent upon the decision of the Hon'ble High Court the said cannot be considered as income of the appellant during the year under consideration. The taxability or otherwise of the impugned amount would arise in the year when it is considered as receipt depending upon the development of the project by the other party and in terms of the decision of the Hon'ble High Court. I hold accordingly. The addition made is therefore deleted." 5. At the outset, ld. counsel for the assessee pointed out that there has been settlement agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he matter was challenged before the Hon'ble Delhi High Court. Ld. CIT (A) has noted the controversy between the parties as incorporated above and has held that, till Hon'ble High Court decides, the amount of Rs. 5 crore is purely contingent and depending upon the decision of the Hon'ble High Court the same cannot be considered as income of the assessee during the year under consideration. Further, the taxability of the said amount would arise in the year when it is considered as receipt depending upon development of the project and in terms of the decision of the Hon'ble High Court. 8. Now before us, it has been brought on record that a settlement agreement has been entered between the parties on 11.07.2017 and the Hon'ble Delhi High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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