TMI Blog2020 (11) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 02.09.2015, it should be held that out of the said 50 Acres of Land, land equal to 26 Acres 10 Guntas is deemed to be Bought Back by the Assessee on 02.09.2015 for same consideration ₹ 2 Crores per Acre because same lands to the extent of 23 Acres 30 Guntas are sold by various sale deeds executed in F. Y. 2015 16 also and in fact, sale of only 26 Acres 10 Guntas of land is not ultimately made as per various sale deeds executed in F. Y. 2015 16 and for such deemed buy back of 26 Acres 10 Guntas of land, Cost of acquisition should be considered at ₹ 2 Crores per Acre (Total Cost ₹ 52.50 Crores) with date of acquisition as 02.09.2015 for computing capital gain, when any land out of this 26 Acres 10 Guntas Land is sold by the assessee in future. This will give full effect to cancellation of four sale deeds executed in F. Y. 2009 10 and execution of three new sale deeds executed in F. Y. 2015 16 as per which, 23 Acres 30 Guntas of the same lands were transferred by the assessee vendor to the buyer M/s Manipal University and 55 Acres 31.89 Guntas of new lands (Out of Total 79 Acres 21.89 Guntas of Contiguous land for ₹ 150 Crores as per three Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 150 crores in the financials as per the Arbitration Award in AY 16-17. The assessment proceeding for this assessment year has been completed with NIL additions. 5. The learned C.I.T. (A) has erred by not considering the fact that the same income cannot be taxed twice both in AY 10-11 as well as AY 16-17. 6. The learned C.I.T. (A) ought to have appreciated that as per the Guidance Note on Recognition of Revenue by Real Estate Developers issued by the ICAI, so long as such acts, which the seller is obliged to perform, have not been performed, no revenue shall be recognized. . 7. The learned C.I.T. (A) has erred by recognizing revenue on the Appellant without considering the fact that the Appellant herein is not being reimbursed by the buyer for any costs. 8. The learned C.I.T. (A) has erred in not considering the submission of the Appellant that according to Accounting Standard AS-7 , the Appellant's case falls within the phrase outcome of a contract cannot be reliably estimated and consequently qualifies as a fit case for non-recognition of revenue. 9. The learned C.I.T. (A) ought to have considered that the Appellant has completed the transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the assessee has failed to fulfil many of the terms and obligations of the agreement and it is also stated in this letter that in view of clause 14 of the agreement dated 01.06.2009, the buyer terminates this agreement dated 01.06.2009 and also cancels the sale deeds already executed and asked the assessee to refund the amount of 100 Crores plus ₹ 10 Crores being the amount spent by the buyer on account of legal fees, stamp duty and registration expenses together with a compensation of ₹ 100 Crores being opportunity cost of the buyer. As noted on page 9 of the Arbitration Award dated 02.09.2015, one more letter dated 15.01.2011 was written by the buyer to the present assessee being vendor that despite promises to refund the money, the vendor has not refunded the money and if the money is not refunded within 45 days, the purchaser will initiate legal action. Subsequently, O. S. No. 2963/2011 was filed before City Civil Judge, Bangalore by the purchaser praying for refund of money and appropriate compensation and costs. Later the assessee filed I. A. No. 2 u/s 8 of the Arbitration and Conciliation Act, 1996 seeking reference of the parties to arbitration in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale of land in F. Y. 2009 10 relevant to the present Assessment Year 2010 11 and entire sale of land has taken place in F. Y. 2015 16 relevant to A. Y. 2016 -17. Learned AR of the assessee also submitted that in that year, the assessee has duly disclosed the capital gain on sale of 79 Acres 21.26 Guntas land with a value of ₹ 150 Crores and therefore, no capital gain on sale of land is taxable in the present year. At this juncture, this was a query of the bench as to whether there is some common lands in the sale deeds executed in F. Y. 2009 10 and F. Y. 2015 16 and in reply, it was submitted by the learned AR of the assessee that there are some common pieces of land in these sale deeds executed in F. Y. 2009 10 and F. Y. 2015 16 but it is not relevant because all the sale deeds executed in F. Y. 2009 10 were cancelled as per Arbitration Award dated 02.09.2015. 5. In reply, learned DR of the revenue supported the orders of the lower authorities. He also submitted that this is a finding of the learned CIT (A) in para 13 of his order that as per the Arbitration Award, the assessee was asked by the arbitrator to convey fresh set of lands and on implementati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as described in Schedule B of the Award for a consideration of ₹ 150 Crores and in this manner, the account between the assessee vendor and buyer M/s Manipal University will be squared up. 7. First, we compare the description of various pieces of land transferred in F. Y. 2009 10 with various Pieces of land transferred in F. Y. 2015 16 and for this, we reproduce the details of that, which is as under:- A) Details of Four sale Deeds Executed in F. Y. 2009 10. 1) List of Total lands being part of Sale Deed dated 03.06.2009 :- S. No. Village Survey No. Area in Acres Area in Guntas Page No./Paper Book 1 Govindpura 7 3 2.00 58 2 Govindpura 8 3 6.00 3 Govindpura 10 3 26.00 Total 9 34.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 120 2 Govindpura 31 4 7.00 Total 9 16.00 Total price is ₹ 18.80 Crores as per page 126 of the Paper Book. Total Area Value as per these Four Sale Deeds is 50 Acres, ₹ 100 Crores. B) Details of Three Sale Deeds Executed in F. Y. 2015 16. 1) List of Total lands being part of Sale Deed dated 21.09.2015 :- S. No. Village Survey No. Area in Acres Area in Guntas Page No./Paper Book 1 Vasudev Pura 2 0 28.84 150 2 Vasudev Pura 3 4 29.81 3 Vasudev Pura 4 5 0 4 Vasudev Pura 5 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 Vasudev Pura 19 0 2.01 Total 0 148.11 Total Guntas converted in Acre 3 28.11 Sale Value is ₹ 6,98,82,710/- as per page 164 of paper Book. 3) List of Total lands being part of Sale Deed dated 31.03.2016 :- S. No. Village Survey No. Area in Acres Area in Guntas Page No./Paper Book 1 Govindpura 4 3 25.50 188 2 Govindpura 5 6 6.00 3 Govindpura 14 6 4.00 4 Govindpura 16 6 18.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of 50 Acres of land sold in A. Y. 2010 11 for which, Registered Sale deeds were also executed in that year, full payment of ₹ 100 Crores was also received by the assessee in that year itself and vacant possession was also given by the assessee to the buyer M/s Manipal University in that year only. We find that in the facts of the present case, the assessee is at fault because although the assessee stated in the agreement that the contiguous land of 190 Acres is already owned by it along with its nominees but still, the assessee did not complete the agreement by executing sale deeds in addition to 50 Acres for which, the sale deed were executed by it in F. Y. 2009 10 and this is not a case where the buyer is defaulting in payment or not willing to fulfil the agreement for any reason. This is also not a case that any portion of land out of 190 Acres stated to be already owned by the assessee along with its nominees was acquired by any government authority and because of that, the assessee was unable to fulfil the balance requirements of agreement dated 01/06.2009. In our considered opinion, up to the date of Arbitration award, sale of 50 Acres of land completed in F. Y. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2010 11 and on account of cancellation of those four sale deeds as per the Arbitration Award dated 02.09.2015, it should be held that out of the said 50 Acres of Land, land equal to 26 Acres 10 Guntas is deemed to be Bought Back by the Assessee on 02.09.2015 for same consideration ₹ 2 Crores per Acre because same lands to the extent of 23 Acres 30 Guntas are sold by various sale deeds executed in F. Y. 2015 16 also and in fact, sale of only 26 Acres 10 Guntas of land is not ultimately made as per various sale deeds executed in F. Y. 2015 16 and for such deemed buy back of 26 Acres 10 Guntas of land, Cost of acquisition should be considered at ₹ 2 Crores per Acre (Total Cost ₹ 52.50 Crores) with date of acquisition as 02.09.2015 for computing capital gain, when any land out of this 26 Acres 10 Guntas Land is sold by the assessee in future. In our considered opinion, this will give full effect to cancellation of four sale deeds executed in F. Y. 2009 10 and execution of three new sale deeds executed in F. Y. 2015 16 as per which, 23 Acres 30 Guntas of the same lands were transferred by the assessee vendor to the buyer M/s Manipal University and 55 Acres ..... X X X X Extracts X X X X X X X X Extracts X X X X
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