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TMI Blog2011 (1) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... ive rise to any income assessable to tax during the assessment year under consideration, since such income was charged with several obligations which the assessee was to discharge before the delivery of plots to the buyers in terms of the sale deeds itself. - there was no need to recognize the revenue from out of the sale of plots during the year under consideration. - Decided in favor of assessee. - ITA No.101/Hyd/10 - - - Dated:- 31-1-2011 - ORDER Per Akber Basha, Accountant Member : This appeal by the Revenue is directed against the order of the CIT(A) Tirupati, dated 30.10.2009 for the assessment year 2005-06. 2. Effective grounds of the Revenue in this appeal read as follows - 1. The order of the CIT(A) is erroneous both on facts and law. 2. The CIT(A) ought to have appreciated the fact that there is no disturbance of accounting Method consistently followed by the assessee company as the year under consideration is the first year of the assessee to receive revenue. 3. The CIT(A) ought to have appreciated the fact that the method adopted by the Assessing Officer is in vogue in assessing the revenue in Real Estate business." 3. Facts of the case in brief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, arrived at Rs. 1.81 crores, and accordingly determined the income of the assessee from the sale of plots at Rs. 1,24,94,587. The Assessing Officer thus completed the assessment on a total income of Rs. 1,24,94,587 as against nil income returned by the assessee, vide order of assessment dated 24.12.2007 passed under section 143(3) of the Act. 4. On appeal, the CIT(A), considering the nature of the business carried on by the assessee company and the fact that the sale of plots further entails certain obligations on the assessee company to make them fit for the business of the buyers, held that there was no need to recognize the revenue from out of the sale of plots during the year under consideration. He accordingly, nullified the order of the Assessing Officer. Aggrieved by the order of the CIT(A), Revenue is in appeal before us. 5. Learned Departmental Representative, strongly relying on the order of the Assessing Officer submitted that the CIT (A) was not correct in nullifying the assessment order passed by the Assessing Officer. He submitted that the income has in fact accrued to the assessee and was received by the assessee during the year and as such it was correctly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly developed stage. He submitted that the Assessing Officer in his assessment order held the sale consideration received by the assessee on the sale of two plots as liable to tax in the assessment year 2005-06 itself, as capital gains, even though the assessee was not carrying the asset as a capital asset, and consequently no capital gains arose to be assessed as such in the hands of the assessee. He submitted that the assessee was obliged, in terms of the MOU it has entered into with the State Government, to deliver the plots to the buyers in such a state not only within the plot but also all the common facilities assured at the time of sale or MOU. Further, by the end of the previous year, the assessee was yet to complete its obligations to the buyers and the risks and rewards are not yet transferred on the said sale of property. Hence, the assessee, as rightly held by the CIT(A), was justified in not recognizing the revenue. Further, learned counsel submitted that since the assessee is in the business of setting up of a bio-tech park involving various activities from the drawing board stage to establishing hi-tech, sophisticated scientific equipment or facilities, it would be to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it is for the department to consider whether there are sufficient grounds or materials for rejecting a method of accounting regularly employed by an assessee and it is not for the assessee to prove that the method of accounting followed by him ought not to be rejected. In this behalf, he placed reliance on the decision of the jurisdictional High Court in the case of CIT v. Margadarsi Chit Funds (P.) Ltd. (155 ITR 442). He has filed detailed written submissions reiterating the above arguments and has also filed copies of various decisions relied upon by him. 7. We have considered the rival submissions and perused the orders of the lower authorities. We have gone through the detailed paper-books filed by the parties and plethora of decisions cited before us. Undisputed facts of the case are that the assessee is engaged in the business of developing a Biotech park and in terms of the MOU it entered into with the Government of Andhra Pradesh as also as per the terms of the sale deed executed by it with the buyers to whom the assessee sold the plots in question during the previous year under consideration, that the assessee was obliged to carry on various developmental works not onl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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