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TMI Blog2012 (6) TMI 440X X X X Extracts X X X X X X X X Extracts X X X X ..... Per RAJENDRA SINGH (AM). These appeals by the revenue are directed against the common order dated 06.5.2009 passed by the CIT (A) for the Assessment Years 2005-06 and 2007-08. The disputes raised in these appeals is related to addition on account of sale of TDR and regarding completion of project. 2. Briefly stated the facts of the case are that the assessee who is a builder had taken up a slum rehabilitation project at Worli, Mumbai. He started the project with construction of transit building on the land provided by Municipal Corporation of Greater Mumbai (MCGM) at Worli. In Financial Year 2005-06, MCGM came up with a proposal that if assessee was ready to handover the possession of transit buildings it would grant TDRs. In terms of the said scheme, the assessee received TDR measuring 15308 sq.m. vide certificate No.SRA526 dated 2.10.2005 and another TDR measuring 4690 sq.m. vide certificate No.SRA594 dated 3.6.2006. The TDR dated 2.10.2005 had been sold by the assessee for a sum of Rs.9,92,04,469/- and the TDR dated 3.6.2006 had been sold for Rs.5,55,86,123/-. Both TDRs were sold during the same Financial Year in which these were received i.e. Assessment Years 2006-07 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidering the explanation of the assessee observed that there was no dispute that nature of income from sale of TDR was in lieu of handing over of transit camp buildings. CIT (A) further observed that the assessee was following project completion method which had been followed by it in the past as well as in future and therefore, the method followed could not be rejected. In such cases, the expenses incurred have to be shown as work-in-progress and any income received from the execution of the project has to be adjusted against work-in-progress till project was completed. The CIT (A) further observed that the project completion method was an accepted method of accounting in construction business and was in line with the accounting standard AS-7 prescribed by the ICAI. He referred to several decisions of the Tribunal in which project completion method had been accepted such as decision of Mumbai Bench of the Tribunal in the case of CIT vs. V.S. Dempo and Co. P.Ltd. (1996)[131 CTR 203(Bom.)]. He observed that the TDRs were directly related to project undertaken by the assessee, therefore, sale proceeds could be taxed only in the year of completion which was Assessment Year 2007-08. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure on transit buildings. In this case the expenditure was more than the income from TDR and therefore, even on this ground no income could be assessed. It was argued that Assessing Officer was not correct in assessing the income from TDR without giving credit for expenses incurred. It was also submitted that in case income from the completion of transit buildings for which TDRs had been received were computed in Assessment Year 2007-08 entire expenses since the beginning had to be held as allowable as rightly held by the CIT(A). 6. The ld. DR on the other hand supported the order of the Assessing Officer. It was argued that the assessee had been receiving amounts from time to time and therefore the income has to be computed on the basis of partial completion method. It was also submitted that the TDRs had been sold to third parties and therefore, income from the same had to be assessed as independent items of income. He placed reliance on the findings given in the assessment order. 7. We have perused the records and considered the rival contentions carefully. The dispute is regarding assessment of income from sale of TDRs. The assessee was implementing a slum rehabilitat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n made by the Assessing Officer in 2006-07 on account of TDR receipt is not justified. Further even if TDR receipt is assessed as independent item, deduction has to be allowed on account of the expenses incurred. The TDRs have been received in lieu of handing over of constructed transit buildings and therefore, cost of those buildings has to be deducted against income from sale of TDR. The cost of the buildings is claimed to be more than income from TDR, full details of which were given to the CIT(A) and therefore, even on this ground no income can be assessed in case of the assessee. In the Assessment Year 2006-07, the project was not complete and there is no dispute about this fact. Therefore, in Assessment Year 2006- 07, TDR received has to be set off against WIP and cannot be assessed separately as income. We therefore, confirm order of CIT (A) deleting the addition made in Assessment Year 2006-07. The position regarding Assessment Year 2007-08 is not clear. The Assessing Officer has not given any finding regarding the year of completion of the project. Though the CIT(A) has held that the project was completed in Assessment Year 2007-08, he has not given any basis of such find ..... X X X X Extracts X X X X X X X X Extracts X X X X
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