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TMI Blog2017 (4) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... 7th floor of the building the agreements which were executed became not legally enforceable. The purchaser's of flats also disputed making of progress payments since their banks refused to grant housing loan due to non availability of building plan approved for the 7th floor where these 2 flats were situated. Also due to the non approval of the 7th floor of the building by the MCGM an uncertainty came into the agreement and the flats which were agreed to sell were into the question. Since as per the clause no.7 of the agreements for sale the purchaser were entitled to get full refund on demand on developer fails to give possession of the fiats within stipulated time period. It is also not in dispute that as on 30th Sept, 2010, the build ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and the suit for cancellation of agreement is pending in the Bombay City Civil Court. In view of the above facts and circumstances of the case, we do not find any merit in the action of lower authorities for bringing tax net advance amount received in respect of flat No.701 & 702 for which no permission was there for construction. Moreover, assessee itself has offered the said amount in the subsequent year when the plan was approved; there is no reason to tax the very same income double. - Decided in favour of assessee. - ITA No. 7393/Mum/2014 - - - Dated:- 31-3-2017 - Shri R. C. Sharma, AM And Shri Sandeep Gosain, JM Assessee by Shri Nilesh Joshi Revenue by Ms. Pooja Swaroop ORDER Per R. C. Sharma ( A.M ) Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved by MCGM as income up to completion of 4th slab ₹ 7190510/- and levied tax on it. Thus, the AO treated 60% (upto completion of 4th slab) of ₹ 71,90,510/- of the Agreement Value, from agreements of Flat no. 701 and 702 as income. 4. By the impugned order CIT(A) confirmed the action of AO against which assessee is in further appeal before us. 5. It was contended by learned AR that Para 6 of the 'Guidance Note on Recognition of Revenue by Real Estate Developer issued by Accounting Standards Board of the Institute of Chartered Accountants of India, which is followed by all the Real Estate Developers for recognition of income states as follows: Para no. 6: Revenue in case of Real Estate sales should be recogni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7th Floor plan was not approved by Government authority and hence agreements were not legally enforceable to lend loan to the prospective purchasers. The Purchasers had also created dispute on making payment due to non-approval and demanded the approved plan of the 7th floor by government authority to make payments. So, it was unreasonable to expect ultimate collection. Hence, the condition No. (iii) was not satisfied. 8. He further contended that in the next year when permission was obtained, the assessee has offered the income in respect of 7th floor and paid taxes thereon. 9. On the other hand, learned DR relied on the order of the lower authorities and contended that assessee has entered into agreement to sale, therefore, adva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35(2) (c) of DCR 1991. From the record we found that on 31-03-2010 the Assessee Company had permissions to build only upto 3rd floors as per plan approved by MDGM dated 08-08-2008. The Assessee Company has purchased the TDR from the open market in the month of May 2010 for getting further building plans approved from the MCGM as per DCR 1991. On 10th June 2010, the Bombay High Court has issued two different orders in two different cases restricting MCGM not to charge premiums for granting additional extra FSI and to give exemption in FSI for the areas like Staircase, lift and passage. The Bombay high court has ordered against the premium for staircase, lift, lobby which was charged by the MCGM. On issue of the Bombay High court order, the M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h were executed became not legally enforceable. The purchaser's of flats also disputed making of progress payments since their banks refused to grant housing loan due to non availability of building plan approved for the 7th floor where these 2 flats were situated. Also due to the non approval of the 7th floor of the building by the MCGM an uncertainty came into the agreement and the flats which were agreed to sell were into the question. Since as per the clause no.7 of the agreements for sale the purchaser were entitled to get full refund on demand on developer fails to give possession of the fiats within stipulated time period. 12. It is also not in dispute that as on 30th Sept, 2010, the building plan was approved only upto 6th fl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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