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TMI Blog2018 (12) TMI 910X X X X Extracts X X X X X X X X Extracts X X X X ..... ts within themselves in such a manner that each would receive their proportion of share in the total build up area and have complete authority to decide the sale of units allocated to them, the price and the time etc. As find from the facts of the case that assessee had sold unit no.2 and 4 for a total sale consideration of ₹ 4,50,00,000/- and ₹ 4,05,00,000/- respectively during the financial year 2008-09 i.e. relevant to assessment year 2009-10. The assessment for assessment year 2009-10 was completed and the returned income of the assessee has been accepted by the department. Hence, we delete the addition made by AO and confirmed by CIT(A). This issue of assessee’s appeal is allowed. AO directing the AO to make addition of 14% share in the unsold units in the income of the assessee in the year in which such unit is actually sold - Held that:- Confirming the action of the AO in directing the AO to make addition of 14% share in the unsold units in the income of the assessee in the year in which such unit is actually sold. - ITA No. 3613/Mum/2017, ITA No. 3614/Mum/2017 - - - Dated:- 7-12-2018 - Sri Mahavir Singh, JM And Sri Rajesh Kumar, AM For the Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in proportion to their percentage in their building and construction in view of deed of declaration dated 02.02.2008. The assessee has been allowed certain units as its shares from the constructed property and the details of ownership rights and interest in the building which is enclosed at pages 6 7 of the assessee s paper book and the same read as under: - Unit No. Name of the owner Total built up area Voting rights Share of respective owners Sq. mtrs Percentage ADK HVG AANGAN AASTITVA SHILPI 1. Arti Kothari 129.46 3.360524936 47.90608 0.044641243 0.6363848 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 129.46 TOTAL 9.080989386 5 SHILPI 129.46 9.080989386 129.46 Total 9.080989386 6 Hemani V Gowani 129.46 9.080989386 129.46 Total 9.080989386 7 Hemani V Gowani 111.54 9.080989386 111.54 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29% 29% 14% 14% 14% 5. The assessee also submitted the details of comparative chart of sale of units in the building, which is enclosed in assessee s paper book at page 8 and the same reads as under: - Unit No. Total Built up Amount Registration Date Rate per sq. meters Sq.mtrs 1. 129.46 5,00,00,000 28/06/2010 3,86,220 2. 129.46 4,50,00,000 13.10.2008 3,47,598 3. 129.46 4,00,00,000 14/11/2008 3,08976 Unit No. Total Built up Amount Registration Date Rate per sq. meters Sq.mtrs 4. 129.46 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation received on account of sale of area 1377.76 sq. mtrs ₹ 48,98,60,000/- Add: Consideration receivable of the unsold stock 47.62 x 400000 ₹ 1,90,48,000/- Total consideration of the Project ₹ 50,89,08,000/- 7. The AO noted that the assessee s right/ interest is oniy to the extent of 14%, whereas the assessee has disclosed its share of consideration of receipts at 12.69% of the total consideration of the project. According to AO, assessee s actual share of consideration receivable from the project is ₹ 7,12,47,120/- as against the disclosed consideration at ₹ 6,45,84,500/-. Therefore, the difference of ₹ 66,62,620/- was added to the total income of the assessee. Aggrieved, assessee preferred the appeal before CIT(A). 8. The CIT(A) apart from confirming the action of the AO, directed the AO to exclude the profit of unsold unit from the income of the assessee for the current year but also directed to bring this income to tax in the hands of the assessee in the year in which these units are actually sold. For this the CIT(A) has observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted that the assessee has not shown the full profit accrued to it as per its share in the project which is 14%. The working of the 40 in bringing to tax 14% of the project receipts in the hands of the assessee is found to be correct and the same is upheld. However there is merit in the alternate ground of the assessee that profit of unsold units cannot be brought to tax till the time of realization of money from sale of such units. Accordingly, the AO is directed to exclude the profit of unsold units from the income of the assessee for the current year and bring this income to tax in the hands of the assessee in the year in which these units are actually sold. Accordingly these grounds of appeal are partly allowed. Aggrieved, now assessee is in second appeal before Tribunal. 9. We have heard rival contentions and gone through the facts and circumstances of the case. We find from the facts of the case and the arguments of both the sides and material available on cash, records including assessee's paper book consisting of pages from 1 to 136. The facts are that the assessee has undertaken a project for consideration of building known as H M Tower, Bandra West, Mumbai. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lotted to the assessee are on lower floors i.e. lower values compared to the units at upper floors. In reply, It was explained that the assessee is having rights of 14% in total project and accordingly it is eligible for 14% share of entire sale consideration of the project. The also furnished the details of comparative chart of sale consideration of all units during the course of assessment as well as appellate proceedings. These are reproduced in the order in above para 5 at page 4. We find from the facts of the case that the AO and CIT(A), based on the above chart came the conclusion that the assessee should have considered 14% income of the total consideration realized on sale of all units. According to revenue, the assessee has shown less income on sale of units allotted which are at lower floors compared to sale consideration of upper floors and accordingly allocated 14% of entire sale consideration realized on sale of all units to determine the share of the assessee in the entire project. 12. We have gone through entire facts and noted that the action of the AO in allocating 14% total consideration realized on sale of all the units of the project is wrong and contrary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee had sold unit no.2 and 4 for a total sale consideration of ₹ 4,50,00,000/- and ₹ 4,05,00,000/- respectively during the financial year 2008-09 i.e. relevant to assessment year 2009-10. The assessment for assessment year 2009-10 was completed and the returned income of the assessee has been accepted by the department. Hence, we delete the addition made by AO and confirmed by CIT(A). This issue of assessee s appeal is allowed. 15. The next issue in ITA No. 3613/Mum/2017 for AY 2011-12 of assessee s appeal is as regards to the order of CIT(A) confirming the action of the AO in directing the AO to make addition of 14% share in the unsold units in the income of the assessee in the year in which such unit is actually sold. For this assessee has raised the following ground No.2: - 2. The learned Commissioner of Income-tax (Appeals) erred in holding that the 14% share in unsold units of the project of ₹ 2646,720/- to be added to the income of the appellant in the year in which such unit is actually sold. The appellant submits that the learned Commissioner of Income-tax (Appeals) failed to appreciate that the appellant does not have any right or interest in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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