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TMI Blog2020 (7) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... ere held as business assets. Proceeding further, it is evident from the terms of the Joint Venture Agreement that only part income accrued to the assessee on execution of the project agreement. The balance consideration was conditional receipt and was to accrue only in the event of assessee performing certain obligations under the agreement. Another pertinent fact to be noted is that the payments received in subsequent years have already been offered to tax. The same was in line with assessee s arguments that the balance receipts were conditional receipts. The response by M/s Shivalik also confirmed the same. Therefore, no fault could be found in the impugned order in estimating the income @10% of gross receipts. Once the income is estimated, no further disallowance u/s 40A(3) would be warranted. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ] - Shri Mahavir Singh, VP And Shri Manoj Kumar Aggarwal, AM For the Assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 142(1) were issued in due course. The reasons for reopening the case, as extracted in assessment order, would reveal that it came to notice that M/s Tamboli Developer i.e. proprietorship concern of the assessee, had transferred certain development rights to M/s. Shivalik Ventures Pvt. Ltd. (M/s Shivalik) vide agreement dated 23/07/2008 for a consideration of ₹ 336 Lacs, out of which an amount of ₹ 100.80 Lacs was stated to be received during financial year 2008-09. It was observed that since assessee transferred the development rights and handed over the possession of property, the aforesaid transfer qualified to be treated as transfer u/s. 53A of Transfer Property Act, 1882 and therefore, resultant gains would be chargeable to tax as Business Profits. Since assessee followed mercantile system of accounting, the entire amount received/receivable on sale of development rights would be taxable in the year of signing of development agreement and handing over of possession of land. Upon verifying the return of income, it was seen that the said amount was not offered to tax as business income. In the above background, reassessment proceedings were initiated against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee. The income accrued to the assessee out of transfer of development right would be ₹ 336 Lacs. As per the term of the agreement, the assessee parted with development rights and the possession of the land was also given. Therefore, the transfer was completed during the year and the taxability of business receipts would not be dependent upon actual receipt thereof. Hence, entire amount of ₹ 336 Lacs was to be brought to tax. 2.9 Upon perusal of expenditure, it was noted that an expenditure of ₹ 42 Lacs was paid through bearer cheques and therefore the same would not qualify as deduction u/s 40A(3) of the Act. 2.10 Finally, the amount of ₹ 336 Lacs was treated as business income against which the expenditure of ₹ 58.80 Lacs was allowed to the assessee and the balance amount of ₹ 277.20 Lacs was determined as business income. 3.1 Aggrieved as aforesaid, the assessee assailed the assessment before Ld. CIT(A) vide impugned order dated 12/07/2018 wherein the assessee drew attention to clause-17 of the joint venture agreement and submitted that as per the agreement, only an amount of Rs,100.80 Lacs accrued to the assessee upon execution of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereon, being; a) To procure the revised Letter of Intent (LOI) and Intimation of Approval (IOI) from the Slum Rehabilitation Authority; b) Procure resolution from M/s Nilofer Co-operative Housing Society agreeing to consent the re-development of property and shift to permanent Rehabilitation Tenement; c) To procure resignation and NOC from the previous architects; d) To shift all Slum Dwellers to temporary alternate and handover on vacating the properties and handover the same to M/s Shivalik Ventures Pvt Ltd for redevelopment; e) To shift all Slum Dwellers from temporary alternate accommodation to permanent accommodation constructed. As per Clause No. 8, the appellant was solely responsible and obliged to settle all claims in regard to FSI to be consumed at its own costs and expenses. As per Clause No. 12, the appellant was required to incur all costs, charges and expenses required to obtain the revised Letter of Intent (LOI) and Intimation of Approval (IOA). Accordingly, as per above stated terms and conditions described in Joint Venture Agreement dated 25/07/2008, the appellant was entrusted with several responsibilities and to perform its part of obligation under the contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration then no amount would be payable to the respondent-assessee as deferred consideration. The consideration of ₹ 20 crores is not an assured consideration to be received by the Shete family. It is only the maximum that could be received. Therefore, it is not a case where any consideration out of ₹ 20 crores or part therefore (after reducing ₹ 2.70 crores) has been received or has accrued to the respondent-assessee. As observed by the Apex Court in Morvi Industries Ltd. v. CIT [1971] 82 ITR 835. The income can be said to accrue when it becomes due.... The moment the income accrues, the assessee gets vested right to claim that amount, even though not immediately. In fact, the application of formula in the agreement dated 25th January, 2006 itself makes the amount which is receivable as deferred consideration contingent upon the profits of M/s. Unisol and not unascertained amount. Thus, in the subject assessment year no right to claim any particular amount gets vested in the hands of the respondent-assessee. Therefore, entire amount of ₹ 20 crores which is sought to be taxed by the Assessing Officer is not the amount which has accrued to the respondent-asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the payments made by Account payee cheques. The appellant had furnished a tabular chart along with profit and loss account of 5 years from A.Y.2008-09 to 2012-13 which is reproduced as under: Amount Received Payment made out of receipt from Shivalik Ventures Financial Year Amount received from Shivalik Amount Spent and payments made Balance amount left offered to Income tax 2008-09 1,00,80,000 83,65,000 17,15,000 2009-10 1,68,00,000 19,82,690 38,17,310 2010-11 20,00,000 20,00,000 - 2011-12 45,00,000 13,18,000 31,82,000 2012-13 40,00,000 10,00,000 30,00,000 Total 3,73,80,000 2,56,65,690 1,17,14,310 The return of income has been filed accordingly which has been accepted by the Revenue. 4.6. It is observed that the amounts received by the appellant over 5 years from M/s Shivalik Ventures Pvt Ltd is disclosed of ₹ 3,73,80,000/- and the amounts spent for the project is of ₹ 2,56,65,690/-, resultantly the balance Gross amount of ₹ 1,17,14,310/- has been considered as income from Joint Venture. However, on perusal of the P L account, it is also observed that the appellant had claimed various other expenses against the contract receipts and had disclosed the nominal profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as civil contractor and the income earned from the stated project was assessed as Business Income. Therefore, the term transfer as defined in Sec.2(47)(v), would not apply since the same is applicable only in case of capital assets held by the assessee. The development rights were held as business assets. Proceeding further, it is evident from the terms of the Joint Venture Agreement that only part income accrued to the assessee on execution of the project agreement. The balance consideration was conditional receipt and was to accrue only in the event of assessee performing certain obligations under the agreement. Another pertinent fact to be noted is that the payments received in subsequent years have already been offered to tax. The same was in line with assessee s arguments that the balance receipts were conditional receipts. The response by M/s Shivalik also confirmed the same. Therefore, no fault could be found in the impugned order in estimating the income @10% of gross receipts. Once the income is estimated, no further disallowance u/s 40A(3) would be warranted. Therefore, we confirm the stand of Ld. CIT(A) in the impugned order. Reasons for delay in pronouncement of order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... January 2020, this order thereon is being pronounced today on 14th day of May, 2020, much after the expiry of 90 days from the date of conclusion of hearing. We are also alive to the fact that rule 34(5) of the Income Tax Appellate Tribunal Rules 1963, which deals with pronouncement of orders, provides as follows: (5) The pronouncement may be in any of the following manners: - (a) The Bench may pronounce the order immediately upon the conclusion of the hearing. (b) In case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date for pronouncement. (c) In a case where no date of pronouncement is given by the Bench, every endeavour shall be made by the Bench to pronounce the order within 60 days from the date on which the hearing of the case was concluded but, where it is not practicable so to do on the ground of exceptional and extraordinary circumstances of the case, the Bench shall fix a future day for pronouncement of the order, and such date shall not ordinarily (emphasis supplied by us now) be a day beyond a further period of 30 days and due notice of the day so fixed shall be given on the notice board. 8. Quite clearly, ordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of judicial machinery, that Hon ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown . Hon ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, It is also clarified that while calculating time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly , and also observed that arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020 . It has been an unprecedented situation not only in India but all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words ordinarily , in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to refix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of this case. Deriving strength from the ratio of aforesaid decision, we exclude the period of lockdown while computing the limitation provided under Rule 34(5) and proceed with pronouncement of the order. Conclusion 6. The revenue s appeal stands di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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