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TMI Blog2024 (8) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... , namely, Deepak Laxman Kudale, Neeraj Horticulturists Pvt. Ltd. and Nupoora Developers Pvt. Ltd. In the appeals filed by such assessees before the Tribunal, the issue for consideration was, whether the "part consideration" which the assessee did not receive under the transaction to sell/transfer plot of land could be taxed or in other words the entire amount of the agreement consideration although as not actually received should be taxed. The tribunal opined in favour of the assessees and against the Revenue. Hence, the Revenue is in appeal on the following questions of law: "A. Whether on the facts and circumstances of the case and in law the Hon'ble ITAT justified in deleting the addition of Long term Capital gain of Rs. 12,15,54,375/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Bench of this Court. The said order is required to be noted which reads thus:- "1. Mr. Padvekar tenders a copy of an order dated 18th September, 2018 giving effect to the order of the Income Tax Appellate Tribunal (ITAT). Paragraph no.6 of the order reads as under : "6. The assessee has requested vide the above mentioned submissions that the amount of Rs.9,90,20,875/- may now be included in his taxable income for the A.Y. 2014-15. In view of these facts and as per the directions of the ITAT discussed above, the amount of Rs.9,90,20,875/- being balance consideration on account of sale of land at Wagholi is being taxed in the hands of the assessee in the A.Y. 2014-15 as Long Term Capital Gains." 2. In view of paragraph no.6 above, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he agreement has to be read as a whole and the revenue cannot re-write the agreement. The various decisions relied on by CIT(A) in our opinion are distinguishable and not applicable to the facts of the present case. In all those cases, the right to receive the consideration has been postponed. However, in the instant case the right to receive the consideration is on fulfillment of certain obligations. Further, the assessee has offered the balance amount to tax in A.Y. 2014- 15 as business income. In view of the above discussion and respectfully following the decisions cited above, we are of the considered opinion that assessee is liable to capital gain tax only on 50% of the consideration that has been received during the year. We, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an 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 an ascertained 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 Rs. 20 crores which is sought to be taxed by the Assessing Officer is not the amount which has accrued to the respondent-assessee. The test of accrual is whether there is a right to receive the amount though l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income does not result, there cannot be a tax, even though in book-keeping an entry is made about a hypothetical income, which does not materialize. " In this case Rs. 20 crores cap in the agreement is not income in the subject assessment year. It has been observed by the Apex Court in the case of K.P. Varghese v. Income-Tax Officer, Ernakulam, 181 ITR 597 that one has to read capital gain provision along with computation provision and the starting point of the computation is "the full value of the consideration received or accruing". In this case the amount of Rs. 20 crores is neither received nor it has accrued to the respondent-assessee during the subject assessment year. We are informed that for the subsequent assessment year (save Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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