Document Fragment View
Fragment Information
Showing contexts for: Sample flat in K Raheja Pvt. Ltd, Mumbai vs Dcit Cent. Cir-4(2), `Mumbai on 3 August, 2022Matching Fragments
A.Y.2018-19 K. Raheja Pvt. Ltd.
14. Before we proceed to deal with the rival contentions, let us first examine the relevant option agreement in question and also the background facts and circumstances leading to such agreement. We find that, the assessee company, in the instant case, had launched a residential project - 'Artesia' in Worli, Mumbai, whose title certificate was issued on 06.05.2009. The proposed development was subject to approvals and clearances from the Municipal Corporation of Brihanmumbai. In the meantime, the assessee had begun marketing the said residential project and in FY 2010-11, the assessee was only able to obtain bookings for two (2) flats in the proposed development. In the same year, the assessee entered into an agreement with its associate entity, HRPL in terms of which the latter was given a pure irrevocable option to purchase twenty (20) flats in this project. Copy of a sample option agreement along with supplementary agreement is found placed at Pages 32 to 70 of the paper book. On conjoint reading of these agreements, it is noted that Clause (3) of the Original Agreement sets out the details of the proposed flat which would be constructed at the proposed project along with the Option Price viz., the price at which the option holder i.e. HRPL could purchase the said flat. Once HRPL would exercise this option, the assessee was bound to execute Agreement for Sale of the proposed flat. The relevant terms and conditions of the said Option is as follows:
"4. Be that as it may, a perusal of the arrangement reveals that the transaction has been made on the basis of very vague terms on lump-sum basis with no basis for arriving at the price determined in each of the flat agreed to be sold. Of the two flats whose option agreements have been examined by the CIT(A)/submitted by assessee, the flat bearing no 1401 has been sold as per square feet carpet area @ 27,430/- [on the basis of the working in pt.5.29 of the CIT(A) order.
The option price to HRIPL is 6.83 crs for this flat with carpet area of 2490 sq.ft. while flat no.1901 has been sold @28,915/-[As per sample option agreement submitted as part of the PB did. 08/06/2021-page 34 of the PB. The A.Y.2018-19 K. Raheja Pvt. Ltd.
5. From the sample option agreement (flat 1901) provided by the assessee, it is seen that as per option agreement terms at section 8(page 37 of the submission) the timeline for deposit of various amounts is given. As per the same, A.Y.2018-19 K. Raheja Pvt. Ltd.
substantial amounts should have been paid by HRIPL between the period of initial agreement in March 2010 and the date of supplemental agreement that is March 2014 i.e.04 years. The schedule of payments as per pt.08 of the sample option agreement vide 37-38 of the PB is as below:
7. Booking of the flats at an early stage of the project is recognized method of raising resources and even the Hon'ble CIT(A) has held the same.
A copy of the sample Option Agreement for Flat No. 1901 has been enclosed at Pg No. 32-70 of the PB. Similar agreements were entered for all the flats. This establishes the practice of booking the flats through option agreements. As on 31.03.2018, the total option deposit received by the assessee was Rs 318 crores which was Rs 5.61] crores as on 31.03.2010. The assessee has enclosed balance sheets at the relevant dates in the PB and the relevant pages for reference are Pg No. 10 & 22.