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Documents citing Ito (E) 2(4), Mumbai vs The Chembur Gymkhana, Mumbai on 23 November, 2017

Skylark Build , Mumbai vs Department Of Income Tax

5. Before us the ld. AR reiterated the submissions made before the lower authorities that the assessee was implementing a slum rehabilitation project and as part of the project the assessee had to construct the transit buildings for shifting the slum dwellers on the land provided by MCGM. Since this was long term contract all the expenses incurred had to be shown as work-in- progress. The assessee was following project completion method of accounting of income and, therefore, during the period of construction of project in case there were any receipts from the activities related to the project it had to be reduced from work-in-progress. MCGM had come up with a scheme that in case transit building after full construction were handed over to them they would issue TDR and thus TDR received in the process of setting up of project could not be declared as income separately because income could be computed only in the year of completion of the project. In this case, the transit buildings were handed over to MCGM on 1.6.2006 before finalization of balance sheet for the year ended 31.3.2006 and therefore, these had been reduced from the work-in-progress in Assessment Year 2006-07 and not shown separately. In Assessment Year 2007-08, the TDR receipts had been shown separately in the profit and loss account. He referred to the decision of the Tribunal in the case of Chembur Trading (supra) in support of the proposition that TDR receipts had to be shown as income in the year of completion of the project. It was also submitted that TDRs had been received in lieu of handing over of constructed transit buildings and therefore, cost of TDRs would be the cost of expenditure on transit buildings. In this case the expenditure was more than the income from TDR and therefore, even on this ground no income could be assessed. It was argued that Assessing Officer was not correct in assessing the income 5 ITA No.4307 & 4308/M/09 A.Y:06-07 & 07-07 from TDR without giving credit for expenses incurred. It was also submitted that in case income from the completion of transit buildings for which TDRs had been received were computed in Assessment Year 2007-08 entire expenses since the beginning had to be held as allowable as rightly held by the CIT(A).
Income Tax Appellate Tribunal - Mumbai Cites 2 - Cited by 0 - Full Document
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