November 2012
ITO v DKP Engineers & Construction P. Ltd. ITAT Mumbai `D’ Bench Before D. Manmohan (VP) and Rajendra Singh (AM) ITA No. 7796/M/2010 A.Y.: 2006-07. Decided on: 31st August, 2012. Counsel for revenue/assessee: Amardeep /Dr. K. Shivram & Rahul Hakani
By Jagdish D. Shah, Jagdish T. Punjabi, Charted Accountants
fiogf49gjkf0d
S/s. 28, 45 – In case of assessee following project completion method, sale proceeds of TDR allotted consequent to development of road need to be reduced from WIP.
Facts:
The assessee company engaged in construction activity had undertaken to develop the D.P. Road leading to Vikroli property on which it was to construct flats. Upon development of the road, the assessee became entitled to TDR which was sold on 5.8.2005. Cost incurred on development of road was considered as part of WIP and the sale consideration of TDR was reduced from WIP which had the effect of reducing the total expenditure incurred till the end of the year, on the project under development. The AO assessed the receipts arising on sale of TDR under the head `Income from Capital Gains’.
Aggrieved the assessee preferred an appeal to CIT(A) who allowed the assessee’s appeal.
Aggrieved, the revenue preferred an appeal to the Tribunal.
Held:
The Tribunal noted that the receipt of TDR had direct nexus with the work done by the appellant and was incidental to the entire project undertaken. It held that the assessee was correct in reducing the sale proceeds of TDR from work-in-progress. The Tribunal confirmed the order passed by the CIT(A) and dismissed the appeal filed by the revenue.
