The Commissioner Of Income Tax – Ii, Pune v. Shri Arun Pitambar Sheth, Pune

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1016 OF 2011 The Commissioner of Income Tax – II, Pune..Appellant. Versus Shri Arun Pitambar Sheth, Pune ..Respondent. Mr.Vimal Gupta, Senior Advocate with Ms.Padma Divakar for the appellant.None for the respondent. CORAM : J.P. Devadhar &M.S. Sanklecha, JJ. DATE : 16[th] January 2013 P.C. : 1.In this appeal filed by the Revenue for assessment year 1998-1999, following question of law has been proposed for our consideration. “Whether on the facts and in the circumstances of the case and in law, the Tribunal did not err in confirming the decision of the Commissioner of Income-tax (A) that the sale consideration of Rs.45 lakhs agreed to be received by the assessee in kind had not accrued to the assessee, hence, not assessable to tax for the relevant assessment year i.e. AY 1998-1999 ?” 2.The respondent – assessee sold development rights with regard to a plot of land to one M/s.Kale & Sharma Associates. The consideration to be received for the sale of development rights during the assessment year in question was Rs.14 lakhs in cash and the balance Rs.45 lakhs was to be received in the form of constructed area of 3000 square feet within 40 months from the date of agreement. The agreement is dated 10[th] December 1997. 3.The assessing officer by order dated 30[th] January 2001 held that the amount of Rs.45 lakhs which was in balance and was to be received in the form of constructed area should also be brought to tax in the assessment year 1998-1999. 4.On appeal, the Commissioner of Income Tax (A) by order dated 28[th] February 2002 upheld the contention of the respondent – assessee that Rs.45 lakhs could not be brought to tax as the same had not accrued during the assessment year under consideration. 5.On further appeal filed by the Revenue, the Tribunal by order dated 30[th] November 2009 while upholding the order of the Commissioner of Income Tax (A) held that the amount of Rs.45 lakhs which was to be received in the form of constructed area had not been received during the assessment year under consideration and further that the construction activity had not materialized. Consequently, the amount of Rs.45 lakhs was contingent upon the construction activity taking place. In such circumstances, even while taxing the income on accrual basis, the same cannot be done on the basis of hypothetical accrual of income. The fact is that the Tribunal approved the finding of fact recorded by the Commissioner of Income Tax (A) to the effect that the consideration of Rs.45 lakhs which was to be received within 40 months from the date of agreement i.e. 10[th] December 1997 had not been received even after lapse of 50 months. Consequently, accrual of balance consideration of Rs.45 lakhs did not take place even on mercantile accounting system for assessment year 1998-1999. 6.The aforesaid finding of the Tribunal upholding the finding of the Commissioner of Income Tax (A) is essentially a finding of fact and, hence, does not call for any interference by this Court. Accordingly, the appeal is dismissed with no order as to costs. (M.S. Sanklecha, J.) (J.P. Devadhar, J.)