INCOME TAX ACT, 1961

Section 143(3)

Assessment - Non-refundable security deposit - Addition as undisclosed receipts - Remand of matter

Assessee-company was engaged in real estate business. A survey was out and an agreement between assessee and M/s. K was found and whereby the other party was required to obtain appropriate development licenses from 'Director Town and Country Planning' Haryana and assessee had agreed to transfer and assign exclusive development rights over the land to M/s. K. As per the terms of agreement, developer had paid sum as a non-refundable deposit which was not taken as receipt by assessee and instead it had treated as advance. Further due to non-fulfillment of various conditions, dispute had arisen between the two parties and the matter was challenged before High Court. AO however added the said amount as undisclosed receipt. CIT(A) had noted that amount was purely contingent and depending upon the decision of High Court the same cannot be considered as income of assessee. Held: As brought on record that a settlement agreement was entered between the parties and High Court vide judgment and order [[O.M.P.(I) (COMM.) 162/2016, dt. 18-1-2017]] had taken the settlement agreement on record and had disposed of the said petition to be decided in terms of settlement agreement. Since the issue had attained finality in terms of settlement agreement duly approved by High Court, the matter was remanded back to AO to implement the said settlement agreement and decide the issue.

Followed:ILC Infracon (P) Ltd. v. Raj Buildwell (P) Ltd. [O.M.P.(I) (COMM.) 162/2016, dt. 18-1-2017]

REFERRED :

FAVOUR : Matter Remanded

A.Y. :

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