Law:

Section:

2008] 303 ITR 366 [2008] 171 TAXMAN 435 (MAD.) HIGH COURT OF MADRAS Commissioner of Income-tax v. Mangal Tirth Estates Ltd. K. RAVIRAJA PANDIAN AND MRS. CHITRA VENKATARAMAN, JJ. TAX CASE (APPEAL) NOS. 3, 626 & 904 OF 2004 AND 2432 OF 2006 NOVEMBER 29, 2007 Section 28(i), read with section 5, of the Income-tax Act, 1961 - Business income - Chargeable as - Assessment years 1993-94, 1994-95 and 1996-97 - Assessee-company, engaged in business of construction and sale of multi-storeyed office-cum-shopping complex, provided centrally air-conditioning facility to purchasers of built up area, for which, under a separate agreement, it collected service charges in advance for a period of five years - Said facility was to continue thereafter at no cost, i.e., after adjustment of cost of plant and machinery over five years - Assessee claimed that receipt regarding air conditioning facility was a deposit as per agreement and in any event, considering obligation to provide said facility, entire amount could not be assessed in year of receipt - Whether read in background of air conditioning agreement stipulating that transfer would be without any consideration and terms of sale agreement on rights of purchasers to common facilities, charges collected for extending facility was, in reality, recouping of charges for installation of plant - Held, yes - Whether since in case of sale of office space, sale consideration received was inclusive of provisions for amenities which were to be treated as part and parcel of property development, going by character of receipt and having regard to completed contract method followed by assessee to arrive at profit and loss account, such receipt was a revenue receipt to be assessed in year of receipt and it could not be spread over for five years as claimed by assessee - Held, yes Section 5, read with section 28(i), of the Income-tax Act, 1961 - Income - Accrual of - Assessment years 1993-94, 1994-95 and 1996-97 - Assessee, a construction company, in consideration of purchasers having acquired an undivided share in land for purpose of construction of a shop through assessee/developer, allotted to purchasers car park area of an extent…

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