No capital gain accrued by mere issuing allotment letter which merely entitles the possession of the plot to the prospective buyers.
In the case of Sujata Farms Pvt. Ltd. Versus DCIT, Circle – 6, Pune – ITAT PUNE
The Assessing Officer claimed that the assessee company is following mercantile system of accounting and therefore, it was required upon the assessee company to recognize sales, on handing over the possession of the plot of land i.e. the date of letter of allotment. In the opinion of the Assessing Officer the assessee company has not recognized the sales and accordingly, correct income has not been declared in all these assessment years.
However assessee company claims that merely handing over possession of plots of land to the buyers by issuing the letters of offer and allotment, transactions would not declared as a sales. Continue reading