DCIT- CC- 8(4), MUMBAI, MUMBAI vs. SASHWAT CONSTRUWELL PRIVATE LIMITED, MUMBAI

Briefly stated, the assessee, Sashwat Construwell Private Limited, is engaged in the business of builders, developers and dealers in real estate and had undertaken the project known as “Bhoomi Celestia” at Malad West, Mumbai. The project comprises three wings, namely A, A1 and B. Under the development arrangement entered into with American Springs and Pressings Works Private Limited, the assessee was entitled to its specified share in the saleable area of the project. Wing B had received the Occupancy Certificate in December 2021. The Assessing Officer noted that the assessee had sold part of the area attributable to its share in Wing B and, on the basis of the sale consideration and the cost adopted by him, worked out profit of Rs.7,86,58,640/- and brought the same to tax in the assessment year under consideration. The assessee, however, contended that “Bhoomi Celestia” was one integrated project comprising all the three wings and that it had consistently followed the Project Completion Method, under which the profit of the entire project was to be recognised upon completion of the project as a whole. The assessee further contended that the computation made by the Assessing Officer in respect of Wing B did not correctly determine the cost attributable to the area sold and that, even on an alternative basis, no taxable profit arose in the year under consideration.

The learned Commissioner of Income Tax (Appeals), after considering the assessment order and the submissions of the assessee, accepted the contention that the three wings constituted one integrated project. It was observed that the three wings shared common facilities and were part of the same development and that the various approvals, commencement certificate and amenities were common to the project. The learned Commissioner of Income Tax (Appeals) further took note of the fact that the assessee had consistently followed the Project Completion Method and that an identical addition relating to Wing B of the same project had been deleted in the appellate proceedings for the earlier assessment year. It was also noted that the assessee had offered the income from the project upon completion of the project and that, even on the alternative computation, the result in respect of Wing B would not give rise to taxable profit. On these considerations, the learned Commissioner of Income Tax (Appeals) directed the Assessing Officer to delete the addition of Rs.7,86,58,640/-.

During the course of hearing before us, the learned Departmental Representative (“ld.DR”) supported the assessment order and relied upon the grounds raised by the Revenue. The learned Authorised Representative (“ld.AR”) of the assessee, on the other hand, submitted that the issue is squarely covered by the decision of the coordinate Bench in the assessee’s own case for the earlier assessment year, being ITA No.6826/Mum/2025 dated 25.06.2026. It was submitted that the issue before the Tribunal in the present appeal arises from the same project, namely “Bhoomi Celestia”, and concerns the same dispute regarding recognition of profit from Wing B while the assessee has consistently followed the Project Completion Method for the project as a whole. The ld.AR accordingly submitted that the decision already rendered by the coordinate Bench in the assessee’s own case governs the issue before us and that the order of the learned Commissioner of Income Tax (Appeals) deserves to be upheld.

We have considered the rival submissions and perused the material available on record. The dispute before us is confined to the addition of Rs.7,86,58,640/- made by the Assessing Officer in respect of the alleged profit from Wing B of “Bhoomi Celestia”. The assessment order proceeds on the basis that Wing B had received the Occupancy Certificate and that the assessee had sold units pertaining to its share in that wing, and therefore the corresponding profit was liable to be recognized in the year under consideration. The assessee, however, has consistently maintained that “Bhoomi Celestia” is a single project comprising Wings A, A1 and B and that the Project Completion Method is being followed for the project. The learned Commissioner of Income Tax (Appeals), after examining the factual position and the earlier appellate order concerning the same project, accepted this contention and deleted the addition.

We further note that the ld.AR has specifically brought to our notice the decision of the coordinate Bench in the assessee’s own case in ITA No.6826/Mum/2025 dated 25.06.2026 for the assessment year 2022-23. The said decision concerns the assessee and the same project and has dealt with the dispute relating to recognition of profit from Wing B under the Project Completion Method. Since the issue before us is materially the same and arises from the same project and the same factual matrix, we find no reason to take a different view in the present assessment year. The Revenue has not been able to point out any distinguishing feature in the facts before us which would warrant departure from the view already taken by the coordinate Bench in the assessee’s own case.

In these circumstances, respectfully following the decision of the coordinate Bench in the assessee’s own case in ITA No.6826/Mum/2025 dated 25.06.2026, we find no infirmity in the order of the learned Commissioner of Income Tax (Appeals) deleting the addition of Rs.7,86,58,640/- made by the Assessing Officer in respect of Wing B of “Bhoomi Celestia”. The grounds raised by the Revenue are accordingly rejected.

In the result, the appeal filed by the Revenue for the assessment year 2023-24 is dismissed.