DCIT, CIRCLE-24(2), NEW DELHI vs. STELLAR CONSTELLATION PROJECTS P.LTD, NEW DELHI

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ITA 5507/DEL/2017Status: DisposedITAT Delhi19 January 2023AY 2013-144 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the issue was revenue neutral as the project was completed in subsequent years and the percentage of completion method was accepted for those years. Therefore, the addition made by the AO was not sustainable.

What were the facts?

The assessee declared income based on a certain percentage of project completion. The Assessing Officer increased this percentage, leading to an addition to the total income. The Commissioner (Appeals) deleted this addition.

What were the issues?

Whether the addition made by the AO on account of proportionate sale based on percentage of completion was justified, considering the subsequent completion of the project and acceptance of the method in later years.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘G’ : NEW DELHI

Before: SH. N.K.BILLAIYA & SH. ANUBHAV SHARMA

For Respondent: Ms. Sangeeta Yadav, Sr. DR
Hearing: 17.01.2023Pronounced: 19.01.2023

The appeal has been filed by the Revenue against order dated 22.06.2017 in Appeal No. 115/16-17/2777 assessment year 2013-14 passed by Commissioner of Income Tax (appeals)-30, New Delhi (hereinafter referred to as the First Appellate Authority or in short ‘Ld. F.A.A.’) in regard to the appeal before it arising out of assessment order dated 26/12/2016 u/s 143(3) of the Income Tax Act, 1961 passed by the ACIT, Range-24, New Delhi (hereinafter referred to as the Assessing Officer or ‘AO’).

5507.Del.2018 Tidal Securities P. Ltd., New Delhi

2.

The brief facts of the case are that The return of income was filed on 27.09.2013, declaring total income at Rs. 4,71,97,300/-. Subsequently, assessment u/s 143(3) of the Act, was completed vide order dated 26.12.2016, at total income of Rs. 6,57,66,370/-, as against returned income of Rs.4,71,97,300/-, after making the addition of Rs. 1,85,69,070/- on account of increasing the percentage of completion of the project by 10.67%, determining at 38.38%, against the declared percentage of the completion of the project at 27.71%, by the assessee.

3.

Ld. CIT(A) had deleted the addition and the revenue is in appeal raising following grounds :-

1. "The Ld.CIT(A) erred in deleting the addition of Rs.1,85,69,070/- made by the AO on account of proportionate sale on the percentage completion for the year in respect of housing project namely "Stellar Jeeven" despite the fact that assessee has violated the accounting principles i.e. assessee was following accounting standard 19 instead of revised accounting standard 7&9 as adopted by AO. Besides, assessee was following mercantile system of accounting in respect of accounting for revenue and expenditure, however, for the purpose of land cost, the assessee is following cash system of account."

2. The appellant craves leave to add, alter or amend any of the ground(s) of appeal before or during the course of hearing of the appeal.” 4. Heard and perused the record.

5.

During the course of hearing it was pointed out on behalf of the assessee that the much water has flown after the impugned orders dated 22.06.2017 of ld. CIT(A) as the project in regard to which assessee was claiming POCM had concluded and at page no. 5 of paper book, a chart has been provided which shows that after the present assessment year 2013-14 the assessee had made the claim on the basis of percentage of completion for the subsequent six financial

5507.Del.2018 Tidal Securities P. Ltd., New Delhi years ending with F.Y. 2018-19. Which have been accepted in assessments. Copy of assessment order for the A.Y. 2014-15, which is immediately preceding year to the disputed A.Y. 2013-14, is available on page no. 1 and 2 of the paper book and it shows that in subsequent years the returned income was accepted. These facts remained uncontroverted by Ld. DR and leave no scope of interference in the findings of Ld. CIT(A). The issue becomes revenue neutral on acceptance of the calculation of income on POCM for subsequent years and project attaining 100% completion. The grounds stand decided against the revenue. The appeal of revenue is dismissed.

Order pronounced in the open court on 19th January, 2023.

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