FAITHFULL DEVELOPERS ,MUMBAI vs. ACIT CIR-20(1), MUMBAI

Facts

The assessee challenged the CIT(A)'s order confirming additions made by the AO for the assessment year 2018-19. The additions were based on the estimated business profit computed under Section 43CB of the Act using the percentage completion method, which the assessee contended was not applicable to their real estate business.

Held

The Tribunal held that Section 43CB, mandating the percentage completion method, is applicable to real estate business from AY 2017-18 onwards. While confirming the AO's action of applying Section 43CB, the Tribunal directed the AO to recompute the estimated profits after considering the assessee's submissions regarding errors in the calculation.

Key Issues

Whether Section 43CB of the Income Tax Act, mandating the percentage completion method, is applicable to real estate business? Whether the AO correctly computed the estimated business profit under Section 43CB?