SUMIT GARDEN GROVE CONSTRUCTION LLP,MUMBAI vs. CIRCLE 41(3)(1), MUMBAI, MUMBAI

ITA 510/MUM/2026Status: DisposedITAT Mumbai18 September 2026AY 2018-1916 pages
AI SummaryAllowed

What were the facts?

The assessee, a real estate developer, followed the percentage-completion method for revenue recognition. The Assessing Officer (AO) made an addition by applying this method to the entire project, including unsold areas, based on the percentage of cost incurred. The CIT(A) upheld this addition.

What did the Tribunal hold?

The Tribunal held that the AO's method lacked statutory foundation and did not conform to the Guidance Note, as it included unsold areas and an assumed profit margin. The addition was directed to be deleted as it did not represent income accrued during the year.

What were the issues?

Whether the Assessing Officer correctly applied the percentage-completion method for revenue recognition in real estate projects, and if the Guidance Note on Accounting for Real Estate Transactions can be treated as a statutory mandate.

Which sections of the Income-tax Act were involved?

Section 145,Section 43CB

AI-generated summary — verify with the full judgment below

Before: SHRI AMIT SHUKLA & SHRI ARUN KHODPIA

For Appellant: Shri Dharan V. Gandhi
For Respondent: Shri Ravi Teja (Sr. DR)
Hearing: 18.09.2026Pronounced: 18.09.2026

PER AMIT SHUKLA (J.M):

The aforesaid appeal has been filed by the assessee against the order dated 13.11.2025 passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi, in relation to the assessment order dated 11.06.2021 passed under section 143(3) read with section 144B of the Income-tax Act, 1961, for the assessment year 2018–19. The substantive issue raised in the grounds of appeal relates to the addition of P a g e | 2 A.Y. 2018-19 Sumit Garden Grove Construction LLP ₹3,15,09,669 made by the Assessing Officer by applying

The order continues below.

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