DCIT, CIRCLE-1, MUZAFFARPUR vs. M/S ASHA REALTY DEVELOPERS PVT LTD, MUZAFFARPUR

ITA 10/PAT/2021Status: HeardITAT Patna09 December 2025AY 2015-167 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the deletion of the addition of ₹3,96,94,221 related to the Percentage Completion Method. The CIT(A) had correctly observed that the AO erred in calculating the revenue recognition by not considering the percentage completion of individual projects against the total projected revenue. The CIT(A)'s finding that the AO had taken the full value instead of the percentage value based on project completion was accepted. The Tribunal also upheld the deletion of the addition of ₹40,97,800 made under Section 43CA. The CIT(A) had correctly applied the proviso to Section 43CA, noting that the agreements for sale were executed in earlier assessment years, and the stamp duty valuation should be considered as of the date of those agreements, especially since payments were made by account payee cheques. The Tribunal found no infirmity in this deletion. Regarding the interest of ₹27,758 on service tax and TDS, the Tribunal held that such interest is not penal in nature and is allowable as a deduction. Therefore, the addition was rightly deleted. The Tribunal dismissed the Revenue's appeal on all grounds.

What were the facts?

The Revenue filed an appeal against the order of the CIT(A) for Assessment Year 2015-16, with a delay of 149 days which was condoned. The appeal challenged the deletion of additions made by the Assessing Officer (AO). The first addition, amounting to ₹3,96,94,221, was in respect of closing stock calculated under the Percentage Completion Method (PCM). The AO had re-calculated the revenue to be recognized as per PCM, finding that the assessee had recognized it short. The second addition, ₹40,97,800, was made under Section 43CA of the Income Tax Act, 1961, representing the difference between the stamp duty value and the actual sale value of various plots. The third issue concerned the deletion of an addition of ₹27,758 made by the AO on account of interest on service tax and TDS.

What were the issues?

1. Whether the learned CIT(A) erred in deleting the addition of ₹3,96,94,221 made by the AO on account of closing stock calculated under the Percentage Completion Method (PCM), contrary to the AO's recalculation of revenue recognition? - Assessee's contention: Revenue recognition should be deferred until at least 25% of the project progress, 25% of saleable area is secured by agreement, and 10% of total revenue is realized. Revenue should be recognized proportionately based on sale agreements executed, and expenditure should be accounted for on an accrual basis. The AO erred by not applying the recognizable value based on the percentage completion of individual projects. - Revenue's contention: Not recorded. 2. Whether the learned CIT(A) erred in deleting the addition of ₹40,97,800 made by the AO under Section 43CA of the Act in respect of various plots sold, by admitting additional evidence and wrongly computing the difference between stamp duty value and actual sale value? - Assessee's contention: The AO misinterpreted Section 43CA by ignoring its proviso, which states that if an agreement is executed before the sale deed and consideration other than cash is paid, the Municipal Value Rate (MVR) on the date of agreement prevails. Agreements were executed in earlier years, and consideration was paid by account payee cheques. - Revenue's contention: Not recorded. 3. Whether the learned CIT(A) erred in deleting the addition of ₹27,758 made by the AO on account of interest on service tax and TDS, which was added as income?

Which sections of the Income-tax Act were involved?

Section 43CA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “PATNA” BENCH, PATNA

Before: SHRI DUVVURU RL REDDY, VP & SHRI RAJESH KUMAR, AM

For Appellant: Shri G.P. Tulsiyan, AR
For Respondent: Shri Md. AH Chowdhary, DR
Hearing: 27.11.2025Pronounced: 09.12.2025

Per Rajesh Kumar, AM:

This is an appeal preferred by the Revenue against the order of the Commissioner of Income-tax (Appeals), Patna-2 (hereinafter referred to as the “Ld. CIT(A)”] dated 29.06.2020 for the AY 2015-16. 2. At the outset, we observe from the appeal folder that there is a delay of 149 days in filing the appeal by the department in support of which a condonation petition was filed. It was stated in the condonation petition that the delay has occurred due to time taken in obtaining the administrative approvals from the competent authorities, which took quite a long time and accordingly, the delay being beyond the control may be condoned. The

The order continues below.

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