“percentage completion method”

ICDS & AccountingICDS IIIICDS III467 judgments

The decision most relied on for percentage completion method is CIT v. Bilahari Investment (P) Ltd. (299 ITR 1), cited in 206 judgments on BharatTax.

Leading authorities on percentage completion method

CIT v. Bilahari Investment (P) Ltd.

299 ITR 1 · 2008 · Supreme Court

206

citing judgments

The project completion method and the percentage of completion method are both recognized methods for recognizing income from real estate contracts.

CIT v. Hyundai Heavy Industries Co. Ltd.

291 ITR 482 · 2007 · Supreme Court

166

citing judgments

The Supreme Court held that the 'project completion method' and the 'percentage of completion method' are recognized accounting methods for ascertaining profit for contracts. The case affirms these methods in the context of contract accounts.

CIT v. ARUN EXCELLO FOUNDATIONS (P) LTD.

212 Taxmann 342 · 2013 · High Court

citing judgments

Accounting Standard 7 is not applicable to real estate developers, and therefore, the percentage of completion method cannot be imposed on them. Assessees are justified in following the project completion method as per Accounting Standard 9.

Prestige Estate Projects (P) Ltd. v. DCIT

33 DTR 514 · 2010 · ITAT

citing judgments

A real estate developer adopting the completed contract method of accounting cannot be forced to follow the percentage completion method under AS-7 if AS-7 has not been specified by the Central Government under section 145(2). The Assessing Officer cannot reject accounts under section 145(3) solely on this ground.

CIT v. Associated Cables P. Ltd.

286 ITR 596 · 2006 · High Court

citing judgments

Retention money withheld by a contractee is not taxable in the year it is retained, but only in the year the obligations under the contract are fulfilled and the amount becomes due to the assessee.

Mazagaon Dock Limited v. JCIT

29 SOT 356 · 2009 · ITAT

citing judgments

Anticipated or foreseeable losses on fixed-price construction contracts are deductible in the year the loss is foreseen, aligning with accounting standards like AS-7. This approach is supported by decisions allowing deduction of foreseeable losses based on technical estimation.

Wall Construction Co Ltd. v. JCIT

102 TTJ 505 · 2006 · ITAT

citing judgments

Interest expenditure on borrowed funds used for stock-in-trade is allowable as a deduction in the year the revenue is offered to tax, even when following the percentage completion method for recognizing revenue.

CIT v. Aditya Builders

378 ITR 75 · 2015 · High Court

citing judgments

The appropriate method of accounting to correctly reflect a true financial statement is a matter of opinion and debate, which is not amenable to revisional jurisdiction under Section 263 of the Act. The Assessing Officer cannot change the method of revenue recognition to the percentage completion method if the assessee has consistently followed the project completion method.

Judgments citing percentage completion method

D G Land Developers Private Limited, Mumbai vs. Assistant Commissioner of Income Tax, Central Circle -4(4), Mumbai

In the result, the appeals of the assessee for assessment year

ITA 404/MUM/2024[2015-16]Status: DisposedITAT Mumbai22 Aug 2024AY 2015-16

Bench: Shri Om Prakash Kant () & Shri Sunil Kumar Singh ()

For Respondent: Mr. Sanjeev Mehta a/w Saurabh

Section 132Section 4

accrued following percentage during the year since no income was accrued following percentage during the year since no income was accrued following percentage completion method. completion method. 5. The Ld. CIT(A) erred in confirming the action of the Ld. AO in The Ld. CIT(A) erred in confirming ... booked during the year since no income was where no sales are booked during the year since no income was accrued following percentage completion method. accrued following percentage completion method. 8. The Ld. AO has erred in initiating penalty proceedings u/s The Ld. AO has erred in initiating penalty proceedings

D G Land Developers Private Limited, Mumbai vs. Assistant Commissioner of Income Tax, Central Circle -4(4), Mumbai

In the result, the appeals of the assessee for assessment year

ITA 403/MUM/2024[2016-17]Status: DisposedITAT Mumbai22 Aug 2024AY 2016-17

Bench: Shri Om Prakash Kant () & Shri Sunil Kumar Singh ()

For Respondent: Mr. Sanjeev Mehta a/w Saurabh

Section 132Section 4

D G Land Developers Private Limited, Mumbai vs. Assistant Commissioner of Income Tax, Central Circle -4(4), Mumbai

In the result, the appeals of the assessee for assessment year

ITA 402/MUM/2024[2017-18]Status: DisposedITAT Mumbai22 Aug 2024AY 2017-18

Bench: Shri Om Prakash Kant () & Shri Sunil Kumar Singh ()

For Respondent: Mr. Sanjeev Mehta a/w Saurabh

Section 132Section 4

Asstt. Commissioner of Income-Tax, Thane vs. Jagdale Infrastructure Pvt. Ltd., Thane

In the result, the appeal filed by the revenue is dismissed

ITA 963/MUM/2024[2018-19]Status: DisposedITAT Mumbai16 Aug 2024AY 2018-19

Bench: Justice (Retd.) C V Bhadang, Hon'Ble & Shri B R Baskaran, Hon'Ble

For Appellant: Shri Subodh RatnaparkhiFor Respondent: Ms. Rajeshwari Menon, Sr. DR

brief. The assessee is a builder. It was developing a real estate project under the name “Amizra” at Thane, Maharashtra. The assessee followed “Percentage Completion Method” for declaring profits from the above said project. Accordingly, the assessee had ascertained profit for the year ... No.3827/MUM/2017 dated 28/8/2019. M/s Shankala Realtors was in the business of real estate development and was following the percentage completion method and offered the income only in respect of those flats for which agreements were registered. The Assessing Officer observed that in many cases, the assessee had received considerable portion

Dy. Commissioner of Income Tax, Chennai vs. Napc Pvt. Ltd., Chennai

ITA 623/CHNY/2024[2018-19]Status: DisposedITAT Chennai14 Aug 2024AY 2018-19

Bench: Shri Manu Kumar Giri, Hon'Ble & Shri S. R. Raghunatha, Hon'Bleआयकरअपीलसं./Ita No.: 623/Chny/2024 निर्धारणवर्ष / Assessment Year: 2018-19 Dy. Commissioner Of Income Tax, Central Circle-2(1) No. 46, M.G. Road, Nungambakkam, Chennai - 600 034. (अपीलार्थी/Appellant) अपीलार्थी की ओर से/Appellant By प्रत्यर्थी की ओर से/Respondent By सुनवाईकीतारीख/Date Of Hearing घोषणाकीतारीख/Date Of Pronouncement : V. : Shri. : Shri. : 01.07.2024 : 14.08.2024 Napc Pvt Ltd., No.3, 6Th Floor, Apex Plaza, Nungambakkam High Road, Nungambakkam – 600 034. [Pan: Aaccn-3625-P] (प्रत्यर्थी/Respondent) V. Nandakumar, Cit T. Banusekar, Advocate & Shri. Suraj Nahar, Ca आदेश /Order Per S. R. Raghunatha: This Appeal By The Revenue Is Filed Against The Order Of The Commissioner Of Income Tax (Appeals), Chennai-19, For The

Section 143(1)Section 143(3)Section 145(3)Section 36(1)(va)Section 41(1)Section 43C

आयकर अपीलीय अधिकरण, 'बी 'न्यायपीठ,चेन्नई IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, CHENNAI श्री मनु कुमार गिरि, न्यायिक

DCIT, Thane vs. Unique Shanti Developers LLP, Thane

ITA 3902/MUM/2023[2016-17]Status: DisposedITAT Mumbai14 Aug 2024AY 2016-17

Bench: Shri Om Prakash Kant () & Shri Rahul Chaudhary () Assessment Year: 2016-17 Unique Shanti Developers Llp, Acit Circle 32(3), Now Acit 103/104, Rajshree Apartment, Circle 1 Thane, Vs. Royal Compex, Eksar Road, A Wing, 6Th Floor, Asher It Park, Borivali (W), 16Z, Wagle Industrial Estate, Mumbai-400092. Thane (West)-400604. Pan No. Aaefu 1254 E Appellant Respondent Assessment Year: 2016-17 Dcit, Thane, Unique Shanti Developers Llp, Room No. 210, A Wing, 6Th Floor, Harish Plazza, 100 Road, 1St Ashar It Park, Road No. 16Z, Vs. Floor, Opp Sector-2, Thane West-400604. Mira Road (E), Thane-400604. Pan No. Aaefu 1254 E Appellant Respondent

For Appellant: Ms. Rajeshwari Menon, Sr. DRFor Respondent: Mr. Hitesh Shah

chartered Accountants of India(I Guidelines, 2012 issued issued in respect of builder and developer in respect of builder and developer for following ‘percentage completion method’ for computation of profit following ‘percentage completion method’ for computation following ‘percentage completion method’ for computation from real estate project are effective only from ... assessee in respect of those two projects is neither se two projects is neither ‘project completion method ject completion method’ nor ‘percentage completion method percentage completion method’ and it is a unique method s a unique method, which is combination of both methods. which is combination of both methods. According

Unique Shanti Developers LLP, Mumbai vs. ACIT Central - 1, Thane

ITA 3856/MUM/2023[2016-17]Status: DisposedITAT Mumbai14 Aug 2024AY 2016-17

For Appellant: Ms. Rajeshwari Menon, Sr. DRFor Respondent: Mr. Hitesh Shah

Mayfair Properties, Kolkata vs. DCIT, Cir. 32, Kolkata

In the result, the appeal of the assessee stands allowed

ITA 395/KOL/2024[2018-19]Status: DisposedITAT Kolkata06 Aug 2024AY 2018-19

Bench: Shri Sanjay Garg & Shri Sanjay Awasthii.T.A. No.395/Kol/2024 Assessment Year: 2018-19 Mayfair Properties….…………….....……………………....………....Appellant 194, Hossenpur, Mayfair Tower, C N Roy Road, East Kolkata Township, West Bengal-700107. [Pan: Aagfm2513C] Vs. Dcit, Circle-32, Kolkata…...................................................…..…..... Respondent Appearances By: Shri Manish Kumar Mundra, Ar, Appeared On Behalf Of The Appellant. Md. Ghayansuddin, Cit-Dr, Appeared On Behalf Of The Respondent. Date Of Concluding The Hearing : May 20, 2024 Date Of Pronouncing The Order : August 06, 2024 आदेश / Order संजय गग", "या"यक सद"य "वारा / Per Sanjay Garg: The Present Appeal Has Been Preferred By The Assessee Against The Order Dated 13.02.2024 Of The National Faceless Appeal Centre [Hereinafter Referred To As ‘Cit(A)’] Passed U/S 250 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’). 2. The Assessee In This Appeal Is Aggrieved By The Action Of The Ld. Cit(A) In Confirming The Addition Made By The Assessing Officer Of Rs.16,47,19,380/- By Making Assessment Of The Income Of The Assessee Applying Percentage Completion Method As Against The Plea Of The Assessee That It Has Been Regularly Following Project Completion Method.

Section 145(2)Section 250

confirming the addition made by the Assessing Officer of Rs.16,47,19,380/- by making assessment of the income of the assessee applying percentage completion method as against the plea of the assessee that it has been regularly following project completion method. I.T.A. No.395/Kol/2024 Assessment Year: 2018-19 Mayfair Properties ... w.e.f. 01.04.2003. In the revised AS 7, the ICAI recommended that the revenue from construction contracts should be recognized only on percentage completion method (‘POCM’) basis. In addition to this, the Central Government exercising power u/s 145(2) has notified Income I.T.A. No.395/Kol/2024 Assessment Year: 2018-19 Mayfair Properties Computation

Kohinoor Ctnl Infrastructure Co. Private Limited, Dadar West vs. Dy Commissioner of Income Tax 6(1)(2), Churchgate Mumbai

In the result, the appeal is dismissed

ITA 1962/MUM/2024[2018-19]Status: DisposedITAT Mumbai06 Aug 2024AY 2018-19

Bench: Shri Narender Kumar Chaoudhry & Shri Ratnesh Nandan Sahay

For Appellant: Shri Jayesh Dadia, A.RFor Respondent: Shri Biswanath Das- CIT D.R

Section 143(1)Section 143(3)Section 250Section 263

under section 263 of the Act. These details were clearly mentioned in audit financial accounts (Note No.19) that the assessee company has followed ‘Percentage Completion Method’ for the purpose of revenue recognition and this accounting method has consistently been followed by the assessee in earlier assessment years and the department

M/S. Concorde Housing Corporation Private Limited, Bengaluru vs. Assistant Commissioner of Income Tax, Central Circle-1(4), Bengaluru

In the result, appeal of the assessee in ITA No

ITA 531/BANG/2024[2014-15]Status: DisposedITAT Bangalore29 Jul 2024AY 2014-15

Bench: Shri Chandra Poojari & Shri Prakash Chand Yadav

For Appellant: Sri V. Srinivasan, A.RFor Respondent: Ms. Neha Sahay, D.R

Section 132Section 153ASection 271(1)(c)

risks and rewards of ownership have been transferred to the customer, which coincides with the entering into of a legally binding agreement, on percentage completion method. 3.1 Thus, he submitted that when the profit is estimated based on the percentage of completion method, the assessee is required to make

Sagar Realtors, Mumbai vs. ITO, Mumbai

In the result, appeal is allowed for statistical purposes

ITA 3955/MUM/2023[2015-16]Status: DisposedITAT Mumbai29 Jul 2024AY 2015-16

Bench: SHRI NARENDER KUMAR CHOUDHRY (Judicial Member), SMT RENU JAUHRI (Accountant Member)

Section 234BSection 271(1)(c)

real estate and has undertaken a project at Virar, Mumbai during the year under consideration. ii) The Assessing Officer proposed to adopt percentage completion method to calculate the income during the year for which a show-cause notice was issued. However, no reply to the notice was filed ... completed as 3 M/s. Sagar Realtors certified by appellant himself and therefore, AS9 was required to be applied for recognition of revenue on percentage completion method. 3. Before us, ld. AR submitted that in case the percentage completion method was properly applied, there loss would be in this case because

ITO, New Delhi vs. M/S Ansal Housing & Construction Ltd., New Delhi

In the result, the cross-objection filed by the assessee is dismissed

ITA 2731/DEL/2010[2007-08]Status: DisposedITAT Delhi26 Jul 2024AY 2007-08

Bench: Shri G.S.Pannu & Shri Kul Bharat[Assessment Year : 2007-08] Dcit, Vs Ansal Housing & Construction Ltd., Central Circle-20, Ugf-15, Indraprastha Building, 21, New Delhi. Barakhamba Road, New Delhi. Pan-Aaaca0377R Appellant Respondent

Section 143(3)Section 14ASection 80Section 80I

against overall total sale of INR 1,84,61,22,989/-. Before AO, it was stated that the assessee prepared its accounts on percentage completion method. By percentage profit, it was stated by the assessee that in the eligible projects, profitability varied from 18.43% to 53.55% like in the case

DCIT-CC-7(3), Aaykar Bhavan, Maharishi Karve Road, Mumbai, Maharashtra vs. Arihant Premises Private Limited, Mumbai

In the result, ground Nos

ITA 1602/MUM/2024[2013-14]Status: DisposedITAT Mumbai24 Jul 2024AY 2013-14

Bench: Shri Prashant Maharshi & Shri Anikesh Banerjeedcit-Cc-7(3), Vs Arihant Premises Private Limited Room No-655, Aayakar Bhavan, 412, Floor-4, Vardhaman Chamber Maharishi Karve Road, Cawasji Patel Road, Horniman Mumbai-400 020 Circle, Fort, Mumbai-400 001 Pan : Aaaca7260K Appellant Respondent

For Appellant: Shri Neeraj ShethFor Respondent: Shri Manoj Kumar Sinha (SRDR)

Section 139(1)Section 143(3)Section 14ASection 250Section 36Section 36(1)(iii)

company was following mercantile system of accounting and for the purpose of recognizing the revenues from the above projects, it was following percentage completion method of accounting. For the purpose of construction of the above projects, the appellant company had borrowed interest-bearing funds from bank as also from group ... disallowed appellant's claim of deduction of interest amounting to Rs.740.84 lakhs. 10.2 It is an undisputed fact that the appellant has followed percentage completion method for the purpose of recognizing revenue from its project. The funds were borrowed for the purpose of construction and have gone into the project

Matrix Security and Surveillance Private Limited, Hyderabad vs. DCIT, Circle 5(1), Hyderabad

In the result, appeals filed by the assessee for both the A

ITA 206/HYD/2024[2022-2023]Status: HeardITAT Hyderabad12 Jul 2024AY 2022-2023

Bench: Shri Manjunatha, G. & Shri K. Narasimha Charyआ.अपी.सं /Ita Nos.205 & 206/Hyd/2024 (िनधा"रण वष"/Assessment Years: 2021-22 & 2022-23) Matrix Security & Vs. Dy. C. I. T. Surveillance (P) Limited Circle 5(1) Hyderabad Hyderabad Pan:Aadcm3902F (Appellant) (Respondent) िनधा""रती "ारा/Assessee By: C.A. E.V. Sri Krishna राज" व "ारा/Revenue By:: Smt. Sheetal Sarin, Dr सुनवाई की तारीख/Date Of Hearing: 10/07/2024 घोषणा की तारीख/Pronouncement: 12/07/2024 आदेश/Order

For Appellant: C.A. E.V. Sri KrishnaFor Respondent: : Smt. Sheetal Sarin, DR

Section 143(1)

return of income for the A.Y 2021-22 on 28.10.2022 and for the A.Y 2022-23 on 5.3.2022. The appellant company follows the percentage completion method and recognizes revenue in the books of account in accordance with applicable accounting standard/ICDS. The assessee entered into long term contract with NCC-Matrix ... financial year relevant to A.Y 2018-19 and continued upto A.Y 2023-24. Accordingly, the assessee recognizes the income in terms of percentage completion method of contract and claimed TDS to the extent the income was recognized in the books of account for the relevant A.Y. The excess TDS credit

Matrix Security and Survelliance Private Limited, Hyderabad vs. DCIT., Circle-5(1), Hyderabad

In the result, appeals filed by the assessee for both the A

ITA 205/HYD/2024[2021-2022]Status: HeardITAT Hyderabad12 Jul 2024AY 2021-2022

For Appellant: C.A. E.V. Sri KrishnaFor Respondent: : Smt. Sheetal Sarin, DR

Section 143(1)

Shri Khatu Shyam Builders, Jaipur vs. ACIT Central Circle 2, Jaipur

In the result, the appeal of the assessee is allowed

ITA 486/JPR/2024[2014-15]Status: DisposedITAT Jaipur10 Jul 2024AY 2014-15

For Appellant: Shri Rohan Sogani, CAFor Respondent: Mrs. Monisha Choudhary, Addl. CIT-DR

Section 143(3)Section 271Section 271(1)(c)

What has been held by the Hon’ble ITAT is that such expenditure should form part of the work in progress, on which percentage completion method should be made applicable. 2.2 Resultantly, in accordance with the decision of the Hon’ble ITAT, the aforementioned expenditure would not be allowed ... therefore, no expenses are allowable.” 2.19 However, Hon’ble ITAT, on totally different footing, held that such expenditure should be allowed by following percentage completion method, irrespective of the fact whether income was booked by the assessee firm or not. Thus, the issue decided was totally on technical grounds

M/S. Hindusthan Bawa Builders, Mangalore vs. Assistant Commissioner of Income Tax, Central Circle-1, Mangalore

In the result, appeals of the assessee in ITA Nos

ITA 271/BANG/2024[2018-19]Status: DisposedITAT Bangalore04 Jul 2024AY 2018-19

Bench: Shri Chandra Poojari & Shri Prakash Chand Yadav

For Appellant: Smt. Sheetal Borkar, A.RFor Respondent: Smt. Neha Sahay, D.R

Section 153CSection 69B

assessment proceedings, the assessee was required to furnish the details of the projects developed, the area, cost, how the income was calculated, whether percentage completion method adopted for revenue cognition, details of the consideration received in cash and also by cheque, er the cash receipts accounted for, books of accounts