“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

DCIT Central Circle-1, Vadodara vs. Darshnam Life Spaces Pvt Ltd, Vadodara

In the result, both the appeals of the Revenue are hereby dismissed

ITA 663/AHD/2023[2015-16]Status: DisposedITAT Ahmedabad28 Jun 2024AY 2015-16

Bench: Smt. Annapurna Gupta & Shri T.R. Senthil Kumarassessment Year : 2015-16 Deputy Commissioner Of Darshnam Life Spaces Pvt. Income Tax, Ltd., Central Circle-1, 3Rd Floor, Platinum Complex, Vs Vadodara Opp. Ganga Jamuna Hospital, Subhanpura, Vadodara-390023 [Pan No.:Aadcd2030M] अपीलाथ"/ (Appellant) "" यथ"/ (Respondent) Appellant By : None Respondent By : Shri Kamlesh Makwana, Cit Dr सुनवाई क" तार"ख/Date Of Hearing: 12.06.2024 घोषणा क" तार"ख /Date Of Pronouncement: 28.06.2024 आदेश/O R D E R Per T.R. Senthil Kumar: This Appeal Is Filed By The Revenue As Against The Appellate Order Dated 14.06.2023 Passed By Commissioner Of Income Tax (Appeals) – 12, Ahmedabad Arising Out Of The Assessment Order Passed Under Section 143(3) Of The Income Tax Act, 1961 (Hereinafter Referred To As The “The Act”) Relating To The Assessment Year 2015-16. 2. The Grounds Of Appeal Raised By The Revenue Are As Follows:-

For Appellant: NoneFor Respondent: Shri Kamlesh Makwana, CIT DR

Section 143(3)Section 68

here erred in deleting the addition of Rs. 11,09,70,932/- made by the AO on account of profit calculated on percentage completion method @ 15% of the total money received during the year of consideration of Rs. 73,98,06,214/-, the construction agreements A.Y. 2015-16 2 were ... erred in deleting the addition of Rs.11,09,70,932/- made by the AO on account of profit calculated on percentage completion method @ 15% of the total money received during the year under consideration of Rs. 73,98,06,214/- without appreciating the fact that the assessee has purposely shifted

Income Tax Officer, Jaipur vs. Shakuntlam Colonizers Private Limited, Jaipur

ITA 697/JPR/2023[2011-12]Status: DisposedITAT Jaipur27 Jun 2024AY 2011-12

For Appellant: Sh. P. C. Parwal, CAFor Respondent: Sh. Ajay Malik, CIT &

Section 143(3)Section 145(3)Section 271(1)(c)

held by the Id. AO that the assessee company in the project named "South City" near chaksu, followed the ‘percentage completion method'. As the assessee has not applied percentage completion method on advances received from the customer, and the Id. AO considered it in contravention of guidelines issued ... Accountants of India and in violation of Accounting Standard 7 read with AS 9. Those standards states that real estate developers should follow percentage completion method. Accordingly, the Id. AO rejected the books of accounts u/s 145(3) of the IT. Act, 1961 and determined profit applying percentage completion method

Tatva Global Environment (Deonar ) Ltd, Mumbai vs. DCIT 9(3), Mumbai

ITA 3983/MUM/2015[2010-11]Status: DisposedITAT Mumbai12 Jun 2024AY 2010-11

Bench: Shri Prashant Maharishi, Am & Shri Sandeep Singh Karhail, Jm

For Appellant: Shri Percy PardiwalaFor Respondent: Shri H.M. Bhatt, DR

Section 115Section 115JSection 143Section 80Section 80I

submitted that income from operation of the assessee company for that year is % 33.25 crores, operating expenses of % 26.48 crores, assessee following percentage completion method adopting accounting standard 7 of construction contracts recognizing the revenue. He further submitted that reference to form number 10 CCB is correct as on that

Skywards Kanakraj Developer, Pune vs. Income Tax Officer, Ward 3(1), Pune

In the result, the appeal of the assessee stands allowed for statistical purposes

ITA 725/PUN/2024[2018-19]Status: DisposedITAT Pune11 Jun 2024AY 2018-19

Bench: Shri Dr. Dipak P. Ripote & Shri Vinay Bhamoreआयकर अपील सं. / Ita No.725/Pun/2024 िनधा"रण वष" / Assessment Year : 2018-19 Skywards Kanakraj Vs. Ito, Ward-3(1), Pune. Developer, Office No.704, Vb Capital, Range Hills Road, Opp. Symphony Restaurant Shivaji Nagar, Pune- 411007. Pan : Acafs3003P Appellant Respondent Assessee By : Shri Pramod S. Shingte Revenue By : Shri Sourabh Nayak Date Of Hearing : 31.05.2024 Date Of Pronouncement : 11.06.2024 आदेश / Order Per Vinay Bhamore, Jm: This Appeal Filed By The Assessee Is Directed Against The Order Dated 15.03.2024 Passed By Ld Cit(A)/Nfac For The Assessment Year 2018-19. 2. The Appellant Has Raised The Following Grounds Of Appeal :- “1. On The Facts & The Circumstances Of The Case & In Law, Lower Authorities Erred In Passing Ex-Parte Order & Erred In Not Deciding The Issue On The Merits Of The Case, This Action Is Being Violative Of Principal Of Natural Justice. Your Appellant Prays For Granting Opportunity Of Hearing Before Lower Authorities.

For Appellant: Shri Pramod S. ShingteFor Respondent: Shri Sourabh Nayak

Section 115BSection 143(3)Section 40aSection 43B

case and in law Learned Assessing Officer erred in rejecting the Project completion method followed by appellant constantly and further erred in substituting Percentage completion method and estimating net profit at 8 percent on adjusted WIP thereby, making an addition of Rs.9238697 your appellant prays for deletion of entire addition

DCIT Central Circle-1(1), Ahmedabad vs. Navratna Organisers and Developers Pvt. Ltd., Ahmedabad

In the result, the appeal of the Revenue is dismissed

ITA 1124/AHD/2023[2014-15]Status: DisposedITAT Ahmedabad04 Jun 2024AY 2014-15

Bench: Shri Siddhartha Nautiyal (Judicial Member), Shri Narendra Prasad Sinha (Accountant Member)

For Appellant: Ms. Amrin Pathan, A.RFor Respondent: Shri Sushil Kumar Katiar, Sr. D.R

Section 14A

construction and development of various properties owned by the respective company/society. The Assessing Officer noticed that the assessee was not following percentage completion method and the correct amount of profit was not offered to taxation. The Assessing Officer, therefore, made addition by estimating the profit @ 8% of WPI. The addition

K K Infrabuild, Vadodara vs. Income Tax Officer, Ward 1(2)(1), Vadodara

In the result, the appeal of the assessee is treated as partly allowed for statistical purposes

ITA 507/AHD/2024[2017-18]Status: DisposedITAT Ahmedabad28 May 2024AY 2017-18

Bench: Ms. Suchitra Kamble & Shri Makarand V. Mahadeokar, Accountnat Member Assessment Year : 2017-18 K.K. Infrabuild The Income Tax Officer 702, Gunjan Tower Vs Ward-1(2)(1) Opp. Synergy House Vadodara Subhanpura, Gorwa Vadodra – 390 023 Gujarat Pan: Aaqfk 9998 P अपीलाथ"/ (Appellant) "" यथ"/ (Respondent) Assessee By : Shri Sunil Talati, Ar Revenue By : Shri N.J. Vyas, Sr.Dr सुनवाई क" तार"ख/Date Of Hearing : 14/05/2024 घोषणा क" तार"ख /Date Of Pronouncement: 28/05/2024 आदेश/O R D E R Per Makarand V. Mahadeokar

For Appellant: Shri Sunil Talati, ARFor Respondent: Shri N.J. Vyas, Sr.DR

Section 143(3)Section 250Section 32

used for the business of plying and hiring the vehicles. The AO also noted that assessee has recognized revenue on the basis of percentage completion method. 3.3. The AO passed an order u/s.143(3) of the Act disallowing excess depreciation of Rs.14,92,312/- claimed by the assessee. The Assessee ... stated that the assessee is engaged in the business of Civil Construction and Infrastructure work and recognize the revenue on the basis of percentage completion method. 5.1. The ld.counsel for the assessee stated that the assessee is not pressing for the Ground No. 1, i.e. for claiming depreciation at higher

Varghese Chacko, Ernakulam vs. The ITO Ward 1(5) Non Corporate, Kochi

In the result, appeal of the assessee is dismissed

ITA 212/COCH/2023[2014-15]Status: DisposedITAT Cochin27 May 2024AY 2014-15

Bench: Shri Sanjay Arora & Shri Soundararajan K.

For Appellant: Shri Anilkumar P.J., A.RFor Respondent: Smt. Jamuna Devi, Sr.D.R

Section 250Section 44A

assessee has no idea on what basis he has arrived at the profit i.e. whether under project completion method or percentage completion method. The assessee filed an appeal before the NFAC and even before the ld. NFAC assessee has not produced any records Varghese Chacko, Edapally Page

DCIT Central Circle 5(1), Mumbai vs. Itd Cementation India Limited, Mumbai

ITA 2090/MUM/2023[2017-18]Status: DisposedITAT Mumbai16 May 2024AY 2017-18

Bench: Shri Amit Shukla, Jm & Shri Prashant Maharishi, Am

Section 115JSection 143(3)Section 14ASection 37Section 80Section 86

Accounting standard and consistent policy of revenue recognition according to which the revenue from constriction contract is always recognized on the basis of Percentage Completion Method (PCM). If it is accepted that the contract will make a loss the estimated loss is immediately provided for in the books of account

Itd Cementation India Limited, Mumbai vs. DCIT Central Circle 5(1), Mumbai

ITA 1400/MUM/2023[2017-2018]Status: DisposedITAT Mumbai16 May 2024AY 2017-2018

Bench: Shri Amit Shukla, Jm & Shri Prashant Maharishi, Am

For Appellant: Shri Vijay Mehta, ARFor Respondent: Shri Jagdish Jangid, CIT DR &

Section 115JSection 143(3)Section 14ASection 37Section 80Section 86

Assistant Commissioner of Income Tax-1(2)(1), Mumbai vs. Kumar Properties Pvt. Ltd., Mumbai

In the result, the appeal filed by the revenue as well as Cross

ITA 3248/MUM/2023[2016-17]Status: DisposedITAT Mumbai03 May 2024AY 2016-17

Bench: Shri Amarjit Singh & Shri Sandeep Singh Karhailassistant Commissioner Of Vs. Kumar Properties Private Income Tax – 1(2)(1) Limited, 21, Woudboy Room No. 535, 5 Th Floor, Road, Hazarimal Somani Aayakar Bhawan, New Marg, Opp. Mumbai Marine Line, M.K. Road, Gymkhana, Fort – Mumbai- 400020 400001 Maharashtra – 400001 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No:Aabck8464E Appellant .. Respondent C.O. No.13/Mum/2024 (A.Y. 2016-17)

For Appellant: Rajan Vora a/wFor Respondent: P.D. Chougule

Section 143(2)Section 145(1)

system of accounting. 2. Whether in the facts and circumstances of the case and in law, the assessee was required to follow the Percentage Completion Method for its income and expenditure reporting, following the Guidance Note of the ICAI in this regard, and the Ld. CIT(A) erred in rejecting ... computation of income by the AO following the same Guidance Note on accounting for Real Estate Transaction dated 11.02.2012, which recommends 'Percentage Completion Method.” 2. Fact in brief is that return of income declaring total loss of Rs.94,84,268/- was filed on 04.10.2016. The return was subject to scrutiny

The DCIT, Central Circle-1, Vadodara vs. M/S. Safal Homes, Ahmedabad

ITA 90/AHD/2021[2011-12]Status: DisposedITAT Ahmedabad24 Apr 2024AY 2011-12

Bench: Shri Siddhartha Nautiyal & Shri Makarand V. Mahadeokar, Accountnat Member

For Appellant: Shri Vartik Chokshi, ARFor Respondent: Shri Sudhendu Das, CIT-DR

Section 132(4)Section 143(3)Section 147Section 148

recognised the revenue of Rs.7,89,17,183/- to its Profit and Loss account for F.Y.2012-13 relevant to A.Y.2013-14 on the basis of percentage completion method of accounting and paid the due tax thereon. 3.6. Dissatisfied with the explanation offered by the assessee and concluding that “No prudent person will

Deputy Commissioner of Income-Tax, Central Circle 2(2), Pune vs. G K Wonders, Pune

Appeal is dismissed in above terms

ITA 25/PUN/2024[2020-21]Status: HeardITAT Pune24 Apr 2024AY 2020-21

Bench: Shri Rama Kanta Panda & Shri Satbeer Singh Godara

For Appellant: -None/Ex-parteFor Respondent: Shri Ramnath P. Murkunde

Section 143(3)Section 43Section 43C

assessee with regard to the addition of Rs.1,97,12,000/- made on account of variation in revenue recognition on the basis of percentage completion method without appreciating the fact that the provisions of section 43CB provides that the profit and gain arising from construction contract or a contract ... said ICDS is in sync with the guidance note for accounting for real estate transactions issued by ICAI which only permits percentage completion method as a method for a computation of business income for real estate developers. The said ICDS is still under discussion. g. In view of the above

ACIT, New Delhi vs. M/S. Shipra Estate Ltd. & Jai Krishan Estate Developers Pvt. Ltd., Delhi

In the result, appeal of the assessee is allowed and appeal of

ITA 3926/DEL/2016[2012-13]Status: DisposedITAT Delhi24 Apr 2024AY 2012-13

Bench: Shri Challa Nagendra Prasad & Dr. B.R.R. Kumarआ.अ.सं/.I.T.A No.3569/Del/2016 िनधा"रणवष"/Assessment Year: 2012-13 बनाम Shipra Estate Ltd. & Jai Krishan Estate Acit Developers Pvt. Ltd., Vs. Circle-58(1), C/O Pradeep & Co., Tax Advocate, New Delhi. 7, Navyug Market, Ghaziabad. Pan No.Abgfs9748C अपीलाथ" Appellant ""यथ"/Respondent & आ.अ.सं/.I.T.A No.3926/Del/2016 िनधा"रणवष"/Assessment Year: 2012-13 बनाम Acit Shipra Estate Ltd. & Jai Krishan Vs. Circle-58(1), Estate Developers Pvt. Ltd., Room No.218, D-32, Main Vikas Marg, D-Block, Vikas Bhawan, Delhi. New Delhi. Pan No.Abgfs9748C अपीलाथ" Appellant ""यथ"/Respondent

Section 801Section 80I

that the question “whether the addition made by the Assessing Officer to the income of the Respondent for the relevant year based on percentage completion method was not correct as held by the ITAT” stands answered in favour of the assessee and against the Revenue by order dated

M/S. Shipra Estate Ltd. & Jai Krishan Estate Developers Pvt. Ltd., Ghaziabad vs. ACIT, New Delhi

In the result, appeal of the assessee is allowed and appeal of

ITA 3569/DEL/2016[2012-13]Status: DisposedITAT Delhi24 Apr 2024AY 2012-13

Section 801Section 80I

ACIT, Circle- 2(2), New Delhi vs. Anthem Infrastructure Pvt. Ltd., New Delhi

Appeal is allowed

ITA 215/DEL/2020[2015-16]Status: DisposedITAT Delhi18 Apr 2024AY 2015-16

Bench: Shri G.S. Pannu, Hon’Ble & Shri Anubhav Sharmaassessment Year: 2015-16 Acit, Vs Anthem Infrastructure Pvt. Ltd., 04, 1St Floor, Jagriti Enclave, Circle-2(2), New Delhi. Vikas Marg Extn., New Delhi. Pan: Aaica7355D (Appellant) (Respondent) Assessee By : Shri Amit Goel, Ca Revenue By : Shri Kanav Bali, Sr. Dr Date Of Hearing : 27.02.2024 Date Of Pronouncement : 18.04.2024 Order Per Anubhav Sharma, Jm: This Appeal Is Preferred By The Revenue Against The Order Dated 24.10.2019 Of The Commissioner Of Income Tax (Appeals)-22, New Delhi (Hereinafter Referred As Ld. First Appellate Authority Or In Short Ld. ‘Faa’) In Appeal No.273/19-20/Cit(A)-22, New Delhi Arising Out Of The Appeal Before It Against The Order Passed U/S 143(3) Of The Income Tax Act, 1961 (Hereinafter Referred As ‘The Act’), By The Acit, Circle 2(2), Delhi (Hereinafter Referred To As The Ld. Ao). 2. Heard & Perused The Records. Ld. Ar Has Relied The Order Of Co- Ordinate Bench In The Case Of Assessee For Ay 2014-15, In Ita No. 5676/Del/2017 To Contend That The Issue Is Covered In Favour Of Assessee By The Order Dated 29/10/2021. Ld. Dr Could Not Dispute This Factual Aspect.

For Appellant: Shri Amit Goel, CAFor Respondent: Shri Kanav Bali, Sr. DR

Section 143(3)Section 144Section 145

held that where the assessee has been consistently following the project completion method, revenue was not justified in substituting the same with percentage completion method. The Hon'ble Allahabad High Court in the case of Pr. CIT v Friend Land Developers [2017] [4] TMI 1153 has held that there ... provisions under the income tax act or the rules which may compel the assessee to follow percentage completion method. In view of the factual as well as legal position discussed above, it is held that Assessing Officer was not justified in applying POCM instead of Project Completion Method regularly followed

Heminder Kumari, Delhi vs. DCIT, Delhi

In the result, we decline to interfere with the order of ld

ITA 846/DEL/2024[2008-09]Status: DisposedITAT Delhi10 Apr 2024AY 2008-09

Bench: Shri Kul Bharat & Shri Pradip Kumar Kediaasstt. Year: 2008-09

For Appellant: Sh. C.S Aggarwal, Sr. AdvFor Respondent: Sh. Vivek Kumar Upadhyay, CIT-DR

Section 147

same have been reflected in the regular books of accounts and then sold and offered to tax as income on the basis of percentage completion method. It was argued that the revenue has accepted the income so offered by the appellant while framing assessment, thus, accepting that the transactions have

Heritage Sagar Enterprises, Mumbai vs. Joint CIT Rang 22 (1), Mumbai

ITA 3809/MUM/2023[2011-12]Status: DisposedITAT Mumbai28 Mar 2024AY 2011-12

Bench: SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY (Judicial Member)

For Appellant: Shri Bharat KanabarFor Respondent: Shri P.D. Chougule

Section 143(3)Section 145Section 43BSection 69C

evidence whatsoever by rejecting books of account under section 145 of the Income-tax Act and without appreciating the fact that appellant followed percentage completion method for project of construction of building. GROUND NO 2 "On the facts and circumstances of the law, the learned Commissioner of Income-tax (Appeals ... income declaring income of INR 83,04,930/-. In the return of income, the Appellant declared income on the basis of the percentage completion method followed by the Appellant. During the course of the assessment proceedings, the Appellant submitted details of the flat/shop units booked in the project including those

Assistant Commissioner of Income Tax, Central Circle-2(2), Hyderabad vs. Laxmi Komatireddy, Hyderabad

In the result, appeal of the Revenue is dismissed

ITA 297/HYD/2022[2015-16]Status: DisposedITAT Hyderabad21 Mar 2024AY 2015-16

Bench: Shri Rama Kanta Panda & Shri K. Narasimha Chary

For Appellant: Shri S. Rama Rao, ARFor Respondent: Ms. TH Vijaya Lakshmi, CIT-DR

Section 131(1)Section 132Section 153A

agreement and there is no payment schedule. Since the project is still a work in progress and income was offered on percentage completion method, (as per para 1, page 6 of the assessment order) Page 11 of 23 C.O.No. 25/Hyd/2022 usually there would be a payment schedule indicating the scheme

Sai Builders and Developers, Vashi vs. PCIT-27, Vashi

In the result, the appeal filed by the assessee is partly allowed

ITA 1916/MUM/2023[2018-19]Status: DisposedITAT Mumbai13 Mar 2024AY 2018-19

Bench: Shri Pavan Kumar Gadale & Shri Gagan Goyalsaibuildersanddevelopers, Vs Pr.Cit-27, B12,Ashiana,Plotno.15, Roomno.401, Sector17,Vashi, 4Thflr,Towerno.6, Navi Mumbai-400703. Vashi Railway Stationcomplex,Vashi, Navimumbai-400703. Pan/Gir No. : Abbfs0092C Appellant .. Respondent

For Appellant: Shri.K.Gopal&Shri.OmKandalkar.ARFor Respondent: Shri.Hiren M Bhatt. Sr.DR

Section 143(3)Section 263

basis which were duly added to the valuation of Closing WIP. This practice of the assessee is not as per revenue recognized by percentage completion method or project completion method. The assessee has adopted its own method which is not in order. For builders/developers, it is required to recognize ... revenue either as per percentage completion method or project completion method. 3. Further, on verification of the Audit Reportit is seen that Auditor has reported that in respect of Project Yashaskaram, though the OC is received on 20.05.2016, the firm has been incurring various construction and finishing expenses to make

Dy. Commissioner of Income Tax, CC-4(2), Central Range-4, Mumbai vs. M/S Neev Infrastructure Pvt Ltd, Mumbai

ITA 1537/MUM/2023[2015-16]Status: DisposedITAT Mumbai26 Feb 2024AY 2015-16

Bench: Shri Aby T Varkey & Shri Gagan Goyal

For Appellant: Shri Ashok Kumar Ambastha, Ld. DRFor Respondent: Shri Rahul Hakani, Ld. AR

Section 143(3)Section 14ASection 250Section 37(1)

total income @ 8% of the WIP 1 without appreciating the fact that the assessee has not substantiated that the revenue recognised is under percentage completion method which is as per accounting standards." 2. "Whether on the facts and in the circumstances of the case the Ld. CIT(A) is justified ... interrelated and hence taken up together for adjudication. On this issue, contentions of the AO were that as the assessee is following the “Percentage completion Method” for revenue recognition, hence amounts of WIP shown in the Balance-Sheet are also liable to declare revenue on a due basis