“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

S.P.Enterprises, Indore vs. The ACIT2(1), Indore

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

ITA 216/IND/2023[2016-17]Status: DisposedITAT Indore21 Feb 2024AY 2016-17

Bench: Shri Vijay Pal Rao & Shri B.M. Biyanis.P. Enterprises Acit 2(1) Ug-9 Lokhandwala Complex Indore Gangali Square Ringh Road, Vs. Indore, Mp (Appellant / Assessee) (Respondent/ Revenue) Pan: Ackfs0827M Assessee By Ms. Nisha Lahoti & Shri Vijay Bansal Ars Revenue By Shri Ashish Porwal, Sr. Dr Date Of Hearing 07.02.2024 Date Of Pronouncement 21.02.2024

Section 143(3)Section 145

still showing huge creditors standing in the account, the same was rightly held to be not commensurate with its following of 'Percentage Completion Method', as per accounting standards. 15. In view of above discussion, the estimated addition of 8% profit on WIP, keeping in view of "creditors", made

Assotech Moonshine Urban Developers Pvt. Ltd., Noida vs. ACIT, Circle- 3(2), New Delhi

In the result, appeal of the assessee is allowed

ITA 366/DEL/2019[2014-15]Status: DisposedITAT Delhi21 Feb 2024AY 2014-15

Bench: Shri Shamim Yahya & Ms. Astha Chandraasstt. Year: 2014-15

For Appellant: Ms. Rano Jain, AdvocateFor Respondent: Shri Zafarul Haque Tanweer, CIT DR

Section 143(3)Section 144CSection 156Section 234ASection 271(1)(c)

final assessment order dated 16.11.2018. 6. The Ld. AR submitted that the assessee being in the business of real estate is following the percentage completion method (POCM) of accounting. Since during the year the project was completed only to the extent of 0.14%, 4 the assessee did not book ... considered the rival submissions and perused the records. The facts are not in dispute. The assessee is real estate developer and is following Percentage Completion Method of accounting (POCM) and in the year of account the project has been completed to the extent of 0.14% only. This has not been

M/S. Rdc Ventures, Mumbai vs. PCIT-27, Mumbai

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

ITA 1915/MUM/2023[2018-19]Status: DisposedITAT Mumbai09 Feb 2024AY 2018-19

Bench: Shri Vikas Awasthy & Shri Amarjit Singhm/S Rdc Ventures Vs. Principal Commissioner Office No.-110 Of Income Tax-27 Ridhhisidhhi Premises Room No. 401, 4 Th Floor, Society, Near Sahakar Tower No. 6, Vashi Talkies Tilak Nagar, Railway Station, Chembur (West) Mumbai- Commercial Complex, 400089 Vashi, Navi Mumbai -400703 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No:Aakfr0914Q Appellant .. Respondent Appellant By : Dhran Gandhi Respondent By : Sanyogita Nagpal Date Of Hearing 29.11.2023 Date Of Pronouncement 09.02.2024

For Appellant: Dhran GandhiFor Respondent: Sanyogita Nagpal

Section 143(2)Section 143(3)Section 263

projects. On verification of the details submitted during the course of assessment proceedings, it is not specifically mentioned that whether assessee is following percentage completion method or project completion method for recognizing the revenue. However, as per the details submitted, if is seen that assessee is following project completion method ... report assessee at Serial No. 2 under the head Revenue Recognition reported as under: “a. During the year, the Company has followed the Percentage Completion Method of accounting as per the Guidance Note on Revenue Recognition by the Real Estate Developers issued by The Institute of Chartered Accountants of India

DCIT Central Circle, Karnal vs. Reliable Realtech Pvt Ltd, Bhiwani

In the result, appeal of the Revenue is dismissed

ITA 4808/DEL/2019[2014-15]Status: DisposedITAT Delhi09 Feb 2024AY 2014-15

Bench: Shri M Balaganesh & Ms. Astha Chandraasstt. Year: 2014-15 Dcit, Central Circle, Vs. Reliable Realtech Pvt. Ltd. Ayakar Bhawan, C/O Nk Jain Adv. Sec-12, Karnal, Naya Bazar, Bhiwani Haryana Pin 132001 Haryana Pin 127021 Pan Aadcr4203L (Appellant) (Respondent)

For Appellant: Shri Gautam Jain, AdvocateFor Respondent: Shri P.N. Barnwal, CIT DR

Section 132Section 132(4)Section 143(3)Section 153A

added a sum of Rs. 1,56,88,100 to the Assessee's declared income by applying the percentage completion method. Apart from this the AO disallowed certain other sums including the sums on account of depreciation and under Section 14A of the Act. The income of the Assessee ... Notes to the Accounts was not taken note of by the ITAT when it came to the conclusion that the percentage completion method should apply to the Assessee. 22. The other aspect that appears to have escaped the attention of the ITAT is that the Assessee offered

Soham Buildcon (Partnership Firm), Ahmedabad vs. The Pr. CIT-3, Ahmedabad

In the result, appeal of the assessee is hereby allowed

ITA 105/AHD/2022[2017-18]Status: DisposedITAT Ahmedabad31 Jan 2024AY 2017-18

Bench: Shri Waseem Ahmed (Accountant Member), Ms. Madhumita Roy (Judicial Member)

For Appellant: Shri Parin Shah, A.RFor Respondent: Shri Sudhendu Das, CIT-D.R

Section 142(1)Section 143(3)Section 263

PCIT, the assessee being in the business of construction of residential and commercial complex was required to recognize revenue on percentage completion method as provided under accounting standard 7 issued by the ICAI. However, the assessee has not explained the method of accounting employed for revenue recognition and neither ... accounting guidelines issued by the ICAI also envisaged that the revenue from the business of real sate construction shall be recognized as per percentage completion method. However, the AO, without verifying correct method of revenue recognition and correct application of accounting standard accepted the returned income of the assessee

Gauri Construction Company, Mumbai vs. Assistant Commissioner of Income Tax-Circle 17(1), Mumbai

In the result, the appeal filed by the assessee is treated as allowed

ITA 2345/MUM/2023[2013-14]Status: DisposedITAT Mumbai31 Jan 2024AY 2013-14

Bench: Shri B.R. Baskaran (Am) & Shri Aby T. Varkey (Jm)

assessee did not offer any income in the assessment year 2012-13. The reason cited by the assessee was that it was following Percentage Completion Method and it considered 2 Gauri Construction Company construction of all five towers as a “single project”. Under Percentage completion method, the requirement to offer

ACIT 1(1), Mumbai vs. Blue Star Ltd, Mumbai

In the result, appeal filed by the learned AO is dismissed and appeal of the assessee is partly allowed

ITA 5551/MUM/2011[2007-08]Status: DisposedITAT Mumbai31 Jan 2024AY 2007-08

Bench: Shri Prashant Maharishi, Am & Shri Sandeep Singh Karhail, Jm Blue Star Ltd. Acit -1(1) Kasturi Building, Room No.579, Mohan T. Advani Chownk, Vs. Aaykar Bhavan, J. Tata Road, Mumbai-400 020 Mumbai-400 020 (Appellant) (Respondent) Pan No. Aaacb4487D Blue Star Ltd. Acit -1(1) Kasturi Building, Room No.579, Mohan T. Advani Chownk, Vs. Aaykar Bhavan, J. Tata Road, Mumbai-400 020 Mumbai-400 020 (Appellant) (Respondent)

For Appellant: Shri Gunjan Kakkad, ARFor Respondent: Shri Dilip K. Shah, DR

Section 115Section 143(3)Section 145ASection 32(1)(iia)Section 40Section 43B

after successful completion of the contract or on fulfillment of certain predetermined conditions mentioned in the order itself. Since sales are booked on percentage completion method, the amount of retention money is already included in the sale. The said amount does not accrue as income to the appellant

Blue Star Ltd, Mumbai vs. Addl CIT RG 1(1), Mumbai

In the result, appeal filed by the learned AO is dismissed and appeal of the assessee is partly allowed

ITA 4793/MUM/2011[2007-08]Status: DisposedITAT Mumbai31 Jan 2024AY 2007-08

For Appellant: Shri Gunjan Kakkad, ARFor Respondent: Shri Dilip K. Shah, DR

Section 115Section 143(3)Section 145ASection 32(1)(iia)Section 40Section 43B

Deputy Commissioner of Income Tax, Central Circle - 2, Visakhapatnam vs. Alakram International Trading Company Private Limited, Kolkata

In the result, appeal of the Revenue is dismissed

ITA 151/VIZ/2021[2017-18]Status: DisposedITAT Visakhapatnam30 Jan 2024AY 2017-18

Bench: Shri Duvvuru Rl Reddy, Hon’Ble & Shri S Balakrishnan, Hon’Bleआयकर अपील सं./ I.T.A. No.118/Viz/2021 ("नधा"रण वष" / Assessment Year :2017-18) Deputy Commissioner Of Income Vs. M/S. Sri Bhagavan Niketan Tax , Central Circle-2, Limited, Visakhapatnam. D.No. V-122/A/1, Quality Haat, 1St Floor, Room No.4, S Aj Farooque Road, Metlabruz, Kolkata-32, Pin: 700018. Pan: Aadcs 7326 M (अपीलाथ"/ Appellant) (""यथ"/ Respondent)

For Respondent: Dr. Satyasai Rath, CIT-DR

Section 132Section 133ASection 142(1)Section 143(2)Section 143(3)Section 153A

sworn statement recorded U/s. 132(4) of the Act on 14/11/2017 admitted to disclose the revenue of the assessee-company on “Percentage Completion Method” as mandated by the above CBDT Notification, for the AY 2017-18 in the return of income filed in response to notice U/s. 153A ... showing cash balance of Rs. 6,32,87,966/- as on 1/4/2016 and has also taken advantage of telescoping of profit offered under “Percentage Completion Method” for the cash payments made towards share application to M/s. Alakram International Trading Company Pvt. Ltd. The Ld. AO therefore treated the source

The Deputy Commissioner of Income Tax, Central Circle-2, Visakhapatnam vs. Dolphin Highrise Private Limited, Kilkata

In the result, appeal of the Revenue is dismissed

ITA 120/VIZ/2021[2017-18]Status: DisposedITAT Visakhapatnam30 Jan 2024AY 2017-18

For Respondent: Dr. Satyasai Rath, CIT-DR

Section 132Section 133ASection 142(1)Section 143(2)Section 143(3)Section 153A

The Deputy Commissioner of Income Tax, Central Circle-2, Visakhapatnam vs. Sri Bhagavan Niketan Limited, Kollkata

In the result, appeal of the Revenue is dismissed

ITA 118/VIZ/2021[2017-18]Status: DisposedITAT Visakhapatnam30 Jan 2024AY 2017-18

For Respondent: Dr. Satyasai Rath, CIT-DR

Section 132Section 133ASection 142(1)Section 143(2)Section 143(3)Section 153A

M/S. Panjos Builders Pvt Ltd., Bangalore vs. Income Tax Officer, Ward-5(1)(1), Bangalore

In the result, appeal of the assessee is allowed

ITA 434/BANG/2023[2007-08]Status: DisposedITAT Bangalore17 Jan 2024AY 2007-08

Bench: Shri Chandra Poojari & Smt. Madhumita Royassessment Year: 2007-08

For Appellant: Shri Ravishankar, A.RFor Respondent: Shri V. Parithivel, D.R

Section 147Section 148Section 201(1)Section 234ASection 250Section 40Section 4o

assessee in respect of non-deduction of TDS on interest payment, non-inclusion of accrued interest on NSC and not following percentage completion method of arriving income/loss as per Accounting Standard AS-7. The Assessing authority issued and served a notice u/s 148 of the Act. The reason recorded ... value of work completed in respect of the project "Panjos Stadia" as on 31si March 207 is Rs.207,74,635/- Adopting the percentage completion method as per AS-7 the gross profit works out to Rs.37,39,434/- @ 18% 4.2 It was submitted by the assessee during assessment proceedings

Ralsons Infrastructure Pvt.Ltd., Ahmedabad vs. The Pr. CIT-3, Ahmedabad

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

ITA 110/AHD/2021[2016-17]Status: DisposedITAT Ahmedabad10 Jan 2024AY 2016-17

Bench: Shri Waseem Ahmed & Ms. Madhumita Roy

For Appellant: Shri Biren Shah & Shri G.M. Thakor, A.RsFor Respondent: Shri Ritesh Parmar, CIT D.R

Section 143(3)Section 153(3)Section 194ISection 263Section 263(1)

relevant year. As per the Ld. PCIT, the assessee has not furnished the revenue statement demonstrating that the revenue was recognized based on percentage completion method. In the absence of the documents, the Ld. PCIT was of the view that the properties in respect of which the registration is pending ... attention on pages 60 to 61 of the Paper Book wherein the details of the revenue recognized in different assessment years based on percentage completion method up to 31.03.2016 were placed. The Ld. AR also drawn our attention demonstrating the revenue recognized

The Dy. Commissioner of Income Tax, Central Circle-6(4), Mumbai vs. M/S Tapir Construction Limited, Mumbai

In the result, appeal filed by the assessee is allowed in terms indicated hereinabove

ITA 2145/MUM/2023[2018-2019]Status: DisposedITAT Mumbai13 Dec 2023AY 2018-2019

Bench: Shri Aby T Varkey, Hon’Ble & Shri S. Rifaur Rahman, Hon'Bledcit – Central Circle – 6(4) V. M/S. Tapir Constructions Limited Room No. 1925, 19Th Floor M-62 & 63, 1St Floor Air India Building Connaught Place Nariman Point, Mumbai - 400021 New Delhi – 110001, New Delhi Pan: Aaect9858L (Appellant) (Respondent)

Section 142(1)Section 143(1)Section 143(2)

From the record we found that assessee follows mercantile system of accounting. In order to recognise the revenue from the project, it follows percentage completion method of accounting. All the expenses incurred by the assessee which are directly attributable to the project have been debited to work in progress ... above decision is reproduced herein below: "11. We have considered rival contentions and carefully gone through the orders of the authorities below. The percentage completion method of accounting has been regularly followed by the assessee. In the succeeding assessment year 2010-11, the A.O has accepted the deducibility

Larsen & Toubro Ltd, Mumbai vs. DCIT RG 2(2), Mumbai

ITA 6589/MUM/2013[2004-05]Status: DisposedITAT Mumbai11 Dec 2023AY 2004-05

For Appellant: Shri J. D. Mistry, Sr. AdvocateFor Respondent: Dr. Yogesh Kamat

Section 115JSection 143(3)Section 14ASection 40A(9)Section 80HSection 92C

contract. 2.0 Revenue recognition 2.1 Two principal methods followed for recognizing the revenue are: a) The completed contract method b) The percentage completion method 2.2 Under the completed contract method, revenue is recognized only when a substantial portion of the contract is completed. Costs and progress payments received are accumulated ... carried to the accounting period in which the contract is completed and the profits/loss recognized in that year. 2.3 Under the percentage completion method, revenue is recognized pro rata to the stage of completion is reached. Against the revenue, costs incurred in reaching the given stage are matched leading

Deputy Commissioner of Income Tax, CC-7(3), Mumbai vs. M/S Macrotech Developers Limited (Formerly Known As Lodha Developers Pvt Ltd.) (Successor of M/S Bellissimo Crown Buildmart Pvt Ltd), Mumbai

In the result, ITA No.2385/Mum/2022 filed by the learned

ITA 2385/MUM/2022[2015-16]Status: DisposedITAT Mumbai05 Dec 2023AY 2015-16

Bench: Shri Prashant Maharishi, Am & Shri Rahul Chaudhary, Jm M/S Macrotech Developers Limited The Dy. Commissioner Of Income (Formerly Known As Lodha Tax, Developers Pvt. Ltd.)(Successor Of Central Circle-7(3), M/S Bellissimo Crown Buildmart Room No,655, Aaykar Bhavan Vs. Pvt. Ltd.) 412, 4Th Floor, 17 G, Vardhman M.K. Road, Mumbai-400 020 Market, Cawasji Patel Street, Fort Mumbai 400001 (Appellant) (Respondent) Pan No. Aaacl1490J

For Appellant: Shri Niraj Seth, AdvocateFor Respondent: Shri Manoj Kumar, CIT DR

Section 115JSection 143(3)Section 144CSection 14ASection 36(1)(iii)

ignoring the fact that assessee engaged in the business of real estate and following the percentage completion method for revenue recognition and all the expenses directly related to the project have to be carried over and debited to the cost of project. Macrotech Developers Ltd; A.Y. 2015-16 3. Whether ... Exchange loss of Rs.1,68,30,320/- by overlooking the fact that assessee is engaged in the business of real estate and following percentage completion method for revenue recognition and all the expenses directly related to the project have to be carried over and debited to the cost of project

ACIT 1(1), Mumbai vs. Blue Star Ltd, Mumbai

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

ITA 5550/MUM/2011[2006-07]Status: DisposedITAT Mumbai30 Nov 2023AY 2006-07

Bench: Shri Prashant Maharishi, Am & Ms. Kavitha Rajagopal, Jm Blue Star Ltd. The Addl. Cit, Range 1(1), Kasturi Building, Mohan T Advani Aaykar Bhavan, Mumbai Vs. Chowk, Jamshedji Tata Road, Mumbai-400 020 Pan/Gir No. Aaacb 4487 D (Assessee) (Revenue) : The Addl. Cit, Range 1(1), Blue Star Ltd. Aaykar Bhavan, Mumbai Kasturi Building, Mohan T Advani Vs. Chowk, Jamshedji Tata Road, Mumbai-400 020 Pan/Gir No. Aaacb 4487 D (Revenue) : (Assessee)

For Appellant: Shri Niraj Sheth

Section 115Section 145ASection 250Section 40Section 43B

certain conditions mentioned in the order and the said retention money are already included in the sale as the sale are booked on percentage completion method. The assessee contended that as the said amount does not accrue as income to the assessee, the same has to be excluded from

Blue Star Ltd, Mumbai vs. Addl CIT RG 1(1), Mumbai

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

ITA 4792/MUM/2011[2006-07]Status: DisposedITAT Mumbai30 Nov 2023AY 2006-07

For Appellant: Shri Niraj Sheth

Section 115Section 145ASection 250Section 40Section 43B

ACIT, New Delhi vs. M/S Advantage Fashion Pvt. Ltd., New Delhi

Accordingly, the order of the CIT(A) on this issue is also affirmed, and the Ground No. 5 raised by the Revenue in AY 2011-12 is also dismissed

ITA 799/DEL/2017[2011-12]Status: DisposedITAT Delhi30 Nov 2023AY 2011-12

Bench: Shri G.S. Pannu, Hon’Ble & Shri Challa Nagendra Prasad, Hon’Ble

Section 132(1)Section 133ASection 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 assessee while framing assessment, thus, accepting that the transactions have

ACIT, New Delhi vs. M/S Advantage Fashion Pvt. Ltd., New Delhi

Accordingly, the order of the CIT(A) on this issue is also affirmed, and the Ground No. 5 raised by the Revenue in AY 2011-12 is also dismissed

ITA 798/DEL/2017[2010-11]Status: DisposedITAT Delhi30 Nov 2023AY 2010-11

Bench: Shri G.S. Pannu, Hon’Ble & Shri Challa Nagendra Prasad, Hon’Ble

Section 132(1)Section 133ASection 147