“ percentage completion method ”

CIT v. Hyundai Heavy Industries Co. Ltd.

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

291 ITR 482 · 2007 · Supreme Court

166

CIT v. ARUN EXCELLO FOUNDATIONS (P) LTD.

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.

212 Taxmann 342 · 2013 · High Court

Prestige Estate Projects (P) Ltd. v. DCIT

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.

33 DTR 514 · 2010 · ITAT

CIT v. Associated Cables P. Ltd.

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.

286 ITR 596 · 2006 · High Court

Mazagaon Dock Limited v. JCIT

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.

29 SOT 356 · 2009 · ITAT

Wall Construction Co Ltd. v. JCIT

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.

102 TTJ 505 · 2006 · ITAT

378 ITR 75 · 2015 · High Court

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

ITA 797/DEL/2017[2009-10]Status: DisposedITAT Delhi30 Nov 2023AY 2009-10

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

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

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

ITA 796/DEL/2017[2008-09]Status: DisposedITAT Delhi30 Nov 2023AY 2008-09

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

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

ITA 795/DEL/2017[2007-08]Status: DisposedITAT Delhi30 Nov 2023AY 2007-08

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

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

ITA 794/DEL/2017[2006-07]Status: DisposedITAT Delhi30 Nov 2023AY 2006-07

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

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

ITA 38/RPR/2023[2016-17]Status: DisposedITAT Raipur28 Nov 2023AY 2016-17

Deputy Commissioner of Income Tax, Circle-1(1), Raipur vs. S.P. Buildcon Pvt. Ltd., Raipur

Bench: Shri Ravish Sood, Jm & Shri Arun Khodpia, Am (Ita No. 35 & 38/Rpr/2023) (Assessment Year: 2014-15 & 2016-17) Deputy Commissioner Of Income Tax, V S.P. Buildcon Private Limited Circle-1(1), S Ff-06, Shyam Plaza, Pandri Bus Stand, Aayakar Bhawan, Civil Lines, Raipur Raipur Pan: Aajcs0653H (अपीलाथ" /Applicant) . (""यथ" / Respondent) . िनधा"रती क" ओर से /Assessee By : Shri Amit M. Jain, Adv. राज"व क" ओर से /Revenue By : Shri Satya Prakash Sharma, Sr. Dr सुनवाई क" तार"ख / Date Of Hearing : 05-09-2023 घोषणा क" तार"ख/Date Of Pronouncement : 28-11-2023

For Appellant: Shri Amit M. Jain, AdvFor Respondent: Shri Satya Prakash Sharma, Sr. DR

Section 143(3)Section 14ASection 2(22)(e)Section 40Section 43C

case, the NFAC was justified in deleting the addition of Rs. 60,39,610/- made by the A.O. by adopting AS-7 i.e., “Percentage Completion Method”? 2. Whether on the facts and in the circumstances of the case, the NFAC was justified in deleting the addition of Rs.2 ... time of hearing. S.P. Buildcon Pvt. Ltd. Ground No. 1: Deleting the addition of Rs.60,39,610/- adopting AS-7 i.e., “Percentage Completion Method”. 32. At the outset, on the issue of applicability of percentage completion method Ld. Sr. DR reiterated facts from the assessment order wherein

Deputy Commissioner of Income Tax, Circle-1(1), Raipur vs. S.P. Buildcon Pvt. Ltd., Raipur

ITA 35/RPR/2023[2014-15]Status: DisposedITAT Raipur28 Nov 2023AY 2014-15

For Appellant: Shri Amit M. Jain, AdvFor Respondent: Shri Satya Prakash Sharma, Sr. DR

Section 143(3)Section 14ASection 2(22)(e)Section 40Section 43C

Jaydeep Construction, Mumbai vs. PCIT-41, Mumbai

In the result, appeal filed by the assessee is dismissed with the above observations

ITA 2086/MUM/2023[2018-19]Status: HeardITAT Mumbai24 Nov 2023AY 2018-19

Bench: Shri Narender Kumar Choudhry, Hon’Ble & Shri S. Rifaur Rahman, Hon'Blejaydeep Construction V. Pr. Cit -41 Shop No. 07/08, Patidar Complex Room No. 541, Kautilya Bhavan C-41 To C-43, G Block Kannamwar Nagar, Vikroli (E) Bandra Kurla Complex Mumbai – 400083 Bandra (E), Mumbai - 400051 Pan: Aaffj0346M (Appellant) (Respondent)

Section 143(3)Section 263Section 43CSection 54

learned PCIT may be quashed/reversed. Revision on the issue of non-declaration of profits of the project (i.e. project completion method or percentage completion method) 3. On the facts and in the circumstances of the case and as per the law, the learned PCIT erred in considering the assessment order

M/S. S.R. Ferro Alloys, Jhabua vs. The PCIT, Bhopal

In the result, the appeal of assessee is allowed

ITA 148/IND/2021[2015-16]Status: DisposedITAT Indore09 Nov 2023AY 2015-16

Bench: Shri Vijay Pal Rao & Shri B.M. Biyanis.R. Ferro Alloys Pr. Cit, Central 9, Siddheswar Colony Bhopal Vs. Jhabua (Appellant / Assessee) (Revenue) Pan: Abhfs7377Q Appellant By Shri Sumit Nema, Sr. Adv. & Gagan Tiwari, Ar Revenue By Shri Ashish Porwal, Sr. Dr Date Of Hearing 12.10.2023 Date Of Pronouncement 09.11.2023

Section 263

Court and various High Courts has held as under “28. Now the issue as to whether a person is mandatorily required to adopt percentage completion method o The method of accounting is governed by section 145 of the Act and as per section 1482) of the Act the income ... followed by mother assessee. In the instant appeal both the lower authorities have rejected the books of account of assessee and applied the percentage completion method adopted by the developer JSM DPL and computed the income accordingly. Whether soch action of the revenue authorities is justified or not needs

Milestone Dewellers Pvt. Ltd., Jaipur vs. ITO Ward 6(2), Jaipur

In the result, appeal of the assessee is allowed

ITA 565/JPR/2023[2017-18]Status: DisposedITAT Jaipur31 Oct 2023AY 2017-18

Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Shri Manish Agarwal (C.A.)For Respondent: Shri Arvind Kumar (CIT) a

Section 143(3)Section 144BSection 147

project. It is also relevant to state that the assessment for AY 2014-15 was completed u/s 143(3) where after applying the percentage completion method, cost of construction as declared by assessee was allowed and addition was made towards the profits (APB 96-117). It is submitted that ... project. It is also relevant to state that the assessment for AY 2014- 15 was completed u/s 143(3) where after applying the percentage completion method, cost of construction as declared by assessee was allowed and addition was made towards the profits (APB 96- 117). It is also submitted that

Income Tax Officer-22(3)(6), Mumbai vs. Sambhav Shelter, Mumbai

In the result, the appeal of the revenue stands dismissed

ITA 811/MUM/2023[2018-2019]Status: DisposedITAT Mumbai25 Oct 2023AY 2018-2019

Bench: Shri Aby T. Varkey, Jm & Shri Amarjit Singh, Am आयकर अपील सं/ I.T.A. No.811/Mum/2023 (निर्धारण वर्ा / Assessment Year: 2018-19) Ito-22(3)(6) बिधम/ Sambhav Shelter, Room No.206, 2Nd Floor, Mumbai Vs. Piramal Chamber, Lalbaug, V 55, Dr E Moses Road Mumbai-400012. Worli Next To Furniturewala Showroom, Mumbai-400018. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Abgfs8321M (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: Shri Anuj Kisnadwala Revenue By: Shri Ganensh Rakh (Sr. Ar) सुनवाई की तारीख / Date Of Hearing: 23/08/2023 घोषणा की तारीख /Date Of Pronouncement: 25/10/2023 आदेश / O R D E R Per Aby T. Varkey, Jm: This Is An Appeal Preferred By The Revenue Against The Order Of The Ld. Cit(A)/Nfac, Delhi Dated 17.01.2023 For The Ay. 2018-19. 2. The Main Grievance Of The Revenue Is Against The Action Of The Ld. Cit(A) Deleting The Addition Of Rs.1,73,36,141/- Made By The Ao After Rejecting The Books Of Account Of The Assessee & Estimating The Profit @ 8% Of The Revenue Recognized.

For Appellant: Shri Anuj KisnadwalaFor Respondent: Shri Ganensh Rakh (Sr. AR)

Section 145(3)

firm is engaged in business of real estate development viz property developer & builders. The AO notes that the assessee recognizes the revenue on percentage completion method. Later on, the case of the assessee was selected for 2 A.Y. 2018-19 Sambhav Shelter scrutiny and the scrutiny was in respect ... notice of the AO that the assessee firm was engaged in the developing of a single property/project and has been following percentage completion method for recognizing revenue. According to the Ld. CIT(A), as per the percentage completion method, the revenue need to be recognized based on the total cost

Kec International Limited, Mumbai vs. Deputy Commissioner of Income Tax Circle-5(2)(1), Mumbai

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

ITA 2512/MUM/2022[2018-2019]Status: DisposedITAT Mumbai13 Sept 2023AY 2018-2019

Bench: Shri S. Rifaur Rahman, Hon'Ble & Shri Rahul Chaudhary, Hon'Blekec International Limited V. Dcit – Circle – 5(2)(1) 463 Rpg House Room No. 571, 5Th Floor Dr. Annie Besant Road Aayakar Bhawan Churchgate, Mumbai - 400020 Worli, Mumbai – 400030 Pan: Aacck5599H (Appellant) (Respondent)

Section 143(3)Section 144BSection 144C(5)Section 234BSection 80JSection 90

assessee on physical milestones to be achieved brings in a degree of subjectivity in revenue recognition, which is not what the percentage completion method envisages. 7.8 In view of the above, it is held that the assessee has not been able to demonstrate that the revenue recognition model it uses ... account for the receipts in its books as income is transparent, and also in accordance with the percentage completion method. Hence, it is not possible to return a finding that the amount of Rs. 43,42,52,923/- is advance received from customers. This part of the objection is accordingly

DCIT-Central Circle-2(4), Mumbai vs. Keysone Relators Private Limited, Mumbai

In the result, the appeal by the Revenue is allowed for statistical purposes

ITA 1845/MUM/2023[2014-2015]Status: DisposedITAT Mumbai11 Sept 2023AY 2014-2015

Bench: Shri Amarjit Singh & Shri Sandeep Singh Karhail

For Appellant: Shri Naresh KumarFor Respondent: Shri Biswanath Das

Section 142(1)Section 143(2)Section 143(3)Section 250

same are require to be added to the WIP of the Project. On the other hand, I find that the Appellant is following Percentage Completion Method for purpose of Accounting. It is further contended by the Appellant that the Project is on the verge of completion and therefore adding ... same are require to be added to the WIP of the Project. On the other hand, I find that the Appellant is following Percentage Completion Method for purpose of Accounting. It is further contended by the Appellant that the Project is on the verge of completion and therefore adding

DCIT-Circle-3(3)(1), Mumbai vs. S D Corporation Private Limited, Mumbai

In the result, the appeal of the revenue vide ITA Nos

ITA 6204/MUM/2019[2009-10]Status: DisposedITAT Mumbai30 Aug 2023AY 2009-10

Bench: Shri Vikas Awasthy & Shri Amarjit Singhita Nos.6191 To 6194, 6204 & 6033 /Mum/2019 (A.Ys. 2008-09, 2009-10, 2011-12 To 2014-15)

For Appellant: Mahita NairFor Respondent: Dharmesh Shah &

ITA 6194/MUM/2019[2012-13]Status: DisposedITAT Mumbai30 Aug 2023AY 2012-13

accounts and thereby increased the WIP, which has a direct impact over the profits of such project also. The assessee follows percentage completion method for recognizing revenue from various projects. It is therefore clear on the above facts that some percentage of this bogus expenditure has been debited

DCIT-Circle-3(3) (1), Mumbai vs. S D Corporation Private Limited, Mumbai

In the result, the appeal of the revenue vide ITA Nos

Bench: Shri Vikas Awasthy & Shri Amarjit Singhita Nos.6191 To 6194, 6204 & 6033 /Mum/2019 (A.Ys. 2008-09, 2009-10, 2011-12 To 2014-15)

For Appellant: Mahita NairFor Respondent: Dharmesh Shah &

ITA 6193/MUM/2019[2013-14]Status: DisposedITAT Mumbai30 Aug 2023AY 2013-14

DCIT-Circle-3(3) (1), Mumbai vs. S D Corporation Private Limited, Mumbai

In the result, the appeal of the revenue vide ITA Nos

Bench: Shri Vikas Awasthy & Shri Amarjit Singhita Nos.6191 To 6194, 6204 & 6033 /Mum/2019 (A.Ys. 2008-09, 2009-10, 2011-12 To 2014-15)

For Appellant: Mahita NairFor Respondent: Dharmesh Shah &

ITA 6192/MUM/2019[2011-12]Status: DisposedITAT Mumbai30 Aug 2023AY 2011-12

DCIT-Circle-3(3)(1), Mumbai vs. S D Corporation Private Limited, Mumbai

In the result, the appeal of the revenue vide ITA Nos

Bench: Shri Vikas Awasthy & Shri Amarjit Singhita Nos.6191 To 6194, 6204 & 6033 /Mum/2019 (A.Ys. 2008-09, 2009-10, 2011-12 To 2014-15)

For Appellant: Mahita NairFor Respondent: Dharmesh Shah &

ITA 6191/MUM/2019[2014-15]Status: DisposedITAT Mumbai30 Aug 2023AY 2014-15

DCIT-Circle-3(3) (1), Mumbai vs. S D Corporation Private Ltd, Mumbai

In the result, the appeal of the revenue vide ITA Nos

Bench: Shri Vikas Awasthy & Shri Amarjit Singhita Nos.6191 To 6194, 6204 & 6033 /Mum/2019 (A.Ys. 2008-09, 2009-10, 2011-12 To 2014-15)

For Appellant: Mahita NairFor Respondent: Dharmesh Shah &

ITA 6033/MUM/2019[2008-09]Status: DisposedITAT Mumbai30 Aug 2023AY 2008-09

DCIT Circle 3(3)(1), Mumbai vs. S D Corporation Private Limited, Mumbai

In the result, the appeal of the revenue vide ITA Nos

Bench: Shri Vikas Awasthy & Shri Amarjit Singhita Nos.6191 To 6194, 6204 & 6033 /Mum/2019 (A.Ys. 2008-09, 2009-10, 2011-12 To 2014-15)

For Appellant: Mahita NairFor Respondent: Dharmesh Shah &