“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

M/S. Krishna E Campus Private Limited, Bangalore vs. Deputy Commissioner of Income Tax, Circle- 4(1)(1), Bangalore

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

ITA 1588/BANG/2019[2015-16]Status: DisposedITAT Bangalore08 Jun 2022AY 2015-16

Bench: Shri George George K. & Ms. Padmavathy Sassessment Year : 2015-16

For Appellant: Shri Ashok A. Kulkarni, AdvocateFor Respondent: Dr. Manjunath Karkihalli, CIT(DR)(ITAT), Bengaluru

Section 144Section 92C

assessment year 2015-16. 2. The only issue contended by the assessee in this appeal is regarding recognition of revenue under the Percentage Completion Method [PCM] as per Accounting Standards [AS] issued by the Institute of Chartered Accountants of India [ICAI]. 3. The assessee is a company engaged in developing ... directions received from Addl.CIT, Range 4(1), assessment was concluded by the with the following observations:- “6.1 Revenue recognition as per percentage completion method as per AS-9:- The assessee has filed his submission vide his letter dtd: 10.12.2018 before the Addl. CIT Range-4(1), Bangalore. The assessee

Pratik Enterprises, Navi Mumbai vs. Pr. CIT -27, Mumbai

In the result, the appeal of the assessee is allowed

ITA 644/MUM/2021[2015-16]Status: DisposedITAT Mumbai27 May 2022AY 2015-16

Bench: Shri Aby T. Varkey, Jm & Shri Gagan Goyal, Am आयकर अपील सं/ I.T.A. No.644/Mum/2021 (निर्धारण वर्ा / Assessment Years: 2015-16) Pratik Enterprises बिधम/ Pcit K/49, Apmc Phase 1, Mumbai-27 Vs. Sector No.19, Navi Mumbai, Thane-400703. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aahfp5443M (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: Shri Nilesh T. Dedhia Revenue By: Shri H. N. Singh (Dr) सुनवाई की तारीख / Date Of Hearing: 12/05/2022 घोषणा की तारीख /Date Of Pronouncement: 27/05/2022 आदेश / O R D E R Per Aby T. Varkey, Jm: This Is An Appeal Preferred By The Assessee Against The Order Of The Ld. Principal Commissioner Of Income Tax-27, Mumbai Dated 17.03.2021 For The Assessment Year 2015-16. 2. The Main Grievance Of The Assessee Is Against The Action Of The Ld. Pcit For Invoking His Jurisdiction U/S 263 Of The Income Tax Act [Hereinafter (‘The Act’)].

For Appellant: Shri Nilesh T. DedhiaFor Respondent: Shri H. N. Singh (DR)

Section 142(1)Section 143(3)Section 194ASection 263

Pratik Enterprises advance from Mrs. Pillai which is also shown under the head advance received from customers ~" Prati ardens. Since the assessee follows percentage completion method, it has offered revenue by way of valuation of WIP of (Daffodils) Pratik Gardens. Thus, since the assessee has offered revenue Daffodils Pratik Gardens

Lodha Developers Ltd(Formerly Known As Lodha Developers Private Limited), Mumbai vs. DCIT Cen Cir 7(3), Mumbai

In the result, appeal filed by the revenue is dismissed

ITA 2349/MUM/2018[2014-15]Status: DisposedITAT Mumbai12 May 2022AY 2014-15

Bench: Shri S. Rifaur Rahman, Hon'Ble & Shri Pavan Kumar Gadale, Hon'Blemacrotech Developers Limited V. Dcit – Central Circle – 7(3) {Erstwhile Lodha Developers Limited} Room No. 655, 6Th Floor 412, 4Th Floor, 17G Vardhaman Chamber Aayakar Bhavan, M.K. Road Cawasji Patel Road, Horniman Circle Mumbai – 400020 Fort, Mumbai - 400001 Pan: Aaacl1490J (Appellant) (Respondent) Dcit – Central Circle – 7(3) V. Macrotech Developers Limited Room No. 655, 6Th Floor {Erstwhile Lodha Developers Limited} 412, 4Th Floor, 17G Vardhaman Chamber Aayakar Bhavan, M.K. Road Cawasji Patel Road, Horniman Circle Mumbai – 400020 Fort, Mumbai - 400001 Pan: Aaacl1490J (Appellant) (Respondent)

For Appellant: Shri Rajan Vora &For Respondent: Shri Sandeep Raj

Section 37(1)

deduction only in the year in which the corresponding income is offered to tax. In the instant case, the assessee is following percentage completion method (POCM) of therefore the judgment of Wall Street construction is not applicable to this case. The assessee is following percentage completion and offers a part

M/S Neelkamal Realtors Suburban P. Ltd., Mumbai vs. Asstt. CIT, Central Circle-1(4), Mumbai

In the result, the appeal of the assessee is allowed

ITA 86/MUM/2021[2017-18]Status: DisposedITAT Mumbai28 Apr 2022AY 2017-18

Bench: Shri Prashant Maharishi, Am & Shri Amarjit Singh, Jm The Asst. Commissioner Of M/S Neelkamal Realtors Income Tax, Suburban Pvt. Ltd. Central Circle-1(4), Db House, Room No. 902, Gen. A.K. Vaidya Marg, Vs. 9Th Floor, Pratishtha Bhavan, Yashodham, Old Cgo Building Annexe, Goregaon (E), Mumbai-400 063 Mumbai-400 020 (Appellant) (Respondent) Pan No. Aaaccn1892N

For Appellant: Shri Siddharth Kothari, CAFor Respondent: Shri C.T. Mathews, DR

Section 143(3)Section 37(1)Section 68

construction of residential cum commercial project at Dahisar. The assessee is in the business of construction of real estate and is following a percentage completion method for income-tax return. The assessee filed its return of income on 30 October 2017 declaring total income at Rs. Nil. The case ... allottees towards various charges as well as service tax and VAT liability. It was stated that as assessee is showing revenue recognition on percentage completion method, revenue is recognized based on percentage of work and therefore there is no relevance of such entries in the bank account. Further assessee submitted

DCIT CC 7(3), Mumbai vs. M/S Cowtown Land Development Pvt. Ltd., Mumbai

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

ITA 4053/MUM/2019[2013-14]Status: DisposedITAT Mumbai28 Apr 2022AY 2013-14

Section 143(2)Section 143(3)Section 269SSection 36(1)(iii)

Panch Tatva Reality, Mumbai vs. Pr. CIT -27, Mumbai

In the result, appeal filed by the assessee is dismissed

ITA 679/MUM/2021[2015-16]Status: DisposedITAT Mumbai18 Apr 2022AY 2015-16

Bench: Shri Amarjit Singh () & S.Rifaur Rahman ()

Section 143(3)Section 263Section 30Section 40

total income under the Act. 4. In the present case, the Assessee is involved in the real-estate business and hence follows the percentage completion method of accounting. During the year under reference, the interest payment of Rs. 3.54 cr, to Revathi Equipment Ltd. has been capitalised to the 'Capital

DCIT Cen Cir 7(3), Mumbai vs. Sanathanagar Enterprises Ltd, Mumbai

In the result and subject to the above observation, all the three appeals are dismissed

ITA 794/MUM/2019[2015-16]Status: DisposedITAT Mumbai12 Apr 2022AY 2015-16

Section 143(3)Section 36(1)(iii)

deduction only in the year in which the corresponding income is offered to tax. In the instant case, the assessee is following percentage completion method (POCM) and therefore the judgment of Wall Street constructions Ltd. is not applicable to this case. The assessee is following percentage completion and offers

DCIT Cen Cir 7(3), Mumbai vs. Sanathanagar Enterprises Ltd, Mumbai

In the result and subject to the above observation, all the three appeals are dismissed

ITA 793/MUM/2019[2014-15]Status: DisposedITAT Mumbai12 Apr 2022AY 2014-15

Section 143(3)Section 36(1)(iii)

DCIT Cen Cir 7(3), Mumbai vs. Sanathanagar Enterprises Ltd, Mumbai

In the result and subject to the above observation, all the three appeals are dismissed

ITA 792/MUM/2019[2013-14]Status: DisposedITAT Mumbai12 Apr 2022AY 2013-14

Section 143(3)Section 36(1)(iii)

Mmr Social Housing P. Ltd., Mumbai vs. Dy CIT-Central Range-7(3), Mumbai

In the result, appeal by the assessee is allowed in terms of our aforesaid findings

ITA 1310/MUM/2021[2014-15]Status: DisposedITAT Mumbai08 Apr 2022AY 2014-15

Bench: Shri Amarjit Singh & Shri Sandeep Singh Karhail

For Appellant: Shri Niraj D. ShethFor Respondent: Shri T. Shankar, Sr. A.R. – CIT

Section 143(3)Section 36(1)(iii)

company was following mercantile system of accounting and for the purposes of recognising the revenue from the above project, it was following percentage completion method of accounting. For the purpose of construction, the assessee had borrowed interest-bearing funds from the group concern and financial institutions. On the said funds ... deduction only in the year in which the corresponding income is offered to tax. In the instant case, the assessee is following percentage completion method (POCM) and therefore the judgment of Wall Street constructions Ltd. is not applicable to this case. The assessee is following percentage completion and offers

M/S Ashish Land & Property Developers Pvt Ltd., Mumbai vs. ITO Ward 9 (1)(4), Mumbai

In the result, appeal filed by the assessee is allowed

ITA 907/MUM/2020[2013-14]Status: DisposedITAT Mumbai06 Apr 2022AY 2013-14

Bench: Shri S. Rifaur Rahman, Hon'Ble & Shri Amarjit Singh, Hon'Blem/S. Ashish Land & Property V. Income Tax Officer – 9(1)(4) Developers Pvt. Ltd., Mumbai 10Th Floor, 215, Atrium Andheri Kurla Road, Andheri (E) Mumbai - 400059 Pan: Aagca2673J (Appellant) (Respondent) Assessee By : Shri Anuj Kisnadwala Department By : Shri Mehul Jain

For Appellant: Shri Anuj KisnadwalaFor Respondent: Shri Mehul Jain

Section 142(1)Section 143(2)Section 24Section 36Section 36(1)Section 36(1)(iii)

Real 8 M/s. Ashish Land & Property Developers Pvt. Ltd., estate developer is different as the Accounting Standards. There are specific methods i.e. percentage completion method and Project Completion method, according to that method, appellant allowed to book the income and respective expenses. In that method it is specify that

DCIT, Central Circle 1(2), Mumbai vs. M/S. Antevorta Developers Pvt. Ltd., Mumbai

In the result, appeal of the Revenue is dismissed

ITA 5065/MUM/2019[2015-16]Status: DisposedITAT Mumbai31 Mar 2022AY 2015-16

Section 143(3)Section 260A

dated 30.12.2015 had held as under:- "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 assesses. In the succeeding assessment year 2010- 11, the AO has accepted the deductibility ... account. This does not mean that assessee had not commenced its business. In fact the assessee is given an option either to follow percentage completion method or project completion method for recognition of Revenue from construction projects. In the instant case as stated supra, the assessee has chosen to follow

M/S Metrik Infraprojects Private Limited, Bangalore vs. Assistant Commissioner of Income Tax Circle-4(1)(2), Bangalore

In the result appeal filed by assessee stands allowed for statistical purposes

ITA 52/BANG/2019[2012-13]Status: DisposedITAT Bangalore31 Mar 2022AY 2012-13

For Respondent: Shri S.V. Ravishankar

Section 234BSection 234D

Ld.AO recomputed the income in the hands of assessee as under: 3. The Ld.AO was of the opinion that assessee followed percentage completion method for construction contracts and that revenue was to be recognised upon the project reaching the threshold limit which in the present case was not achieved

Asstt. CIT (OSD) - CC -7 (3), Mumbai vs. M/S. Macrotech Developers Ltd. (Earlier Known As M/S Lodha Developers Ltd.), Mumbai

In the result the appeal filed by the assessee is allowed for statistical purposes

ITA 68/MUM/2019[2015-16]Status: DisposedITAT Mumbai25 Mar 2022AY 2015-16

Bench: S Shri Rifaur Rahamn & Pavan Kumar Gadaledcit – Cc-7(3) Vs. Macrotech Developers Room No. 655, 6Th Ltd (Successor To Floor, Aayakar Bhavan, Bellissimo Crown Mk Road, Mumbai – Buildmart Pvt Ltd) 400020. (Earlier Known As Lodha Crown Build Mart Ltd) 412, 17-G, Vardhaman Chambers, Cp Road, Horniman Circle Fort, Mumbai – 400001 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaacl1490J Appellant .. Respondent Macrotech Developers Vs. Dcit – Cc-7(3) Ltd (Successor To Room No. 655, 6Th Bellissimo Crown Floor, Aayakar Bhavan, Buildmart Pvt Ltd) Mk Road, Mumbai – (Earlier Known As 400020. Lodha Crown Build Mart Ltd) 412, 17-G, Vardhaman Chambers, Cp Road, Horniman Circle Fort, Mumbai – 400001. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaacl1490J Appellant .. Respondent

Section 143(2)Section 14ASection 36(1)(iii)

Patel & Associates, Mumbai vs. Dy CIT -CC-7(3), Mumbai

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

ITA 832/MUM/2021[2017-18]Status: DisposedITAT Mumbai15 Mar 2022AY 2017-18

Bench: Shri Om Prakash Kant () & Shri Pavan Kumar Gadale () Assessment Year: 2017-18 Patel & Associates, Dcit Cc-7(3), Office No. 1, 2Nd Floor, Patel Vs. Aayakarbhavan, Bhuvan, 29 Vijay Wad, Dr Mumbai-400020. Nagindas N Shah Lane Chirasazar, Mumbai-400 002. Pan No. Aanfm 8145 P Appellant Respondent

For Appellant: Ms. AparnaSivakumar, AR

Section 139(9)Section 143(3)

assessee has filed a detailed submission that it was following wrong method of accounting and that the income offered as per percentage completion method was computed incorrectly. It is, however, found that the assessee has offered income following the same, method in previous assessment years as well and this ... even a claim of any deduction not claimed or access income offered wrongly. The assessee is offering 10% as income following percentage completion method. Now when the project is completed the claim of the assessee is that the method followed for offering the income was incorrect, the assessee never made

Red Hat India P. Ltd, Mumbai vs. Addl/Jt/Dy/Asstt/CIT/ITO, NFAC, Delhi

ITA 1379/MUM/2021[2016-17]Status: DisposedITAT Mumbai25 Feb 2022AY 2016-17

Bench: Shri Pramod Kumar & Shri Kuldip Singhassessment Year: 2016-17

For Appellant: Shri Ajit Jain, A.R. &For Respondent: Ms. Vatsala Jha, D.R

Section 143(3)Section 144B

assessee contended that the assessee has recognized revenue from subscription service in its books of account as per the Percentage Completion Method (PCM) prescribed under Accounting Standard-9 (AS-9). Revenue recognition and subscriptions are provided over a period of 1 to 7 years, the amount received from customer ... period to which such subscription relates. It has been claimed that the said practice of recognizing revenue is in accordance with paragraph-? of percentage complete method of AS-9. The assessee has further placed reliance upon the Income Computation and Disclosure Standard (ICDS) issued by the CBDT pursuant to section

M/S. S P R Developers Private Limited, Bangalore vs. Deputy Commissioner of Income Tax, Central Circle- 1(3), Bangalore

In the result, all the appeals filed by the assessee are allowed

ITA 297/BANG/2020[2008-09]Status: DisposedITAT Bangalore09 Feb 2022AY 2008-09

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri L Bharath, C.AFor Respondent: Shri Pradeep Kumar, CIT (DR)

Section 153A

case 22. The 'Guidance Note on Accounting of Real Estate Transactions' requires satisfaction of all the below conditions for recognizing revenue under percentage completion method. a. All necessary approvals for commencement of the project have been obtained; b. The project has reached reasonable level of development; c. More than

M/S. S P R Developers Private Limited, Bangalore vs. Deputy Commissioner of Income Tax, Central Circle- 1(3), Bangalore

In the result, all the appeals filed by the assessee are allowed

ITA 296/BANG/2020[2007-08]Status: DisposedITAT Bangalore09 Feb 2022AY 2007-08

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri L Bharath, C.AFor Respondent: Shri Pradeep Kumar, CIT (DR)

Section 153A

M/S. S P R Developers Private Limited, Bangalore vs. Deputy Commissioner of Income Tax, Central Circle- 1(3), Bangalore

In the result, all the appeals filed by the assessee are allowed

ITA 295/BANG/2020[2006-07]Status: DisposedITAT Bangalore09 Feb 2022AY 2006-07

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri L Bharath, C.AFor Respondent: Shri Pradeep Kumar, CIT (DR)

Section 153A

Nortel Networks India Pvt. Ltd., New Delhi vs. Addl. CIT, Circle-18(2), New Delhi

Appeal are allowed

ITA 5462/DEL/2018[2008-09]Status: DisposedITAT Delhi09 Feb 2022AY 2008-09

Bench: This Tribunal & Earlier Vide Order Dated 25.02.2014, This Tribunal Had Restored The Matter For De Novo Adjudication To The File Of Assessing

Section 143(3)Section 254

amounting to Rs. 44,36,24,597/- has been recognized by the assessee during the year under consideration, which means that going by percentage completion method, the revenue credited for the year @ 97.76% (percentage of completion for the subject AY) taken by the assessee would come ... total AMC revenue of Rs. 44,36,24,597/- based on percentage completion method, 98.4605% of this revenue amounting to Rs. 43,67,94,996/- has already been taxed upto AY 2007-08. Hence, to set off double taxation, in compliance to the directions of the Hon’ble ITAT