“project completion method”

ICDS & AccountingICDS IIIICDS III326 judgments

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

Leading authorities on project 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. Shivalik Buildwell P Ltd.

40 Taxmann.com 219 · 2013 · High Court

citing judgments

Real estate developers' profits arise only upon the transfer of title, and advances received from customers cannot be treated as trading receipts in the year of receipt.

CIT v. Ashaland Corporation

133 ITR 55 · 1982 · High Court

citing judgments

Income from the sale of immovable property, including any 'on-money' component, is taxable only when the sale is complete, marked by the execution and registration of the sale deed and/or transfer of possession to the buyer.

CIT v. Happy Home Corporation

94 Taxmann.com 292 · 2018 · High Court

citing judgments

When a partner admits to undisclosed income during a survey, and that income is linked to future sale deed registrations, it can be considered as income received for the purpose of assessment under Section 145 of the Income-tax Act, 1961, even if it is subject to conditions.

Ltd. v. ITO

64 DTR 251 · 2011 · ITAT

citing judgments

The Assessing Officer accepted the assessee's claim of being in the construction business and its use of the project completion method, and the Revenue did not take remedial measures under sections 263 or 147, indicating acceptance of the assessment.

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.

Judgments citing project completion method

DCIT Cir 7(1), Mumbai vs. Peninsula Land Ltd, Mumbai

ITA 4600/MUM/2009[2006-07]Status: DisposedITAT Mumbai18 Aug 2022AY 2006-07

For Appellant: Shri Achal SharmaFor Respondent: Shri Vijay Mehta

Section 143(3)

Assessing Officer of re-computing the business profits of the project „Ashok Towers‟ by adopting his own method while rejecting the project completion method consistently adopted by the Assessee. We note that the CIT(A) had deleted the addition by following the order of CIT(A) in the case

L & T Seawoods Ltd., Mumbai vs. ITO 1(2)(2), Mumbai

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

ITA 17/MUM/2019[2014-15]Status: DisposedITAT Mumbai12 Aug 2022AY 2014-15

Bench: Shri G. S. Pannu & Shri Vikas Awasthyआअसं. 17/मुं/2019 (िन.व. 2014-15) L & T Seawoods Ltd. 2Nd Floor, L & T House, N.M. Marg, Ballard Estate, Mumbai-400001. Pan: Aabcl4524C ...... अपीलाथ" /Appellant बनाम Vs. Ito-1(2)(2), 5Th Floor, Aayakar Bhavan, M.K. Marg, Mumbai-400020 ..... "ितवादी/Respondent अपीलाथ" "ारा/ Appellant By : Sh. Nitesh Joshi, Advocate "ितवादी "ारा/Respondent By : Sh. Mehul Jain, Sr-Dr सुनवाई की ितिथ/ Date Of Hearing : 17/06/2022 घोषणा की ितिथ/ Date Of Pronouncement : 12/08/2022 आदेश/ Order This Appeal By The Assessee Is Directed Against The Order Of Commissioner Of Income Tax (Appeals)-2, Mumbai [Hereinafter Referred To As ‘The Cit(A)’] Dated 02.11.2018 For The Assessment Year (Ay) 2014-15. 2. The Assessee In Appeal Has Assailed The Findings Of Cit(A) In Confirming The Disallowance Made In Respect Of :

For Appellant: Sh. Nitesh Joshi, AdvocateFor Respondent: Sh. Mehul Jain, Sr-DR

Section 142(1)Section 143(3)Section 37

office spaces. In lieu of construction of Railway Station, the assessee was granted sailable rights over the constructed development. The assessee followed Project Completion Method to recognize the profits. During the period relevant to AY under appeal, the assessee incurred Market & Business Promotion Expenses for promoting its development project amounting

ACIT 30(3), Mumbai vs. Suratchandra B. Thakkar -HUF, Mumbai

In the result, all the three appeals of the In the result, all the three appeals of the Revenue are In the result, all the three appeals of the dismissed

ITA 4335/MUM/2018[2008-09]Status: DisposedITAT Mumbai12 Aug 2022AY 2008-09

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail () Assessment Year: 2006-07 & Assessment Year: 2007-08 & Assessment Year: 2008-09 Acit-30(3), Shri Suratchandra B. Thakkar C-13, 5Th Floor, R. No. 510, (Huf), Pratyaksha Kar Bhavan, Bkc, Vs. Tipco Compound, Rani Sati Bandra (East), Marg, Malad (E), Mumbai-400051. Mumbai-400097. Pan No. Aaaht 0788 G Appellant Respondent Revenue By : Mr. Hoshang B. Irani, Dr Assessee By : None Date Of Hearing : 28/07/2022 Date Of Pronouncement : 12/08/2022

For Appellant: NoneFor Respondent: Mr. Hoshang B. Irani, DR

plea that assessee was following advance received on the plea that assessee was following advance received on the plea that assessee was following Project Completion Method and ent and entire income was declared in assessment ire income was declared in assessment year ... employing the same method of accounting i.e. regularly employing the same method of accounting i.e. regularly employing the same method of accounting i.e. project completion method to determine complete picture of project completion method to determine complete picture of project completion method to determine complete picture of income

ACIT 30(3), Mumbai vs. Suratchandra B. Thakkar -HUF, Mumbai

In the result, all the three appeals of the In the result, all the three appeals of the Revenue are In the result, all the three appeals of the dismissed

ITA 4334/MUM/2018[2007-08]Status: DisposedITAT Mumbai12 Aug 2022AY 2007-08

For Appellant: NoneFor Respondent: Mr. Hoshang B. Irani, DR

ACIT 30(3), Mumbai vs. Suratchandra B. Thakkar -HUF, Mumbai

In the result, all the three appeals of the In the result, all the three appeals of the Revenue are In the result, all the three appeals of the dismissed

ITA 4333/MUM/2018[2006-07]Status: DisposedITAT Mumbai12 Aug 2022AY 2006-07

For Appellant: NoneFor Respondent: Mr. Hoshang B. Irani, DR

G.F. Reality Pvt. Ltd, Mumbai vs. Income Tax Officer 9(3)(4), Mumbai

In the result, the appeal filed by the assessee is

ITA 5460/MUM/2019[2015-16]Status: DisposedITAT Mumbai04 Aug 2022AY 2015-16

Bench: Shri Prashant Maharish & Shri Pavan Kumar Gadale

For Appellant: Shri. Vimal Punmiya.ARFor Respondent: Shri S. Anbuselvam.DR

Section 133(6)Section 143(1)Section 143(2)Section 143(3)Section 234BSection 271(1)Section 43C

Income Tax Act without considering peculated fact of the case particularly ITA No. 5460/Mum/2022 GF Reality Pvt Ltd., Mumbai. -2- when Assessee follow project completion method of accounting and in Asst. year 2015-16 is not even started. 2. The Ld. CIT(A) erred in confirming the charging of interest ... assessee has not sold any property during the year and the project commencement certificate was obtained in April 2017.The Assessee follows Project Completion method(PCM) as per the Accounting Standard (AS) 9 ITA No. 5460/Mum/2022 GF Reality Pvt Ltd., Mumbai. -7- issued by the Institute of Chartered Accountants of India

Skv Industrial Plant & Waste Treatment Pvt. Ltd., Mumbai vs. ITO Ward -3(3)(3), Mumbai

ITA 7375/MUM/2018[2014-15]Status: DisposedITAT Mumbai02 Aug 2022AY 2014-15

For Appellant: Shri Prakash PanditFor Respondent: Shri Hoshang B. Irani

Section 143(2)Section 143(3)Section 234ASection 254Section 43B

relation to the project in the future. The Assessing Officer/CIT(A) have failed to appreciate that the Appellant has been consistently following project completion method and have made disallowances primarily on the ground that either expenses were not incurred during the relevant previous year or no tax was withheld from ... audit fee expenses (INR 50,000/-) is set aside with the direction for fresh adjudication after taking into account project completion method being followed by the Appellant and the decision of the Tribunal in the case of Apollo Tyres Ltd. vs. Deputy Commissioner of Income Tax, TDS Circle, Gurgaon

DCIT Circle- 2(1)(1), Mumbai vs. M/S Bombay Dyeing & Manufacturing Co. Ltd, Mumbai

ITA 928/MUM/2020[2009-10]Status: DisposedITAT Mumbai05 Jul 2022AY 2009-10

Bench: Shri Kuldip Singh & Shri Gagan Goyalassessment Year : 2009-10 & Assessment Year: 2010-11

For Appellant: Shri Yogesh Thar, A.RFor Respondent: Dr. Yogesh Kamar, D.R

Section 145Section 14ASection 92CSection 92F

statutory authorities for e.g. Service Tax department, Sales Tax authorities. Under this method "revenue" is recognized during the period of construction as against "project completion method" where under revenue "sale of flats" is recognized when the possession of the flats is handed over to the purchasers. Under the Percentage Completion

ACIT, Circle - 2(1)(1), Mumbai vs. The Bombay Dyeing & Mfg. Co. Ltd., Mumbai

ITA 3299/MUM/2019[2010-11]Status: DisposedITAT Mumbai05 Jul 2022AY 2010-11

Bench: Shri Kuldip Singh & Shri Gagan Goyalassessment Year : 2009-10 & Assessment Year: 2010-11

For Appellant: Shri Yogesh Thar, A.RFor Respondent: Dr. Yogesh Kamar, D.R

Section 145Section 14ASection 92CSection 92F

ACIT, Circle - 2(1)(1), Mumbai vs. The Bombay Dyeing & Mfg. Co. Ltd., Mumbai

ITA 2779/MUM/2019[2013-14]Status: DisposedITAT Mumbai05 Jul 2022AY 2013-14

Bench: Shri Kuldip Singh & Shri Gagan Goyalassessment Year : 2009-10 & Assessment Year: 2010-11

For Appellant: Shri Yogesh Thar, A.RFor Respondent: Dr. Yogesh Kamar, D.R

Section 145Section 14ASection 92CSection 92F

Tata Housing Development Company Ltd., Mumbai vs. DCIT- 8(3)(1), Mumbai

In the result, the appeal filed by the assessee ITA

ITA 3491/MUM/2019[2015-16]Status: DisposedITAT Mumbai28 Jun 2022AY 2015-16

Bench: Shri Pavan Kumar Gadale & Shri Amarjit Singhm/S Tata Housing Vs. Dcit – 8(3)(1) Development Company Room No. 615, Ltd.,E Block, Voltas Aayakar Bhavan, Compound, Tb Kadam Mk Marg, Marg, Chinchpokli, Mumbai – 400020. Mumbai – 400033. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. :Aaact0191Q Appellant .. Respondent Dcit – 8(3)(1) Vs. M/S. Tata Housing Room No. 615, Aayakar Development Company Bhavan, Ltd.,E Block, Voltas Mk Marg, Compound, Tb Kadam Mumbai – 400020. Marg, Chinchpokli, Mumbai – 400033. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. :Aaact0191Q Appellant .. Respondent

For Appellant: Shri.Madhur Agarwal.ARFor Respondent: Shri.Ajay Kumar. CIT DR

Section 115JSection 143(2)Section 143(3)Section 14ASection 36(1)Section 36(1)(iii)

dispute. Not its allowability per se i.e. the expenditure is allowable being of a “revenue nature” but in the case of project completion method” it has to be allowed only when the project is complete and revenue/income is recognized by the appellant - i.e. it has to be matched with ... decided is the fact of allowability of 'interest” as a 'period cost - which is not in doubt here- what is assailed is that 'project completion method ” its time of allow ability is only when the project is complete and revenue therefrom recognized. Hence, this ground of appeal is dismissed. Thus

M/S Ideb Buildcon Private Limited, Bangalore vs. Deputy Commissioner of Income Tax Circle-3(1)(1), Bangalore

In the result, the appeal by the assessee is allowed

ITA 1465/BANG/2018[2007-08]Status: DisposedITAT Bangalore28 Jun 2022AY 2007-08

Bench: Shri N.V. Vasudevan, Vice Preseident & Shri Padmavathy Sassessment Year : 2007-08

For Appellant: Shri Narendra Sharma, AdvocateFor Respondent: Smt. Priyadarshini Baseganni, Addl.CIT(DR)(ITAT)

Section 143(3)

appeal have to be considered for adjudication by the Tribunal:- 7.1 Whether learned AO is justified in making addition by adopting percentage of project completion method as against project completion method. 7.2. Whether learned Assessing officer can thrust any particular method of accounting on the assessee, without rejecting the books ... sustainable? There is no dispute that income from the project upto AY 2012-13 is Rs.17,66,54.389/-. The Assessee by following the Project Completion Method of Accounting recognized accrual of income in AY 2012-13. The Revenue claims that the Assessee ought to have followed POCM and recognized income

Rashmi Infrastructure Developers Ltd., Mumbai vs. DCIT-3(3)(1), Mumbai

In the result, both the appeals of the assessee are allowed for statistical purposes

ITA 3243/MUM/2018[2014-15]Status: DisposedITAT Mumbai22 Jun 2022AY 2014-15

Section 131Section 133ASection 139(5)Section 143(3)Section 245D(1)Section 245D(4)Section 80I

During the course of survey action u/s 133A of the Act, it was found that the assessee company was following project completion method for recognizing the income for the construction project. A statement on oath u/s 131 of the Act of the Director was recorded wherein he voluntarily disclosed

Rashmi Infrastructure Developers Ltd., Mumbai vs. DCIT -3(3)(1), Mumbai

In the result, both the appeals of the assessee are allowed for statistical purposes

ITA 3128/MUM/2018[2013-14]Status: DisposedITAT Mumbai22 Jun 2022AY 2013-14

Section 131Section 133ASection 139(5)Section 143(3)Section 245D(1)Section 245D(4)Section 80I

Shree Ahuja Properties & Developers, Mumbai vs. DCIT, CC -6 (2), Mumbai

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

ITA 7215/MUM/2019[2009-10]Status: DisposedITAT Mumbai15 Jun 2022AY 2009-10

Bench: Shri Pavan Kumar Gadale & Shri Gagan Goyalm/S. Shree Ahuja Vs. Dcit – Cc – 6(2) Properties & Developers Room No. 1903, 19Th A/201, Rajpipla, Opp Floor, Air India Bldg, Standard Chartered Nariman Point, Bank, Santacruz(W), Mumbai – 400021. Mumbai – 400054. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Abefs2387M Appellant .. Respondent Appellant By : None Respondent By : Ms.Kavita Kaushik.Dr Date Of Hearing 07.06.2022 Date Of Pronouncement 13.06.2022 आदेश / O R D E R Per Pavan Kumar Gadale Jm: The Assessee Has Filed The Appeal Against The Order Of The Commissioner Of Income Tax (Appeals) 54 Mumbai Passed U/S 143(3) R.W.S 147 & 250 Of The Act. The Assessee Has Raised The Following Grounds Of Appeal:

For Appellant: NoneFor Respondent: Ms.Kavita Kaushik.DR

Section 143(3)Section 147

amount of on money ought to be taxed only in the year in which project is completed since the appellant herein followed project completion method of accounting; b) the project of the appellant was completed in AY 2012-13 and entire profits earned from the project was offered in that ... that the amount has to be taxable only in the year in which the project is completed as the assessee is fallowing the project completion method. Further the assessee has completed the project in the A.Y 2012-13 and the entire profits were offered for tax in that year hence

M/S. Bagadia Properties Private Limited, Bangalore vs. Income Tax Officer, Ward - 1(1)(3), Bangalore

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

ITA 1248/BANG/2019[2014-15]Status: DisposedITAT Bangalore31 May 2022AY 2014-15

Bench: Shri N. V. Vasudevan & Shri B. R. Baskaranassessment Year:2014-15 M/S. Bagadia Properties Private Limited, 1097 (Old) 58 (New), 18Th B Main Road, Ito, 5H Block, Rajajinagar, Ward – 1(1)(3), Vs. Bengaluru – 560 010. Bengaluru. Pan No : Aadcb 3328 E Appellant Respondent Appellant By : Shri. Shivarama Iyer, Ca Respondent By : Shri. Sankar Ganesh, Jcit(Dr)(Itat), Bengaluru. Date Of Hearing : 10.03.2022 Date Of Pronouncement : 31.05.2022 O R D E R Per B.R. Baskaran: The Assessee Has Filed This Appeal Challenging The Order Dated 01-03-2019 Passed By Ld Cit(A)-1, Bengaluru & It Relates To The Assessment Year 2014-15. Though The Assessee Has Raised Many Grounds, All Of Them Are Related To A Single Issue, Viz., Disallowance Of Interest Expenses Relating To Non-Convertible Debentures.

For Appellant: Shri. Shivarama Iyer, CAFor Respondent: Shri. Sankar Ganesh, JCIT(DR)(ITAT), Bengaluru

filed this appeal before us. 3. The facts that relate to the interest disallowance are discussed in brief. The assessee is following “Project completion method” for disclosing income from sale of flats. During the year under consideration, the assessee had completed three projects named Alta Vista, Soring Dale and Villa

DCIT Circle- 6(3)(2), Mumbai vs. M/S Kohinoor Planet Construction Pvt Ltd., Mumbai

In the result, appeal is dismissed

ITA 292/MUM/2020[2011-12]Status: DisposedITAT Mumbai19 May 2022AY 2011-12

For Appellant: Shri Jayesh DadiaFor Respondent: Smt. Neelam Shukla

Section 115JSection 143(3)Section 147Section 148

Authorised Representative for the Assessee pointed out that the Assessee has been consistently following the completed contract method [hereinafter referred to as ‗the Project Completion Method‘] for computing profits which has been accepted in all the assessments framed on the Assessee Under Section 143(3) of the Act from ... Supreme Court in the case of ITA. No. 292/Mum/2020 Assessment Year: 2011-12 Bilahari Investments (P) Ltd.: 299 ITR 1 (SC) wherein the Project Completion Method has been accepted and approved. 8. We have considered the rival contentions and perused the material on record. The Assessee is engaged

Deputy Commissioner of Income Tax, Circle- 1(1)(1), Bangalore vs. M/S. Agv Infrastructure Private Limited, Bangalore

In the result, the appeal filed by the revenue stands allowed for statistical purposes

ITA 198/BANG/2020[2016-17]Status: DisposedITAT Bangalore13 May 2022AY 2016-17

Bench: Shri. Chandra Poojari & Smt. Beena Pillaiassessment Year : 2016-17 M/S. Agv Infrastructure Pvt. Ltd., The Deputy # 2013, 3Rd Block, Commissioner Of Janapriya Heavens, Income Tax, Allalasandra, Circle – 1(1)(1), Gkvk Post, Bangalore. Vs. Bangalore – 560065. Pan: Aafca3699F Appellant Respondent Assessee By : Shri Sandeep Chalapathy, Ca : Smt. Priyadarshini Revenue By Basaganni, Addl. Cit (Dr) Date Of Hearing : 18-04-2022 Date Of Pronouncement : 13-05-2022 Order Per Beena Pillaipresent Appeal Is Filed By Revenue Against Order Dated 31.10.2019 Passed By Ld.Cit(A)-1, Bangalore On Following Grounds Of Appeal: “1. The Order Of The Learned Cit (Appeals), In So Far As It Is Prejudicial To The Interest Of Revenue, Is Opposed To Law & The Facts & Circumstances Of The Case. 2. The Ld. Cit (A) Erred In Adopting Gross Profit At 8.55% Based On The Trend Of The Gross Profit In The Preceding Three Years

For Appellant: Shri Sandeep Chalapathy, CA

Section 143(2)Section 69

sides in the light of records placed before us. 13. We note that the assessee is following mercantile system of accounting based on project completion method. Nothing is placed on record in order to determine to what extent the project progressed and completed qua the income declared. We note that

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)

assessee for business purposes of the assessee." However, the case of Wall Street construction is one where the assessee was following project completion method and therefore the ITAT held that the interest cost shall be debited 32 ITA NO. 2349 & 2148/MUM/2018 (A.Y. 2014-15) Macrotech Developers Limited to work

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)

contentions of the Ld. AR that the assessee is following the mercantile method of accounting and the revenue recognition is as per the project completion method of Accounting Standard of ICAI. But the A.O. was not satisfied with the explanations and disallowed the claim and added to the work ... assessee for business purposes of the assessee." However, the case of Wall Street construction is one where the assessee was following project completion method and therefore the ITAT held that the interest cost shall be debited to work in progress and allowed to be claimed as deduction only