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“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
44
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
44
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
42
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
39
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
35
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
28
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

M/S Rahul Raj Estates Pvt. Ltd, Mumbai vs. PCIT, Central - 4, Mumbai

In the result, appeals filed by the assessee are allowed

ITA 3523/MUM/2019[2014-15]Status: DisposedITAT Mumbai27 Apr 2022AY 2014-15

Bench: Shri S. Rifaur Rahman, Hon'Ble & Shri Amarjit Singh, Hon'Ble

For Appellant: Shri Reepal TralshawalaFor Respondent: Shri T. Shankar
Section 115JSection 132Section 139Section 139(1)Section 143(3)Section 153CSection 263Section 263(1)

Appellant herein and bifurcated in 3 Asst. Years 2012-13, 2013-14 and 2014-15 on the contention that the Appellant herein follows project completion method of accounting and the project was completed and occupancy certificate received in July 2011 and thereafter agreements for sales were executed and profits offered ... regular books of account. Based upon the same and following the method of accounting regularly employed i.e. project completion method of accounting, the total amount of Rs.28 crs. was bifurcated and offered in the assessment years as per following tabulation- Assessment Sales offered as per %of total Undisclosed year audited

M/S Rahul Raj Estates Pvt. Ltd, Mumbai vs. PCIT, Central - 4, Mumbai

In the result, appeals filed by the assessee are allowed

ITA 3522/MUM/2019[2012-13]Status: DisposedITAT Mumbai27 Apr 2022AY 2012-13

Bench: Shri S. Rifaur Rahman, Hon'Ble & Shri Amarjit Singh, Hon'Ble

For Appellant: Shri Reepal TralshawalaFor Respondent: Shri T. Shankar
Section 115JSection 132Section 139Section 139(1)Section 143(3)Section 153CSection 263Section 263(1)

Appellant herein and bifurcated in 3 Asst. Years 2012-13, 2013-14 and 2014-15 on the contention that the Appellant herein follows project completion method of accounting and the project was completed and occupancy certificate received in July 2011 and thereafter agreements for sales were executed and profits offered ... regular books of account. Based upon the same and following the method of accounting regularly employed i.e. project completion method of accounting, the total amount of Rs.28 crs. was bifurcated and offered in the assessment years as per following tabulation- Assessment Sales offered as per %of total Undisclosed year audited

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)

purposes of the assessee. 6.9 The case of Wall Street constructions Ltd. (2006) 102 TTJ 505 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

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)

purposes of the assessee. 6.9 The case of Wall Street constructions Ltd. (2006) 102 TTJ 505 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

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)

purposes of the assessee. 6.9 The case of Wall Street constructions Ltd. (2006) 102 TTJ 505 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

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)

present case. The CIT(A) also held that the fact that in case of Wall Street Construction Ltd. (supra) the assessee was following Project Completion Method whereas the assessee follows percentage of completion method is of no consequence. Thus, following the decision of Special Bench of Tribunal cited supra ... purposes of the assessee. 5.8. The case of Wall Street constructions Ltd. (2006) 102 TTJ 505 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

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

engaged in the construction activity of the said project and is in the initial phase of development. 3.2. Since the assessee follows project completion method, all the revenues and expenses directly related with its project are transferred to the project work in progress during the year under consideration ... were included in the closing work in progress in the balance sheet. Only, in view of the fact that assessee is following the project completion method for recognition of revenue, there is no income from construction activity disclosed by the assessee in the profit and loss account. This does

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)

progress. The contentions of the assessee that the assessee is following Mercantile System of Accounting and the revenue recognition is as per the project completion method Accounting Standard of ICAI.Whereas, the A.O dealt on the provisions of Act, judicial decisions and was not satisfied with the explanations and disallowed ... 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

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)

Before the Ld. CIT(A), the assessee has also filed a table computing loss of ₹6,36,89,063/- on the project, following project completion method, which is reproduced as under: Patel & Associates 7 Particulars Amount (₹) Sales 18,45,95,070/- Add: Closing Stock 48,40,63,345/- Less ... contended that a fresh claim of computing correct profit (loss) from the project should have been admitted by the Ld. CIT(A) following project completion method, rather than profit from project recognized by the assessee in the return of income following consistent method of computing business income

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

since no part of the project obligation was fulfilled or completed. d. Without prejudice to the above, Project Completion Method ('PCM') cannot be adopted. 30. There was litigation with regard to lands to be developed (both for the lands to be ultimately sold to VBEHCS and SBREWA) had caused delay

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

since no part of the project obligation was fulfilled or completed. d. Without prejudice to the above, Project Completion Method ('PCM') cannot be adopted. 30. There was litigation with regard to lands to be developed (both for the lands to be ultimately sold to VBEHCS and SBREWA) had caused delay

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

since no part of the project obligation was fulfilled or completed. d. Without prejudice to the above, Project Completion Method ('PCM') cannot be adopted. 30. There was litigation with regard to lands to be developed (both for the lands to be ultimately sold to VBEHCS and SBREWA) had caused delay

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

project and unless the project is complete the final figure of revenue (excess or short) cannot be arrived at in view of the project completion method. Therefore, the claim of the appellant that the excess revenue has already been recognized in its case and it should be reduced from ... such situation, the ground taken by appellant is liable to be rejected and the income assessed by AO is upheld in accordance to project completion method. The ground taken by appellant fails.” 2.4 The assessee has again approached the Tribunal and has raised the following grounds of appeal

M/S Fortune Rpj Developers, Thane vs. ACIT Circle-1, Thane

In the result, the appeal of the assessee is dismissed

ITA 478/MUM/2020[2016-17]Status: DisposedITAT Mumbai31 Jan 2022AY 2016-17

Bench: Shri Om Prakash Kant () & Shri Pavan Kumar Gadale ()

Section 143(3)

TOTAL Rs.80,50,429/- Rs.70,00,371/- 6. Before the Ld. CIT(A), the assessee did not explain whether it was following project completion method or percentage completion method for offering profit from the said projects for the purpose of the Income-tax. The Ld. CIT(A) after analysing ... Assessment order." From the above submission it is evident that the AR has abstained from clearly submitting whether the appellant is following the Project Completion method or Percentage Completion method. Hence I am constrained to analyse the material placed on record. It is seen that the appellant had purchased

M/S Monarch, Bangalore vs. Income Tax Officer Ward-1(2)(1), Bangalore

In the result, the appeals filed by the assessee are allowed for statistical purposes

ITA 172/BANG/2018[2014-15]Status: HeardITAT Bangalore04 Jan 2022AY 2014-15

Bench: Shri George George K, Jm & Shri B.R.Baskaran, Am

For Appellant: Sri.Sandeep, CAFor Respondent: Sri.Nischal B, Addl.CIT-DR
Section 143(3)

follows: The assessee is a partnership firm, engaged in the business of development of immovable properties. According to the assessee, it was following project completion method for revenue recognition. During the assessment years 2012-2013, 2013-2014 and 2014-2015, the assessee did not hand over 2 ITA Nos.170-172/Bang/2018 M/s.Monarch ... assessee has filed these appeals before the Tribunal. The Learned AR submitted that the assessee determined the income from the project under “Project Completion method” in AY 2017-18. However, in the 3 ITA Nos.170-172/Bang/2018 M/s.Monarch return of income, the assessee deducted the income assessed

M/S Monarch, Bangalore vs. Income Tax Officer Ward-1(2)(1), Bangalore

In the result, the appeals filed by the assessee are allowed for statistical purposes

ITA 171/BANG/2018[2013-14]Status: HeardITAT Bangalore04 Jan 2022AY 2013-14

Bench: Shri George George K, Jm & Shri B.R.Baskaran, Am

For Appellant: Sri.Sandeep, CAFor Respondent: Sri.Nischal B, Addl.CIT-DR
Section 143(3)

follows: The assessee is a partnership firm, engaged in the business of development of immovable properties. According to the assessee, it was following project completion method for revenue recognition. During the assessment years 2012-2013, 2013-2014 and 2014-2015, the assessee did not hand over 2 ITA Nos.170-172/Bang/2018 M/s.Monarch ... assessee has filed these appeals before the Tribunal. The Learned AR submitted that the assessee determined the income from the project under “Project Completion method” in AY 2017-18. However, in the 3 ITA Nos.170-172/Bang/2018 M/s.Monarch return of income, the assessee deducted the income assessed

M/S Monarch, Bangalore vs. Income Tax Officer Ward-1(2)(1), Bangalore

In the result, the appeals filed by the assessee are allowed for statistical purposes

ITA 170/BANG/2018[2012-13]Status: HeardITAT Bangalore04 Jan 2022AY 2012-13

Bench: Shri George George K, Jm & Shri B.R.Baskaran, Am

For Appellant: Sri.Sandeep, CAFor Respondent: Sri.Nischal B, Addl.CIT-DR
Section 143(3)

follows: The assessee is a partnership firm, engaged in the business of development of immovable properties. According to the assessee, it was following project completion method for revenue recognition. During the assessment years 2012-2013, 2013-2014 and 2014-2015, the assessee did not hand over 2 ITA Nos.170-172/Bang/2018 M/s.Monarch ... assessee has filed these appeals before the Tribunal. The Learned AR submitted that the assessee determined the income from the project under “Project Completion method” in AY 2017-18. However, in the 3 ITA Nos.170-172/Bang/2018 M/s.Monarch return of income, the assessee deducted the income assessed

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

In the result, the appeal of the Revenue is dismissed

ITA 5676/DEL/2017[2014-15]Status: DisposedITAT Delhi29 Oct 2021AY 2014-15

Bench: Shri G.S.Pannu & Shri Kul Bharatassessment Year : 2014-15 Vs Anthem Infrastructure Pvt.Ltd., Acit, Circle-2(2), 501, Sachdeva Tower, New Delhi. Karkardooma, New Delhi-110092. Pan-Aaica7355D Appellant Respondent Appellant By Sh. Satpal Gulati, Cit Dr Respondent By Sh. Amit Goel, Ca & Sh.Nipun Mittal, Ca Date Of Hearing 14.10.2021 Date Of Pronouncement 29.10.2021

Section 143(3)Section 14A

Noida Extension. The appellant company started this project in F.Y. 2010-11. For recognizing revenue from this project, the appellant company is following project completion method as per AS-9. However, in the assessment proceedings, Assessing Officer has held that accounting policy followed by the appellant is not acceptable ... computed as per the provision of Income Tax Act / Rules and not according to the Guidance Note issued by ICAI. The projection completion method is a recognized method of accounting for computing the taxable income as per provisions of Income Tax Act. The provisions of section 145 of Income

Friends Land Developers, Ghaziabad vs. DCIT, Circle- 1, Ghaziabad

In the result, the appeal of the assessee is allowed

ITA 2778/DEL/2018[2014-15]Status: DisposedITAT Delhi07 Oct 2021AY 2014-15

Bench: Shri Anil Chaturvedi & Shri Sanjay Gargassessment Year : 2014-15

Section 133ASection 143(3)Section 144ASection 153ASection 264

whether the assessee, who is a real estate developer, was justified in 2 | P a g e computing his income by adopting project completion method as against the action of the lower authorities in estimating the income of the assessee on the basis of percentage completion method of accounting ... income recognized on the basis of the aforesaid method was accepted through out in the past. The assessee has been regularly following Project Completion Method of accounting and the revenue was recognized at the time of registration of the residential unit in the name of the customer: Till the time

ITO, New Delhi vs. M/S. Malibu Estate Pvt. Ltd., New Delhi

In the result, appeals of the Revenue are dismissed and the appeals of the assessee are allowed

ITA 3299/DEL/2013[2008-09]Status: DisposedITAT Delhi12 Aug 2021AY 2008-09

Bench: Shri O.P. Kant & Shri K. Narasimha Charyassessment Year:2008-09

For Appellant: Sh. Anil Kumar Chopra, AdvFor Respondent: Ms. Paramita M. Biswas, CIT/DR

same by order dated 13.12.2013 for the assessment year 2007-08 (ITA No. 2778/Del/2011), upheld the contention of the assessee that the project completion method followed by the assessee will not result in deferment of tax and there is no justification for the Ld. Assessing Officer to adopt POC method