Search Results For: percentage completion method


ITO vs. M/s Shanti Constructions (ITAT Agra)

COURT:
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DATE: May 16, 2019 (Date of pronouncement)
DATE: June 1, 2019 (Date of publication)
AY: 2012-13
FILE: Click here to view full post with file download link
CITATION:
S. 145(2) "Project Completion Method" vs. "Percentage Completion Method": Dept's argument that assessee should have declared profit on percentage completion method because according to AS-7, revised in 2002 with effect from 01.04.2003, the 'Completed Contract method' has been scrapped & ICAI guidelines prefer the percentage completion method is not acceptable (Realest Builders 307 ITR 202 (SC) distinguished, All judgements referred)

As regards to the adoption of project completion method of accounting by the assessee, it is seen that the assessee’s business came into existence from 11.03.2003 and since then it has been consistently following project completion method of accounting. The Ld. AR has contended that the assessee has never deviated from such method of accounting since the inception of the business and that the revenue had also accepted project completion method and profit shown by the assessee during the assessment proceedings for AY 2014-15 in assessee’s own case which also finds mention in para 6.2.1 of the order passed by Ld. CIT(A). It is well settled that the project completion method is one of the recognized method of accounting and as the assessee has consistently been followed such recognized method of accounting thus in the absence of any prohibition or restriction under the act for doing so, it can’t be held that the decision of the CIT(A) was erroneous or illegal in any manner. The judgement in the case of “CIT vs. Realest Builders & Services Ltd.”, (Supra) relied Id. DR on method of accounting is rather in favor of the assessee and against the revenue

Ashoka Hi-Tech Builders Pvt.Ltd vs. DCIT (ITAT Indore)

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DATE: August 3, 2018 (Date of pronouncement)
DATE: August 7, 2018 (Date of publication)
AY: 2012-13, 2013-14
FILE: Click here to view full post with file download link
CITATION:
S. 43CB/ 145: Entire law on taxation of real estate construction contracts explained in the context of 'completed contract' vs. 'percentage completion' with reference to Accounting Standards AS-7 and AS-9 and all important judgements on the point

In our considered view, provisions of AS7 cannot override the provisions of section 145 in so far as the computation of business income under the Income Tax Act for the purpose of determining income is concerned. In the instant case, we find that the learned Assessing Officer has brought no material on record to show that the system of accounting adopted by the assessee for the year under appeal was not consistently followed y the assessee or the system adopted was a defective system. In our considered view, even a project completion method is also a recognized system of accounting. Simply the Institute of Chartered Accountants of India has recommended the percentage completion method does not mean that project accounting or the same is a defective system of accounting

Vastukar Township Pvt. Ltd vs. DCIT (ITAT Jaipur)

COURT:
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COUNSEL:
DATE: December 22, 2017 (Date of pronouncement)
DATE: January 29, 2018 (Date of publication)
AY: 2012-13
FILE: Click here to view full post with file download link
CITATION:
S. 145(2): Law on how revenue should be recognized by a developer of property under the “percentage completion method” in the light of Accounting Standards AS-1, AS-7 & AS-9, the Guidance Note on Accounting for Real Estate Transactions issued by the ICAI and several judgements on the issue explained

As per AS 7, the recognition of revenue and expenses by reference to the stage of completion of a contract is often referred to as the percentage completion method. Under this method, contract revenue is matched with the contract costs incurred in reaching the stage of completion, resulting in the reporting of revenue, expenses and profit which can be attributed to the proportion of work completed

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