Re: Method of Accounting- Completion of project

An assessee has filed a declaration u/s 4 of the scheme to settle the dispute that was being contested in an appeal before the Tribunal for A.Y. 2017-18 in respect of the addition made to the total income on the ground that the assessee was required to recognise the profit of the project in progress by following the percentage completion method prescribed by the ICDS 3 & 4 . The declaration has been accepted by the authorities and the appeal stands withdrawn as per s. 4(2)(3)(5) and s.7. The assessee has now sought relief for the adjustment in the year of completion of project A.Y. 2020-21 on account of the prior recognition of the profit .

This is yet another case of an unintended hardship which is more pronounced in cases where the assessee has opted for settlement under the scheme. The scheme does not provide for any consequential relief in an assessment year different than the year of settlement even where such relief  is consequential and denial of such relief results in a sure double taxation. Had assessee not withdrawn the appeal, he could have appealed to the appellate authorities to give consequential relief  under their powers to avoid double taxation. Unless the Government clarifies its position in such cases , it would not be possible to advise an assessee to opt for the scheme especially where the time for filing the revised return of income is over.    

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