Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2012 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (6) TMI 241 - AT - Income TaxApplicability of AS-7 to Developer - assessee engaged in business of construction of Civil Work and Road Construction as a Contractor, had entered into an agreement with GSRTC for the development of a shopping complex - Revenue on observation that assessee was authorized to collect advances from the customers, opined that the assessee should have declared profit of the said project on percentage of completion method - Held that:- Facts reveal that assessee was developing the commercial complex and, therefore, acting as a developer. Also, units of complex were to be transferred to lessees on approval of GSRTC, which was not received till the end of the accounting period. Further, since only part money was received, hence shown as an advance and sales were not materialized till the end of the year. Since the assessee can be termed as a contractor as also a developer, therefore the Revenue can be recognized in terms of AS-9 and not As-7. It was wrong on the part of the AO to assess the income irrespective of the year of completion of project when the amount received in advance has not reached certainty and that too the AO has merely estimated 10% as the recognition of Revenue of the construction contract, without assigning any specific basis of such an estimation. Thus, percentage completion method could not be applied. Deletion of addition upheld - Decided in favor of assessee.
|