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2009 (12) TMI 687 - AT - Income TaxAdditions on account of sale proceeds of the flats and extra work done respectively - value already declared by the assessee-firm as its income was more than the entire sale proceeds received by it from the two projects including extra work done – Held that:- Value of the flats remaining unsold should be determined by adopting cost or market price, whichever is lower and the same should be taken to the credit side of the project’s profit and loss account being closing stock - Since the percentage completion method was followed by the assessee in the earlier years, the gross profit already declared by the assessee in relation to the project in the earlier years is liable to be reduced from the total gross profit of the project, which would give a gross profit of the project for the year under consideration - expenses claimed by the assessee in the profit and loss account for the year under consideration are required to be deducted so as to work out the net profit of the project which is liable to be brought to tax in the hands of the-assessee in the year under consideration being the year of completion of project – matter remanded to AO Addition on account of amount claimed to be received by the assessee as advance treated as its contract receipt – Held that:- Only profit element of the value of work done could be brought to tax as its income and not the entire contract receipts - partner of the assessee-firm is also the managing director of DCCPL and the returns of income filed by the assessee as well as by DCCPL were signed and verified by Shri Santobarao Desai. It, therefore, cannot be said that wrong claim was made by DCCPL on the basis of which adverse inference cannot be drawn against the assessee - entire amount of contract receipts cannot be treated as its income and it is only the profit element thereof which could be brought to tax in its hands - aggregate profit of the contract work done by the assessee for DCCPL over the years should be taken into account to ascertain the reasonability or the profit. The profit arising out of execution of contract work in the earlier years as declared by the assessee was already accepted by the Department and addition on account of the said profit being lower, if any, could have been considered in those years alone and not in the year under consideration - expenses incurred in connection with the execution of contract are therefore required to be allowed as deduction Addition on account of undervaluation of work-in-progress of project – Held that:- Project was completed by the assessee during the year under consideration and the entire profit thereof was chargeable to tax in that year going by the project completion method followed by the assessee - determination of the profit of the entire project after taking into consideration the value of unsold flats representing closing stock of the assessee same would take care of undervaluation of such stock, if any, and no separate addition on account of such alleged undervaluation of closing stock is required to be made - Addition deleted
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