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2015 (2) TMI 111 - AT - Income TaxEstimation of profit - revenue recognition - rejection of books of accounts - as per AO assessee was following project completion method and no profit is declared on the basis of percentage completion method - in respect of project Iraisaa and Costarica, the AO made an addition by taking 10% profit on work-in-progress in respect of these projects also confirmed by CIT(A) - Held that:- After verifying all the accounts for the years under consideration, we found that assessee was following percentage completion method for Iraisaa and Costarica projects and has offered for taxation he amount of ₹ 3,60,509/- and ₹ 474,060/- respectively for the said projects, the work of which is under progress. In view of these facts allegation of AO to the effect that the assessee did not declare any profit with regard to work-in-progress and the completed project, is also having no basis. In view of above discussion, we set aside the order of lower authorities for making addition by estimating 10% profit on work-in-progress for both the years. The AO is directed to reframe assessment keeping in view our above observation. Needless to say the assessee should be given full opportunity before finalizing the assessment. - Decided in favour of assessee for statistical purposes. Disallowance of business expenditure - Held that:- It is clear from the record that payments so made was towards compensation to the customers, who have booked their flats and the same was paid for the reason of commercial expediency. It is pertinent to mention that assessee has not claimed expenditure in respect of refund of sale consideration of ₹ 1,43,97,500/-, however, only amount of compensation termed as buy-back expenses aggregating to ₹ 65,68,500/- which has been claimed as deduction which amount as has been informed in the course of regular business. Thus, there is no reason to disallow such expenses as revenue expenses. Accordingly, we direct the AO to allow expenses of ₹ 65,68,500/- as revenue expenses. - Decided in fvaour of assessee.
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