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2018 (8) TMI 2076 - AT - Income TaxUnder-reporting of income from business - accounting for real estate transactions - assessee did not follow the percentage completion method while following mercantile system of accounting - HELD THAT:- Revenue could not point out any specific error in the order of the CIT(A). Ld D.R. could not controvert the findings of the CIT(A) that according to guidance note of accounting for real estate transactions (Revised 2012) issued by the ICAI, percentage completion method can be applied when the stage of completion of the project reaches a reasonable level of development. A reasonable level of development is not achieved if the expenditure incurred on construction and development cost is less than 25% of the construction cost. In the instant case, except in three project out of seventeen running projects, construction cost is less than 25%of the project cost. Out of the closing work in progress of ₹ 2,73,68,844/-, ₹ 2,40,98,078/- belongs to 14 projects which have incurred marginal expenditure and even less than 25% of the projected cost of the concerned project. So, percentage completion method are not applicable to these projects. Out of rest amount of ₹ 32,70,766/- in three projects, it is noticed from the WIP-sheet already submitted, some flats are pending to be completed. If at all percentage completion method is applied on ₹ 32,70,766/- for three projects, namely, Jagannath Estate, Jagannath Prava and Jagannath Park Enclave, element of estimated profit in the project works out to ₹ 6,16,257/-. We find that the CIT(A) after considering the entire facts of the case, has allowed relief of ₹ 8,93,83,742/- and sustained the disallowance of ₹ 6,16,258/-. Therefore, we find no infirmity in the order of the CIT(A), which is hereby confirmed and ground of appeal of the revenue is dismissed. Suppression of sale receipts on sale of land/plot, when the assessed has booked loss on it - HELD THAT:- The profit disclosed by the assessee on land sales comes to around 5.91% which appears to be reasonable. Further, the only reason given by the Assessing Officer in the assessment order to reject book results in respect of land sales was disclosure of loss from such transaction. Since the assessee has not disclosed any loss from land sale, the very reason given by the Assessing Officer to reject the book results does not exist. Hence, the profit disclosed by the assessee has to be accepted. We find that the CIT(A) after considering the entire facts of the case, has deleted the addition of ₹ 5,43,99,650/-. Therefore, we find no infirmity in the order of the CIT(A), which is hereby confirmed and ground of appeal of the revenue is dismissed.
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