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2018 (2) TMI 97 - AT - Income TaxRecognition of revenue - revenues where the assessee has entered into registered sale deeds with the plot buyers and where certain advances have been received from the plot buyers, where the assessee is following percentage completion method of accounting - profits determined by applying “percentage completion method” as per Accounting Standards issued by ICAI - Held that:- In respect of revenues from executed sale deeds, the revenues have been recognized to the extent of work completed and the said principle will apply in respect of advances so received from the buyers. The assessee has therefore to maintain the consistency in its method of accounting where it is following percentage completion of method and within the said method, it cannot be allowed to make variation on the basis of plot buyers agreement and executed sale deeds so long as the basic parameters for recognition of revenues, as we have discussed above, have been fulfilled. In respect of total advances actually received from the customers as on 31.03.2012 amounting to ₹ 4,44,28,514 arising out and in respect of which plot buyers agreement has been executed, revenues to the extent of percentage of work completed (45.73%) which comes to ₹ 2,03,17,159, following the percentage completion method has been rightly brought to tax by the Assessing officer and the order of the ld CIT(A) is set aside to this extent. Thus following the percentage completion method, revenues, as per executed sale deeds amounting to ₹ 2,11,38,286 and in respect of advances received from the customers amounting to ₹ 2,03,17,159 arising out and in respect of which plot buyers agreement has been executed, shall be recognized for the year under consideration. There is no dispute regarding the cost incurred and expected to be incurred in future and which has been determined as a percentage of sale @ 44.27% at ₹ 1,83,52,325 and after setting off the said cost, the profit chargeable to tax shall be ₹ 2,31,03,120 as against ₹ 3,43,13,700 determined by the AO.
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