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2020 (1) TMI 1132 - AT - Income TaxRejection of books of accounts - recognition of income - Development of housing project - assessee has not followed percentage completion method whereas as per the Guidance Note issued by ICAI the assessee is required to follow percentage completion method of accounting - HELD THAT:- It is noted from the available records that the assessee is regularly following an accounting policy whereby sales is recognized by following project completion method . According to this method, the sales are recognized when the sale deed is executed and possession of the flat is given to the buyer. There is no provision under the Act which makes percentage completion method of accounting in real estate project mandatory as observed by the AO. The Guidance Note issued by the ICAI is recommendatory. The same do not override the choice of method of accounting to be followed by the assessee provided under the Act. The complete detail of subsequent recognition is also placed by the assessee at page PB 27 of the paper book. Therefore when such amount is already recognised as revenue or reflected back in the subsequent years, assessing the same in the year under consideration has resulted into double taxation. The AO has not considered the expenditure incurred by the assessee against such receipt. In the present case in the project Grandeur, total value of stock as on 31- 03-2015 was ₹ 6,10,28,779/-. Therefore, deduction on account of cost against the receipt of ₹ 3,96,99,161/- ought to have been allowed instead of assessing the receipt as income. Hence, taking into consideration the facts and circumstances, we find no reason to interfere with the order of the ld. CIT(A). Thus Ground No. 1 of the Revenue is dismissed. Disallowance of commission expenses as bogus - persons could not furnish the details of the flats or project of flat number or person to whom they has allegedly sold the flats - CIT-A granted part relief - HELD THAT:- The onus upon the assessee to prove before the Revenue authorities and to furnish the evidence with regard to rendering of services to whom alleged commission was paid. Since the assessee could not prove the actual rendering of services, therefore, the assessee is not entitled to claim commission expenses. Thus while taking into consideration the entire facts and circumstances of the case, we allow the commission expenses to Shri Akhil Boolia only and with regard to commission expenses paid to other persons are concerned, we set aside the order of the ld. CIT(A) and uphold the order of the AO. Therefore, the Ground No. 2 of the Revenue is partly allowed.
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