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2021 (7) TMI 790 - AT - Income TaxAccrual of income - profit of the project - Year of assessment - HELD THAT:- We noticed that AO has proceeded to make addition of whole expected profit in this AY based on the promised payment schedule since assessee is a company and expected to follow the mercantile system of accounting. The same view was expressed by the CIT(A) in his order. In our considered view, from the records submitted before us, it clearly indicate that the project was not completed in this assessment year and promised payments against this project is part of the total agreed sales proceeds when the project is completed. We do not agree with the AO in bringing the whole profit of the project in the first year of execution of the MOU. Since, the claim of the assessee was not verified by the Ld. CIT(A) and it needs proper verification. We deem it fit to remit this issue back to the file of AO to redo the assessment de novo and direct him to verify the status of the project and can be taxed only to the extent of income which accrues to the assessee during this assessment year and direct AO to give proper opportunity of being heard to the assessee. Accordingly, the grounds raised by the assessee are allowed for statistical purpose.
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