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2022 (3) TMI 426 - AT - Income TaxRevenue estimation - recognition of revenue from BSNL project - application of percentage completion method - non-grant of deduction in respect to excess revenue taxed for its contract with Bharat Sanchar Nigam Limited (“BSNL”) - difference between completed contract method and percentage of completion method - how much revenue from BSNL project is liable to taxation during the relevant period, i.e., AY 2008- 09? - HELD THAT:- We are of the considered opinion that whilst applying the percentage completion method, the estimated revenue of a project would be dynamic year-on-year and would keep on changing over the contract period. Thus, the myopic view taken by the Ld. CIT(A) in comparing the total estimated revenue from BSNL contract vis a vis the assessment order of AY 2005-06 (i.e., sum of INR 1617,62,89,128/-) and as claimed by the Assessee (i.e., sum of INR 1606,85,17,755/-) in the relevant AY 2008-09, is baseless and devoid of merits. Our view is fortified by the judgment of the Hon’ble Supreme Court in CIT v. Bilahari Investment (P.) Ltd.[2008 (2) TMI 23 - SUPREME COURT] We are of the opinion that the percentage completion method tries to attain periodic recognition of income in order to reflect current performance and, accordingly, the revenue recognized during AY 2005-06 to AY 2007-08 would be relevant for determining the recognizable revenue from BSNL project till AY 2008-09 and not the final figure when the project is actually completed, which would otherwise lead to impossibility of performance. We also note that the Assessing Officer has not disputed that during the relevant period, estimate of revenue under BSNL project was INR 1606,85,17,755/- and 97.76% of the project was completed and, thus, the recognizable revenue of the Assessee from BSNL project was INR 1570,82,26,462/-. Therefore, it was not open for the Ld. CIT(A) to take a contrary view in the remand proceedings without any corroborative evidence on record. This is second round of litigation before this Tribunal and all the necessary factual details are available on record. After duly considering the material evidence on record and the order of the Ld. CIT(A) we observe that the CIT(A) has missed to take into consideration the revenue from BSNL project which was suo moto offered to tax by the Assessee and is also reflected in the audited financials. In this background, we approve the working submitted by the Ld. AR that the total revenue taxed by the Assessing Officer with respect to the BSNL project for AY 2005-06 to AY 2008-09 is INR 1610,60,22,380/- and the recognizable revenue from BSNL project for AY 2005-06 to AY 2008-09 as per percentage completion method is INR 1570,82,26,461/-. Accordingly, the Assessing Officer is directed to grant relief to the Assessee to the extent of sum excessively taxed, so as to avoid double taxation - Decided in favour of assessee.
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