2002 (5) TMI 512 - AT - Income Tax

Summary

Issues:
Assessment of income based on project completion method, acceptance of method of accounting by CIT(A), setting aside of matter to Assessing Officer for determining percentage of project completed, appeal by Revenue for assessment year 1992-93, appeal by assessee for assessment years 1993-94 to 1995-96, direction by CIT(A) without ambiguity.

Analysis:

1. Assessment Method Dispute:
The case involves a builder following the project completion method, disputed by the Assessing Officer who assessed income based on percentage of work completed. The CIT(A) accepted the method for some years but set aside the matter for determining the exact percentage of project completion in other years. The Tribunal referred to previous cases and directed the Assessing Officer to consider income in the year when 75% of the total constructed area was sold, emphasizing no profit or loss should be determined until this threshold is met.

2. Appeals and Decisions:
The appeals encompass assessment years 1992-93 to 1995-96, with common issues addressed together. The Revenue appealed for 1992-93, challenging the CIT(A)'s decision. The assessee appealed for 1993-94 to 1995-96, contesting the setting aside of matters for reassessment. The Tribunal upheld the CIT(A)'s decision for 1992-93 due to incomplete construction, and for subsequent years, it sustained the orders subject to the direction on determining income based on sales of 75% of the constructed area.

3. Judicial Precedents and Directions:
The Tribunal referred to past cases where matters were set aside for reassessment based on the percentage of project completion. Notably, the Tribunal cited the Champion Construction Co. case where the income determination was linked to the sale of 75% of the constructed area. The Tribunal emphasized the need for clarity in directions, supporting the CIT(A)'s findings for incomplete construction in certain years and providing specific guidelines for determining income based on sales thresholds.

4. Final Decision:
Ultimately, the Tribunal dismissed all appeals by both the assessee and Revenue, subject to the directions provided regarding the determination of income based on the sale of 75% of the constructed area. The Tribunal's decision aimed to provide a clear framework for assessing income in cases involving project completion methods, emphasizing the importance of specific guidelines and thresholds for determining profits or losses.