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2023 (5) TMI 1328 - ITAT AHMEDABADEstimation of profit/ income - method of accounting for recognizing income - Percentage Completion Method (PCM) or Profit Margin Method (PMM) - assessee in principal accepted Percentage Completion Method (PCM) and returned profit whereas the AO estimated the profit at 9.31% under Profit Margin Method (PMM) - CIT(A) deleted the addition on the ground that the A.O. without rejection of books of accounts u/s. 145 of the Act, but estimated the income based on Profit Margin Method - HELD THAT:- Cordinate Bench of this Tribunal for earlier Assessment Year 2014-15[ 2022 (11) TMI 70 - ITAT AHMEDABAD] deleted the addition as DR was unable to point any infirmity in the findings of the CIT(A) that as per the guidance note issued by the ICAI for accounting of construction contracts the cost of land was to be excluded for calculating the Construction and Development cost of the project, nor was he able to controvert the factual findings of the CIT(A) that after excluding this cost of land the CDC completed by the assessee during the year was below the prescribed 25% of the Estimated cost of the project. Basis of the AO for recognizing Revenue from construction contracts of the assessee during the impugned year was the CDC, as per his calculation exceeding the prescribed limit of 25% of the estimated cost of project, which the Ld.CIT(A) correctly found to be factually incorrect. Disallowance u/s 36(1)(ii) - interest free advances given - CIT(A) deleted addition as CIT(A) has held that the assessee had surplus interest free funds surplus far excess of the interest free advances - HELD THAT:- It is settled principle of law by various judgments of the Jurisdictional High Court that when the interest free funds available with the assessee were far in excess of investments, it can be said that the investments are made out interest free funds, then the disallowance made u/s. 36(1)(iii) by the A.O. is not justifiable. Respectfully following the jurisdictional High court in the case of Amod Stamping Pvt. Ltd.[2014 (7) TMI 753 - GUJARAT HIGH COURT] the disallowance made by the A.O. is unjustifiable and the same is hereby deleted. Revenue appeal dismissed.
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