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2021 (8) TMI 122 - AT - Income TaxRevenue recognition - eligible method of accounting - appellant company followed Percentage Completion Method [PoCM], duly considering the provisions of Accounting Standards – 7 and 9 - difference between the profit shown by the assessee and profit computed as per PoCM - HELD THAT:- It is true that the assessee recognised revenue in A.Y 2014-15 when the project was completed only 18.26% and as per the accounting principles read with Guidance Notes under PoCM, revenue has to be recognised after completion of 25% of the project. In our considered opinion, the action of the assessee company on the revenue reported by it on its project Prateek Edifice has not caused any loss to the revenue and the entire exercise is revenue neutral as the assessee has already offered complete amount of tax in the subsequent F.Y., and such completion was before passing of impugned assessment order, which is dated 29.12.2017. These facts clearly show that the Assessing Officer was well aware of the revenue recognised by the assessee from the entire project and the taxes paid by it. As undisputed position that emerges is that the assessee is following consistent method of accounting to recognise revenue under the project. No doubt, the assessee has not included cost of land for computation of profit under PoCM, but before completion of project, the entire revenue has been offered for taxation which also included the impugned addition made by the Assessing Officer. We, therefore, do not find any merit in the impugned addition. Considering the facts of the case in totality, we direct the Assessing Officer to delete the addition. This ground is accordingly allowed. Addition being interest on loan - HELD THAT:- The assessee was asked to furnish clarification in respect of claim of interest. It is also not in dispute that vide letter dated 27.11.2017, the assessee has simply stated that it has borrowed loan from Prateek Infratech Pvt Ltd and M/s Prateek Buildtech India Pvt Ltd for general purposes. No supporting evidences were furnished by the assessee to substantiate its claim. Even before us, no details/documentary evidences regarding claim of interest expenses as revenue expenditure has been furnished. Therefore, the action of the AO is found to be correct - interest on loan amount shall remain added in total project cost. However, in all fairness, we direct the AO to consider this enhanced project cost in total estimated cost of project. With these observations, this ground is dismissed.
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