TMI Blog2020 (10) TMI 1116X X X X Extracts X X X X X X X X Extracts X X X X ..... . He has not done so. There is no finding by the AO that the books of accounts maintained by the assessee are defective. Also we find that the AO has shifted the gross sale receipts recognized by the assessee in FYs 2011-12 2012-13 back to FY 2010-11 without shifting the expenditure incurred in connection with completion of the said properties. The assessee is following mercantile system of accounting. In the instant case, the addition made by shifting back the gross sale receipts recognized by the assessee in FYs 2011- 12 2012-13 to FY 2010-11, without shifting the expenditure incurred in connection with the completion of the said project violates the Accounting Standard I notified u/s 145(2) - we uphold the order of the Ld. CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the non-compliance by the assessee, we are proceeding to dispose off this appeal after examining the materials available on record and after hearing the Ld. Departmental Representative (DR). 2. The 1st ground of appeal Whether the Ld. CIT(A) was right in deleting the addition of ₹ 2,76,07,910/-being the value of consideration received by the assessee when it was clear that substantial amounts have been received by the assessee before signing of the agreements of sale during the year. The 2nd ground of appeal Whether the Ld. CIT(A) was right in accepting the date of possession letters as date of sales when it was clear from the facts that major amounts have been received upon signing of sale agreements. 3. Briefly st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the AO, the assessee filed an appeal before the Ld. CIT(A). During the course of hearing before the CIT(A), the assessee filed possession letters. The same being an additional evidence, the CIT(A) remanded it to the AO to verify it and send a report. After receipt of the remand report from the AO, the CIT(A) furnished a copy of it to the assessee to file its reply. The assessee filed a reply to the remand report on 07.02.2018. Having considered the facts of the case along with the remand report submitted by the AO and reply to it by the assessee, the Ld. CIT(A) held that (i) the gross sale receipts recognized by the assessee in FYs 2011-12 and 2012- 13 have been shifted by the AO to FY 2010-11 without shifting the expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of registration of agreements of sale made during the year ; the AO has not called for books of accounts and examined the same. Holding as above, the Ld. CIT(A) further observed that in construction business the gross receipts cannot be net income, the corresponding expenditure is to be reduced to get the gross profit and examination of the accounts reveals that the assessee has carried forward part of expenditure as work-in-progress to later years and spent further the complete those projects. Considering the above facts, the Ld. CIT(A) directed the AO to delete the addition of ₹ 2,76,07,910/-. 5. Before us, the Ld. DR relying on the order of the AO submits that as the assessee is following mercantile system of accounting and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said Accounting Standard I accrual refers to the assumption that revenue and costs are accrued, that is, recognized as they are earned or incurred (and not as money is received or paid) and recorded in the financial statements of the periods to which they relate. In the instant case, the addition made by the AO of ₹ 2,76,07,910/- by shifting back the gross sale receipts recognized by the assessee in FYs 2011- 12 2012-13 to FY 2010-11, without shifting the expenditure incurred in connection with the completion of the said project violates the Accounting Standard I notified u/s 145(2) of the Act. There is merit in the finding of the Ld. CIT(A) that :- To protect the interests of the buyer, the Government of Maharashtra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition of ₹ 29,23,305/- on the reason that in the advance columns in audited accounts, the amount of cancelation of gala does not figure. In appeal, the Ld. CIT(A) having examined the balance sheet of the assessee as at 31.03.2010 (earlier year), ledger accounts and TDS certificates, has arrived at a definite finding that the amount was repaid to the parties and tax was also deducted on the compensation/premium paid on cancellation. A perusal of the details filed by the assessee before the AO clearly indicates that there is no contravention of Rule 46A of the Income Tax Rules, 1962 by the Ld. CIT(A). In view of the above facts, we uphold the order of the Ld. CIT(A) and dismiss the 3rd ground of appeal. 9. In the result, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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