TaxTMI 
TaxTMI 
2022 (1) TMI 880
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....y the Asst. Commissioner of Income tax, Panvel Circle, Panvel (the learned Assessing Officer) was dismissed. Thus, aggrieved assessee has raised the solitary ground of appeal against confirmation of addition of Rs. 72,78,238/- estimating the profit rate of 7.5% on the total contract value of Rs. 9,70,43,181/-. 2. The facts of the case show that assessee is engaged in the business of contract execution. It filed its return of income on 30th September 2008 at a loss of Rs. 5,57,328/-. During the course of assessment proceedings, assessee remained non-compliant and therefore, Assessing Officer passed order under section 144 of the Act on 26th November, 2020 by making addition of Rs. 72,78,238/-. 3. Genesis of the addition shows that Assessin....
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....e submitted that the accounting methodology employed by the assessee is in line with Accounting Standards 9 (AS 9) issued by the Institute of Chartered Accountants of India. Accordingly, all contract costs are shown under the head work-in-progress until its completion. He also referred to the details of the construction work-in-progress as well as the advances received from the debtor. He further submitted that statement-showing reconciliation of gross receipts as per Form No. 26AS with the entries in the books of account. He submitted that on completion of the contract the income credited and offered to taxation by the assessee is Rs. 9,94,46,049/- whereas the credit in the Form No. 26AS is only 9,69,49,181/-. Therefore, the assessee has o....
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....ully considered the rival contentions. The facts are in a narrow compass that assessee is a company who is a contractor following completed contract method as its accounting policy for recognizing revenue. This method is permitted as per AS 9 issued by the Institute of Chartered Accountants of India. In case of the completed contract method, the revenue is recognized in the year in which the contract is completed. Therefore, it is important to see that during the course of the continuation of contract all the receipts received from the Principal are considered by assessee in its books of account or not. It may overflow in more than one accounting period. The Principal is required to be deducted tax at source under section 194C of the Act as....
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.... accounting periods iv. Annual accounts of both the accounting periods produced i.e. for FY 20007-08, FY 2008-09, which are audited, follows same accounting policy, and total turnover shown in both the period exceeds sum shown in form No. 26 AS for FY 2007-08. v. Each and every entry in Form No. 26AS has been shown to be recorded in the books of account and gross receipt during the continuation of the contract, vi. Bills and copy of account of principal shows that all sums received are accounted for in the account of principal Thus, we do not find any reason to uphold the orders of the lower authorities. Assessee has submitted details before the lower authorities i.e. Commissioner of Income Tax (Appeals), the statement showing reconc....