TMI Blog2019 (8) TMI 1843X X X X Extracts X X X X X X X X Extracts X X X X ..... aken note of the revenue recognition in the later year. We are unable to see any infirmity in the process of reasoning adopted by the CIT(A) while granting relief to the assesse. The assessee has also demonstrated that the revenue recognized from project has been actually assessed and accepted in 143(3) r.w.s. 263 of the Act proceedings. We thus see no merit in the appeal of the Revenue. - I.T.A. No. 2727/Ahd/2011 - - - Dated:- 5-8-2019 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER For the Appellant : Shri S. K. Dev, Sr. D.R. For the Respondent : Ms. Nupur Shah, A.R. ORDER PER PRADIP KUMAR KEDIA - AM: The captioned appeal has been filed at the instance of the Revenue against the order of the Commissioner of Income Tax (Appeals)-XIV, Ahmedabad ( CIT(A) in short), dated 12.08.2011 arising in the assessment order dated 21.12.2010 passed by the Assessing Officer (AO) under s. 143(3) of the Income Tax Act, 1961 (the Act) concerning AY 2008-09. 2. The solitary ground of appeal raised by the Revenue reads as under: 1). The Ld. Comissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on fact sin del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to comply with the accounting standard. The AO accordingly invoked the provisions of Section 145 of the Act and rejected the book results reported by the assessee. The AO referred to AS-7 which provides for percentage completion method and held that the assesse was required to recognize the Revenue by applying percentage completion method. The failure to do so by the assessee has given incorrect and distorted picture of the profits of the assessee company. The AO accordingly proceeded to estimate the profits of the assessee at 15% of the advances received from the customers amounting to Rs.5,52,70,410/- with the aid of Section 145(3) of the Act. The AO accordingly estimated net profits of the company at Rs.82,90,562/- being 15% of the advances received from customers and added the same to the total income of the assessee. 4. Aggrieved by the addition of Rs.82,90,562/- made by the AO by applying percentage completion method, the assessee preferred appeal before the CIT(A). The CIT(A) recorded the defense of the assessee in support of its action as per para 2.2 of its order. The CIT(A) accordingly found merit in the plea of the assessee for non taxability of estimated income. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te electricity connection for the units to be built under the said project, the appellant company has paid necessary charges to Torrent Power Ltd., in the month of April, 2008. Further, the appellant company has received BU Permission from Mahahagar Seva Sadan, Ahmedabad, as per their letter dated 22-01-2009 i.e. at the fag end of F.Y. 2008-09. From verification of the agreements in respect of different units of the project of the appellant company, it is seen that the agreement for sale in respect of Unit - B Unit - E were executed in the month of August, 2008 i.e. after 31-3-2008 and therefore, the observations and findings of the A.O hat substantial construction work has been completed in the project is factually incorrect and based on wrong appreciation of the facts. The agreement for sale in respect of Unit - D has been executed in the month of March, 2008 and as per the terms and conditions No. 2 of the said agreement for sale, the appellant company has not given the physical possession of the said unit to the prospective member. Further, the tenure of the agreement for sale has been fixed for 9 months. Accordingly, Unit - D was also not completed by 31-3-2008 and theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to agree with the argument of the appellant that in a real estate sale, all significant risks and rewards of ownership are normally considered to be transferred when legal title passes to the buyer at the time of registration with the relevant authority or in the name of buyer or when the seller enters into an agreement to sale and give the possession to the buyer. In the present case of the appellant company, it has not given the physical possession of any units to the prospective buyer by 313-2008. Accordingly, it cannot be said that significant risks and rewards have been passed to the prospective buyers of various units from the appellant company. The A.R of the appellant company has also referred the decision of Hon'ble Hydrabad ITAT Bench 'A' in the case of Shapoorji Pallonji Biotech Park (P) Ltd., 138 TTJ 62 wherein on the facts of the said case, the Hon'ble ITAT has held that the sale deed executed by the assessee did not give rise to any income assessable to tax during the assessment under consideration since such income was charged with the several obligations relating to the development work and common facilities in the bio-tech park which the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 by the assessee for which the assessment was carried out under s.143(3) of the Act determining the total income at Rs.8.13 Crores. The order so passed under s.143(3) of the Act was also subjected to revisionary proceedings under s.263 of the Act. The Pr.CIT however dropped the proceedings under s.263 of the Act in the absence of any infirmity in the action of the AO in passing the assessment order under s.143(3) of the Act. The learned AR submitted that the profit from the project has thus been ultimately assessed in the later AY 2009-10 and vetted by the Pr.CIT. In support of the revenue recognition in FY 2008-09 concerning AY 2009-10, the learned AR referred to the financial statement of the later year and pointed out that income has already been offered from the project and duly assessed. Under these circumstances, the action of the AO in applying the percentage completion method and preponing the year of chargeability is not justified more so where the AO has not given the credit for the additions so made in AY 2008-09 in the later years resulting in double jeopardy to the asessee. The learned AR submitted that the action of the AO has resulted in double taxation of the same ..... 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