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When assessee follows project completion method as per AS-7, it is entitled to set off receipts from sale of TDR against costs of work-in-progress and such amount taxable in the year of receipt
Case Law Details
- Case Name
- The Asst. Commissioner of Income Tax Vs. Skylark Build (ITAT Mumbai )
- Appeal Number
- Only available for paid members
- Date of Judgement/Order
- Only available for paid members
- Related Assessment Year
- 2006- 07
- Courts
- ITAT Mumbai
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ACIT Vs M/s Skylark Build (ITAT Mumbai)– Approach adopted by the Assessing Officer for assessing the income from TDR independently without deducting the expenses incurred is not justified. The assessee has been following project completion method which is an accepted method of accounting in construction business and also recommended as per accounting standard AS-7 of ICAI. Therefore, in such cases the income from the project has to be computed in the year of completion.
The TDRs received are directly linked to the execution of the project and therefore, before the compl...
