Vyapti Enterprise Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad held that addition by adopting Percentage Completion Method cannot be sustained as department already accepted Project Completion Method in earlier years. Accordingly, appeal allowed and addition set aside.
Facts- The assessee is a partnership firm engaged in the business of real estate developments. AO held that percentage completion method is to be adopted in the assessee’s case since out of the total sale consideration of total units sold of Rs. 29,11,23,000/-, Rs. 22,71,16,656/- have been received as advance from the customers which works out to 78% and estimated cost of the project including the land cost of Rs. 59.35 crores, out of which total cost incurred including the land cost is Rs. 42.89 crores. The percentage of proportion of cost incurred on land and construction cost estimated cost is 72%.
CIT(A) confirmed the addition. Being aggrieved, the present appeal is filed.
Conclusion- Hon’ble Delhi High Court in the case of CIT vs. Manish Build Well Pvt. Ltd. has held that department had accepted assessee’s method of accounting, namely, project completion method in earlier years and, therefore, there was no justification for adopting percentage completion method for one year on selective basis.
Held that respectfully following the above judicial precedents we have no hesitation in deleting the additions made by the lower authorities and the grounds raised by the assesee are hereby allowed. In the result, the appeal filed by the assessee is allowed.
