Case Law Details
Krishna E-Campus Pvt. Ltd. Vs DCIT (ITAT Bangalore)
ITAT Bangalore held that from clause (5) of Guidance Note issued by ICAI that the cost of construction and also saleable project area needs to be taken into account while recognizing revenue under the Percentage Completion Method.
Facts- The only issue contended by the assessee in this appeal is regarding recognition of revenue under the Percentage Completion Method [PCM] as per Accounting Standards [AS] issued by the Institute of Chartered Accountants of India [ICAI].
Conclusion- It is clear from clause (5) of Guidance Note issued by ICAI that the cost of construction and also saleable project area needs to be taken into account while recognizing revenue under the PCM.
In the present case, we notice that the condition mentioned in clause (c) of para 5.3 of the ICAI Guidance Note is not satisfied since the saleable area for the year under consideration as a percentage tot the total saleable area (104685 / 526645 sq.ft.) is much less than 25%. Further, from the cost perspective, we notice that the AO has considered the revalued value of cost of land for the purpose of arriving at the total project, instead of actual cost of the land.
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