Percentage completion method followed by the developer is acceptable

DCIT Vs Gopuram Developers (ITAT Mumbai)

ITAT Mumbai held that appellant is recognizing the revenue on the basis of percentage completion method since inception of the firm as per the Accounting Standards. There is no change or modification in the accounting method hence addition unsustainable.

Facts- The return of income filed by the assessee was selected for scrutiny and statutory notices issued under the Act, were issued and complied with. The assessment under section 143(3) of the Act was completed on 22/02/2016 after making certain additions/disallowances including additions of Rs.5,93,35,636/- under the head “income from business and profession” and addition of Rs.49,13,037/- under the head “income from house property”. Aggrieved, the assessee preferred the appeal before the Ld. FAA. After considering submissions of the assessee, the Ld. FAA allowed the appeal of the assessee. Aggrieved with the finding of the Ld.FAA, the Revenue is in appeal before the Tribunal.

Conclusion- A.O. ignored the percentage completion method of revenue recognition consistently followed by the assessee in assessment years prior to the assessment year under consideration i.e. A.Y. 2009-10 and opined that project of the assessee was completed therefore entire profit should have been declared in the year under consideration. In our opinion, the Ld. FAA after considering the submission of the assessee and analyzing facts of the case, correctly upheld the percentage completion method of Revenue recognition following the judicial precedents, and therefore we do not find any error in the order of the Ld.FAA on the issue in dispute.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

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