Tribunal directs AO to assess on-money at 12% on project completion. Revenue appeal dismissed.

The Tribunal ruled in favor of the assessee, directing the AO to assess the on-money at 12% in the year of project completion, as per the project completion method of accounting. The appeal of the Revenue was dismissed as it became infructuous following the Tribunal's decision on the assessee's appeal. The assessee's appeal was allowed, and the Revenue's appeal was dismissed.

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Issues Involved:
1. Addition of Rs. 53,75,000 as income from on-money.
2. Year of assessability for the on-money.
3. Rate of estimation for the on-money.

Detailed Analysis:

1. Addition of Rs. 53,75,000 as Income from On-Money:
The assessee contested the addition of Rs. 53,75,000, which was 25% of the alleged on-money of Rs. 2,15,00,000. The correct amount of on-money was Rs. 1.50 crore, making 25% equal to Rs. 37.50 lakhs. The assessee argued that income from on-money should be taxed only in the year when the project is completed, as per the Revised Guidance Note of 2012 issued by ICAI. The CIT(A) had confirmed the addition based on the year of receipt, which the assessee claimed was unjustified.

2. Year of Assessability for the On-Money:
The assessee maintained that the income from on-money should be assessed in the year of project completion, following the project completion method of accounting. The AO had added Rs. 2,15,00,000 under section 68 of the Act, but the correct amount was Rs. 1,50,00,000. The CIT(A) dismissed the appeal regarding the non-taxability of the on-money in the year of completion, holding it should be taxed in the year of receipt. The assessee cited multiple case laws supporting the argument that income should be assessed in the year of project completion.

3. Rate of Estimation for the On-Money:
The CIT(A) had sustained the addition at 25% of the on-money received. The assessee argued for a 12% rate, as accepted by the Settlement Commission for the assessee's group entities. The Tribunal found the assessee's argument convincing and directed the AO to apply a 12% rate on Rs. 1,50,00,000, aligning with the Settlement Commission's decision. The Tribunal cited various decisions supporting the assessment of income based on the method of accounting followed by the assessee.

Conclusion:
The Tribunal ruled in favor of the assessee, directing the AO to assess the on-money at 12% in the year of project completion, as per the project completion method of accounting. The appeal of the Revenue was dismissed as it became infructuous following the Tribunal's decision on the assessee's appeal.

Final Orders:
- The appeal of the assessee is allowed.
- The appeal of the Revenue is dismissed.

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