TaxTMI 
TaxTMI 
2017 (3) TMI 883
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....tion of Rs. 44, 64,432/- being 42% of the amount transferred to deferred sales as the said receipt does not form part of the sale proceeds of the assessee and is in nature of reimbursement of construction cost already incurred during the year in redeveloping the old building and providing better amenities to the occupants/tenants and percentage completion method is not applicable to such type of receipts." 2. Briefly stated the facts are that the Assessee is in the business of redevelopment of old buildings and providing alternate accommodation to old tenants. The Assessee is also selling surplus permissible area to the people in the open market. Therefore, the main revenue of the Assessee is sale proceeds from free sales and differential ....
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....ccount. In response to the query raised by the Assessing Officer, the Assessee submitted its reply stating that Assessee follows percentage completion method for recognizing its revenue based on the work completion certified by the architects. It was also the submission of the Assessee that on agreement with occupants for cost of construction, the cost of construction received account under sales is credited and the occupant account is debited. It was however submitted that the consideration for the said work is received as work progresses or as agreed between the parties. Therefore, it was submitted that the nature of revenue accounted in cost of construction received account is not in the nature of reimbursement of the cost actually incur....
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....eleted the disallowance holding that this method of accounting i.e. the percentage completion method is followed by the Assessee consistently and similar claims were accepted by the Revenue in the previous assessment years and also in the subsequent assessment years and therefore it was held by the Ld. CIT (Appeals) that following the principle of consistency, the addition should be deleted. While holding so, the Ld. CIT (Appeals) observed as under : "2.5 I have carefully considered submissions of appellant and order of AO, case records I other material on record The appellant received Rs. 1,06,29,600/- from his old tenant occupants as per terms of agreements with them As per appellant, this amount is receivJ it for providing better amenit....
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....was transferred to Deferred Sales Suspense Account and accounted for in subsequent year based on stage of construction of project. The appellant was allowed to develop the project only because of consent granted by tenants or occupants as per development agreements entered into with them. The accounting of expenses and income in a year has to be considered on basis of project as a whole and not on basis 'of individual units. So the amount received from tenants/occupants for extra facilities or amenities represents revenue receipts and the same has to be accounted for on basis of percentage completion method. It may be mentioned that the appellant had been following this method of accounting consistently from initiation of the project i.....