2018 (12) TMI 1263

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....nd in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition made by the AO on account of running bill of Rs. 5,49,08,049/- raised but not accounted for by the assessee during the relevant previous year ignoring the fact that (i)Assessee was following accrual method of accounting and moreover, contractee had credited the said amount to the account of the assessee and had made TDS on it. (ii)Assessee had claimed the credit for TDS made by the contractee and yet, did not offer the same as its income. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in holding that the assessee was following Accounting standard 9 (AS-9) for revenue recognitio....

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....y assessment u/s. 143(3) on 20/03/2015 wherein the income of the assessee was determined at Rs. 245.45 Lacs after certain additions / disallowances as against returned loss of Rs. 303.62 Lacs filed by the assessee on 25/09/2012. During impugned AY, the assessee being resident corporate entity was stated to be engaged in construction activities. 2.1 During assessment proceedings, it transpired that during financial year 2009-10, the assessee received a construction contract from an entity namely Housing Development & Infrastructure Limited [HDIL] for development of certain projects at Kurla & Virar. The assessee carried construction activity and incurred various expenses which were debited to Profit & Loss Account. Initially, HDIL made paym....

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....ract from the Housing Development and Infrastructure Limited (HDIL) for development of projects i.e. Rehab Project at Kurla and HDIL residency Park at Virar. The company carried out construction activity and incurred various expenses which were debited to profit and loss A/c. Initially the HDIL made payment to the assessee company and the projects were ongoing. However, during the year under consideration, the dispute arose between the assessee company and HDIL. The HDIL stopped payments to the company and consequently the company stopped work at the projects of HDIL. Thus during the year, there are no revenue receipts from the projects; however the expenses continued on ongoing basis and are debited to profit and loss A/c. The company incu....

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....s transferred project to the contract giver and the significant risk and reward of ownership of and control over the project. This effectively means that the revenue on contract could be recognized when the project is constructed and delivered to the buyer. In the present case the work is disrupted or stopped and no money was paid to assessee during the year. Since there is a dispute and project is yet to be constructed and possession yet to be given, the assessee submitted that recognition of revenue and taxing the same is contrary to the concept of real income and provisions of AS 9. It is observed that the general principle governing revenue recognition as per Accounting Standard 9 demands that the revenue is measurable and that at the t....