2024 (11) TMI 218

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....red to as the 'Act'). 2. The assessee in this appeal is aggrieved by the action of the ld. CIT(A) in confirming the addition made by the Assessing Officer of Rs. 16,47,19,380/- by making assessment of the income of the assessee applying percentage completion method as against the plea of the assessee that it has been regularly following project completion method. 3. The brief facts of the case are that the assessee is a partnership firm and is engaged in the business of builders and developers. During the year, the assessee company had undertaken two projects i.e. 1. Mayfair Greenwoods, 2. Mayfair Elite. The assessee has been following 'project completion method' of accounting, where the income is offered to tax on completion of the p....

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....tage completion method ('POCM') basis. In addition to this, the Central Government exercising power u/s 145(2) has notified Income Computation and Disclosure Standards ('ICDS') III vide Notification No.S.O 3079(E) dated 29.09.2016 relating to construction contracts. The Assessing Officer observed that as per the said ICDS III notified by Central Government, the assessee was supposed to disclose its income as per percentage completion method. He observed that in this case, the assessee was nearby to completion of projects as the assessee incurred 84.28% & 67.34% of total cost of project of Mayfair Greenwood project & Mayfair Elite project respectively. Further, the assessee executed agreement for sale for 52870 unit area out of 77920 unit ar....

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....ercentage completion method from the construction of project during the period from 01.04.2011 to 31.03.2013. He, accordingly, assessed the income of the assessee as per percentage completion method and made the impugned addition. 4. Being aggrieved by the said order of the Assessing Officer, the assessee preferred appeal before the CIT(A), however, the same was dismissed by the CIT(A). 5. We have heard the rival contentions and gone through the record. At the outset, the ld. Counsel for the assessee has submitted that the assessee-firm since inception of its business from the year 1995 has been consistently and regularly following project completion method of accounting. The ld. Counsel has further demonstrated that so far as the obs....

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....pril, 2016 shall be recognised in accordance with the provisions of this standard. 22.2 Contract revenue and contract costs associated with the construction contract, which commenced on or after 31st day of March, 2016 but not completed by the said date, shall be recognised based on the method regularly followed by the person prior to the previous year beginning on the 1st day of April, 2016." 5.2 The ld. Counsel has further demonstrated the aforesaid two projects in question namely Mayfair Greenwood project & Mayfair Elite project have commenced on 20.03.2013 and 10.03.2014 respectively. Therefore, the aforesaid transitional provisions which state that for the projects, which commenced on or before 31.03.2016 but not completed ....