TaxTMI 
TaxTMI 
2025 (6) TMI 698
X X X X Extracts X X X X
X X X X Extracts X X X X
....th questionnaires and also served upon the assessee. The assessee is engaged in the business of real-estate developer and during the year company has undertaken one residential project namely ALTIUS, Kolkata which is real-estate project for construction of flats. The assessee was co-owner and developer of the said project with other 15 co-owners. The said project was developed by the assessee at its own cost and expenses and area/revenue of the project was agreed to be shared with the other co-owners of the land. The assessee was following project completing method of accounting and accordingly, all the direct and indirect expenses incurred have been transferred to project work-in-progress account and the advances received against booking of flats were credited to long term liabilities. The assessee was following mercantile system of accounting. According to the ld. AO, the assessee has not recognized the revenue of the said project on the basis of Percentage Completion Method. According to the ld. AO, out of the total estimated cost of the project of Rs.125.00 crores, the assessee has already incurred construction cost to the tune of Rs.91,00,35,369/- meaning thereby that the cons....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing POCM suffers from certain mistakes and by considering the specific two changes - i.e considering only the cost of land incurred by the appellant ( and resultant percentage) and share of sales attributable/receivable by the appellant - the figure of revenue to be recognized during the relevant FY under POCM comes out as a loss. 6.12 Therefore, the claim of the appellant that it is a developer and regularly following AS-9 and 'Project Completion Method' of accounting which has been accepted by the Department in the immediately preceding year and therefore the same should also be followed in the relevant FY w.r.t 'ALTIUS' project is found correct. 6.13 Based on the above discussion, the addition of Rs 12,18,46,800/- made by the AO as revenue recognized from the project 'ALTIUS' is not found correct, and is directed to be deleted. Consequently, the figure of Work in Progress revised by the AO also stands canceled, and accordingly WIP gets restored to the original claim. Based on the above discussion, Grounds 2 to 9 taken by the appellant are considered as partly allowed." 05. The ld. Authorized Representative vehemently submitted before us that the assessee was engaged in the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion of the building of flats would be commenced on 11th March, 2013, as per building permit dated 29th August, 2012, a copy of which is available at page no. 27. The ld. Authorized Representative submitted that ICDS-4 and AS-9 were instant applicable to the assessee. It was argued that assessee has regularly been following AS-9 and Project Completion Method, since start of the project ALTIUS, which has been accepted in the earlier years during the assessment proceeding also. Even on the rule of consistency the same treatment should be given to the Altius project so far as the revenue recognition is concerned unless there is a change in the facts and circumstances. The ld. Authorized Representative placed before the Bench the copy of the assessment order for A.Y. 2017-18, wherein the said treatment has been accepted by the ld. AO. The ld. Authorized Representative also stated that reasons for selection of scrutiny for A.Y. 2017-18 and for A.Y. 2018-19 (the instant assessment year) were similar i.e. income from the real estate business, investment, advances/ loans and sale turnover/ receipts. The ld. Authorized Representative contended that in A.Y. 2017-18, AS-9, has been accepted s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....red the expenses on the said project and accordingly, the expenses were debited under the head flats construction in progress which was carried over to the current financial year. The assessee again incurred expenses and these were also transferred to the flat work-in-progress and was carried over to the next financial year in the books of accounts of the assessee. However, according to the ld. AO the assessee has completed the construction of flat to the extent of 73.42% based on the actual expenditure incurred by the assessee vis-à-vis the total estimated expenditure to be incurred on the project. According to the ld. AO, the income should be assessed based on the Percentage Completion Method in view of ICDS-III and AS-7 issued by the Institute of Chartered Accountant (ICAI). We note that the case of the assessee has been assessed under scrutiny in the preceding assessment year i.e. 2017-18 and the accounting method of re-cognizing the revenue on project completion method has been accepted by the Revenue as is apparent from the assessment order for A.Y. 2017-18, a copy of which is placed in the paper book. Therefore, unless there is a change in the facts, no deviation is a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed during the assessment proceedings that assessee has taken interest bearing funds but has made interest free advances to the land co-owners / parties during the financial year and accordingly, disallowed the proportionate interest not charged from the land co-owners/ parties amounting to Rs.1,66,95,828/-. The ld. AO noted that the assessee has taken loan at interest ranging from 9% to 15% from various other parties and had paid interest on unsecured borrowings of Rs.3,80,71,552/- to unsecured parties. The ld. AO noted that the assessee has shown interest income of Rs.8,76,344/-. Thus, the ld. AO observed that the loans were raised at higher rate of interest while interest free advances were given to various parties. Accordingly, the ld. AO, after taking into account the opening balance of unsecured loans and advances, closing balances of unsecured loans and advances, computed the excess interest paid claimed by the assessee amounting to Rs.1,66,95,828/- by applying a rate of 13.19% and added the same to the income of the assessee. 013. In the appellate proceedings, the ld. CIT (A) allowed the appeal of the assessee after taking into consideration the reply and contention of the ....