TaxTMI 
TaxTMI 
2025 (12) TMI 1340
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....n confirming the addition made by the Learned Assessing Officer ("AO") of estimated business profit of 11,13,08,897/- computed on an estimated turnover of 2.74,20,59,318/- under Section 43CB of the Act, on mere assumptions and presumptions, on the grounds that: The provisions of Section 43CB, mandating the percentage completion method of accounting for revenue recognition, are applicable from 01.04.2017 (i.e., from A.Υ. 2017-18 onwards) and extend to real estate business which had already been completed in earlier years. 2 circumstances of the case and in law, the Learned CIT(A) has erred in disallowing the entire business expenses incurred during the year and consequently not allowing the business loss of 11,37,60....
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....of land and construction of building and the case was selected for scrutiny and the assessment was completed by making additions on account of estimated business income and deemed rental income. Aggrieved by the said order the assessee preferred appeal which was partly allowed and additions with regard to estimated business income was sustained. Consequently the assessee has filed the appeal before us on the grounds mentioned herein above: 5. From the records, we found that these grounds have already been adjudicated in detail by Ld. CIT(A) and the operative portion of the same is contained in para 4 to 4.9 which is reproduced herein below: 4. Ground Nos. 1.2.3&4: All these grounds pertain to the estimation of business profit at....
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....bsequent years also. The income would be offered on sale of flats as and when the sale is completed. Appellant requested that the addition of Rs.11,13,08,897/- based on the estimated profit under 4.5 Appellant's submissions were carefully considered. With introduction of section 43CB, as inserted by the Finance Act 2020, with retrospective effect from 01/04/2017 percentage completion method, Section 43CB of the Act is reproduced as under: it is mandatory for the businesses involving construction contract to offer income on "Computation of income from construction and service contracts. 43CB. (1) The profits and gains arising from a construction contract or a of completion method in accordance with the income computatio....
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....7, which provides the profits and gains arising from a construction contract or a contract for providing services shall be determined on the basis of percentage completion method notified under sub-section (2) of Section 145 of the Act. Thus, this provision is (PCM) in accordance with the income computation and disclosure standards applicable from assessment year 2017-18 onwards" 4.7 From the above, it is clear that the percentage completion method as mandated in section 43CB of the Act is applicable to real estate business also. Hence, the appellant's submission that section 43CB should not applied in the appellant's case is not acceptable. The AO's action on applying section 43CB in appellant's case is confirmed. ....