2026 (1) TMI 690

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....x Act, 1961 (for short 'the Act') in consonance with the order passed by the Dispute Resolution Panel (DRP) dated 21.12.2016 u/s 144C(5) of the Act. 2. The Ground Nos. 1 and 2 raised by the assessee are general in nature and does require any specific adjudication. 3. The Ground Nos. 7 to 14 were stated to be not pressed by the ld AR at the time of hearing as it was pointed out that relief has been given by the revenue post DRP dirresections. The same is reckoned as a statement made from the Bar and accordingly the Ground Nos. 7 to 14 raised by the assessee are hereby dismissed as not pressed. 4. The Ground Nos. 3 to 6 raised by the assessee are on a single issue challenging the addition of Rs. 4,30,05,774/- being the impact on the ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....s (FTS). 7. During the year under consideration, the assessee has retrospectively change its method for identifying the stage of completion. The stage of completion was measured by reference to total cost incurred to date as a percentage of total estimated cost for each contract as against staff cost incurred to date as a percentage of estimated staff cost for each contract. Accordingly, the assessee company had reversed the revenue amounting to Rs. 5,58,51,260/- related to earlier years which has been disclosed as a prior period item in the profit and loss account. Due to this change in method of accounting, the impact on the profitability of the year was worked out at Rs. 4,30,05,774/-. In other words, had the assessee continued with t....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... aforesaid contentions of the assessee and proceeded to make an addition of Rs. 4,30,05,774/- as under reported profit by the assessee. It is pertinent to note that pursuant to the change of method of accounting, the assessee had indeed reversed the revenue of earlier years in the sum of Rs. 5,58,51,260/- during the year and the same had been claimed as deduction as a prior period item, which has been allowed by the ld AO and not disturbed by the ld CIT(A). The impact on the profit of Rs. 4,30,05,774/- is only pursuant to the reversal of revenue of Rs. 5,58,51,260/-. When that deduction on account of prior period expenses is allowed there is absolutely no reason to make a separate addition on account of addition on account of impact of prof....