TaxTMI 
TaxTMI 
2026 (9) TMI 1317
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....ellate order Appeal No. & Date of order of the Ld. FAA AO who passed the assessment order & Date of order 1847/D/26 2018-10 CIT(A)-3 Noida DIN & Order No: ITBA/APL/M/250/2025- 26/1083598282(1) Dated 12.12.2025 DCIT, NFAC New Delhi Dated 14.06.2021 1848/D/26 2018-19 CIT(A)-3 Noida DIN & Order No: ITBA/APL/M/250/2025- 26/1083753877(1) Dated 16.12.2025 DCIT, NFAC New Delhi Dated 30.03.2022 2. Heard and perused the record. Assessee company is engaged in the business of real estate development, executing a single project "Rudra Aqua Casa" at Greater Noida (West). The return for AY: 2018-19 was filed and assessment was completed u/s. 143(3) of the Act determining income at Rs. 20,14,73,350/- and returned income of Rs. 94,82,730/- but on account of alleged suppressed turnover an addition of Rs. 10,63,68,619/- was made on the basis of difference between turnover as per service tax record and turnover as per ITR and Form 3 CD. The same is deleted by ld. CIT(A) observing that difference arose from on account of difference of basis of recognition on income in two different statutes. Then disallowance u/s. 40(a)(ia) of Rs. 8,56,22,003/-was made on account of di....
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....tion or a disallowance is not sustainable. In the case of assesse under the erstwhile services tax regime tax was deducted on advance received, even before service was rendered by position handed over i.e. on receipt/advance basis whereas under the Act revenue is recognized on percentage of completion method or mercantile basis only to the extent of stage of completion actually achieved as mandated by Section 145(1). Thus, advances not yet recognized as revenue under POCM were carried by assesse in the added balance sheet under advances from customers in the form of liability and duly disclosed the impugned assessment order nowhere costs any illegality in the manner of reporting income under the Act. In the revenue recognized of Financial Year 2017-18 correctly stood at Rs. 5,10,47,004/- in line with POCM and accounting standards. The assessee's audited books of accounts and audit report in Form 3CD have not been shown to be suffering from any discrepancy and the entire difference alleged in the form of mismatch is attributable to difference in accounting basis under the two different statute and ld. AO has not taken into consideration the said facts while ld. CIT(A) has duly consi....
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....April (Rs.1,09,64,422), May (Rs. 42,80,688), and June (Rs. 2,85,28,088), and demand raised in June (Rs.11,25,85,646). 7.7 That these amounts represent amount received and demands raised, and under mercantile system and POCM, such receipts do not constitute income until the relevant stage of construction or sale is achieved. The recognition of income under POCM requires matching of revenue with proportionate project costs incurred, which ensures income is recorded only when it is accrued and earned. 7.8 The calculation of turnover on the basis of percentage of completion method is as under: Computation Cost of the project 6,02,29,00,000 Cost incurred till date upto 31.03.2018 2,33,08,16,514 % age completion 38.70% Saleable Area 2143394 Area sold till date 703227 Revenue to be recognised Expected Sales realization 2103796149 Revenue till now (38.70% of 2103796149) 814153117 Less: Revenue shown in F.Y.15-16 522787050 Less: Revenue shown in F.Y. 16-17 240319063 Revenue to be recognised in F.Y. 17-18 51047004 7.9 Based on POCM, the total cost of the project was Rs. 6,02,29,00....
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....llegation of suppression, falsification, or manipulation of accounts, and no defect has been pointed out in the regularly followed accounting method. 7.15 It is a settled legal principle, as held by the Hon'ble Supreme Court in CIT v. Excel Industries Ltd. (2013) 358 ITR 295 (SC), that income must be realand not hypothetical, and mere advances cannot be treated as taxable income z. That the AO acted in a mechanical manner and treated the entire STR turnover as taxable income, without applying his mind to the nature of real estate business or the established accounting and taxation principles. 7.16 Even assuming without admitting that a portion of the advance might be attributable to income, the AO was duty-bound to determine what portion had actually accrued as income based on project status, which he failed to do.The assessee's financials disclose advances received, and these figures match the amounts reported in the STR, demonstrating consistency and transparency in reporting. 7.17 The Tax Audit Report under Form 3CD clearly sets out the accounting policies followed, including revenue recognition method, which has not been questioned or rejected....