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TMI Blog2012 (12) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... s.3.82 Crores does not bear any correctness to the fact that the income as arisen to the impugned Assessment Year on incomplete projects when the majority of the projects were sold for more than the very turnover for the impugned Assessment Year. CIT(A) also confined himself to adoption of AS-7 as noted by AO without actually addressing the issue in the practical aspects of the business conducted, advance received, income on percentage on the advance to be considered and loss but not the least that the work-in-progress is a closing stock when the expenses have been allowed cannot be reduced on a percentage basis to find profit therein - Finding no merit in the bringing to tax the percentage of work-in-progress,thus direct deletion of the addition. - I.T.A.No. 535/CTK/2011 - - - Dated:- 20-7-2012 - Shri K.K.Gupta and Shri K.S.S.Prasad Rao, JJ. For the Appellant: Shri A.K.Sabat/B.K.Mohapatra,ARs For the Respondent: Smt. Paramita Tripathy, DR ORDER Shri K.K.Gupta, Accountant Member. This appeal by the assessee agitates the order of the learned CIT(A) dt.3.10.2011 primarily on two issues one being denial of deduction claimed u/s.80IB amounting to R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the following amount as increase in work-in-progress during the year 2007-08, i. Niladree Enclave-1 Rs. 2,95,94,396 ii. Niladreee Project -1 Rs. 66,26,488 iii. Niladree Project-2 Rs. 5,65,702 iv. Niladree Project-3 Rs. 4,32,526 Total Rs. 3,82,19,112 and estimated income @6.84% on the said amount of Rs.3,82,19,112 at Rs.26,75,338 and added the same to the total income. The Assessing Officer also disallowed Rs.45,92,548 claimed by the assessee u/s.80IB in respect of the Niladree Enclave-1 House/Flats sold during the year under consideration. 3. Aggrieved, the assessee filed appeal before the CIT(A) agitating the disallowance of deduction u/s.80IB along with the proportionate computation of income in the purported work-in-progress holding the assessee is a contractor ought to have rendered income by maintaining the accounts vide AS-7 of the Institute of Chartered Accountants of India. The learned CIT(A) in his brief order has confirmed both without bringing on record as to how the assessee was to maintain accounts as if the assessee was a building contractor when the contractor does not incorporate the sales of the flats which is constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... untenable. He contended that AS-7 is not applicable to the facts of the assessee s case and the Assessing Officer as well as the learned CIT(A) has grossly erred both on facts and in law in applying the same. He alternately submitted that the Assessing Officer having changed the method of accounting by adopting a percentage on the amount of increase in work-in-progress, the learned CIT(A) ought to have directed for the reduction in the succeeding assessment year(s) wherein the income has already been subjected to tax on sale/completion of flats/houses, as per the method of accounting followed by the assessee. For the purpose the learned Counsel for the assessee submitted a Paper Book indicating as to how a parallel computation for the purpose of deriving income of work-in-progress for the different AYs would lead to set on and set off the income when the work-in-progress is on the basis of actual expenditure incurred certified by the Architect Certificate obtained for the purpose of receiving installment from the prospective buyers of the flats. AS-7 as sought to be relied upon by the authorities below is on the basis of bills raised on the tax deducted at source who pay the bills ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed orders of the authorities below and the material available on record. On consideration of the facts and circumstances of the case, we are inclined to hold that the learned Counsel for the assessee has agreed to the proposition that the claim of deduction u/s.80IB would be available to it only on the basis of obtaining the completion certificate from the local authorities in view of the fact when the housing project is approved by the local authorities on or after 1.4.2004 was to be completed within four years irrespective of the claim of deduction either on the basis of project completion method or on the basis of percentage completion method for deriving income when in the strict sense of the term the income cannot be derived unless the purchasers of flats have been given clearance from the local authorities for possession and occupation. For this purpose, therefore, the prayer of the learned Counsel for the assessee is acceded to and the Assessing Officer is directed to allow the deduction as and when the certificate from the local authority for the project completion has been obtained for the income for the project which claim is being made in the respective AYs in accordance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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