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TMI Blog2017 (1) TMI 942X X X X Extracts X X X X X X X X Extracts X X X X ..... riod on the Pusalkar Project undertaken by the appellant in the year under consideration. 2. The Ld CIT (A) erred in not appreciating, that as regards, the same project, the income recognized in the past years ie from AY 2000-2001 to AY 2005-06 have been accepted by the Department without any dispute, including downward revision in the estimated project income made in AY 2005-06. 3. The Ld CIT (A) erred in holding that adjustments to the income from project on account of changes in the accounting estimate can be made only in the year of completion of the project and not in the intervening period when the construction is in process." 2. Briefly stated relevant facts leading the above grounds include that the assessee is a builder & dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that 16% is a higher side, the assessee proceeded to rectify the same by reducing 4% and offering in the return only 12% of profit. After considering the assessee and on perusal of the written submissions, AO concluded the assessment by rejecting the assessee‟s rectification attempts and disallowed the loss of Rs. 20,46,764/-. The loss on account of Pusalkar project at the end of the AY 2006-07 is worked out to Rs. 27,50,993/-. In the process, AO reasoned the assessee‟s attempt to not to rectify the earlier AYs where the profit percentage of 20% was offered and why now the percentage of 20% is reduced to 12% deviating from the method of accounting, said to be consistently followed by the assessee. This deviation is not permitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal income from the total project profits and therefore, the amount has suffered double taxation. That year is not before me in appeal. However, this amount cannot be taxed twice and Assessing Officer has to allow it by modifying his order under necessary provisions of law........". Regarding the core issue of enhancement of profit percentage from 12% to 16%, CIT (A) mentioned that the BMC‟s demand vide letter dated 7.11.2006 should not control the profits of the year under consideration and the same should only effect on the profits of the AY 2007-2008 to which the letter belongs. However, CIT (A) did not appreciate the assessee‟s decision of reducing the profit to 12% based on the BMC‟s claim relatable to the later year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of percentage completion of the cost being the principle in substance. What is changed is only the percentage of profits qua the cost of the projects up to the year. Mentioning that the CIT (A) is not justified in commenting adversely against the assessee in para 4.3 of his order. He also appreciated the CIT (A)‟s decision in directing the AO to grant relief to the tune of Rs. 20,46,734/- in the subsequent assessment year ignoring the fact that he failed to grant relief in the year under consideration. 5. On the other hand, Ld DR for the Revenue submitted that the assessee did not appreciate that fact of maintaining consistently the method of accounting opted by him for the project (Pusalkar) under consideration. He also submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come in the post period. We have also perused the relevant finding on if the assessee reduced the current year‟s profit based on event (BMC‟s letter dated 7.11.2006) relatable to the next year. CIT (A)‟s finding in this regards reads as under:- "As per the accounting standards also, any claims or penalties payable by contractor arising out of delays or from other causes provided for full disclosure in the financial statements in the financial year in which they occur. Thus, the adjustments, if any, need to be done, then the same may be carried out in AY 2007-2008, in which the event has occurred and the certainty regarding the expense has been achieved (sic)." 7. CIT (A) further held that the auditor‟s report did ..... X X X X Extracts X X X X X X X X Extracts X X X X
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