The ITAT addressed a case involving a change in accounting ...

Assessee switched from % of completion to project completion for revenue recognition. Legit change, no profit understatement found.

Case Laws Income Tax

June 26, 2024

The ITAT addressed a case involving a change in accounting policy from Percentage of Completion Method (POCM) to Project Completion Method (PCM) for revenue recognition. The assessee declared a net loss due to the change and the AO added the financial impact as profit, resulting in a significantly higher profit than industry average. The ITAT directed the AO to verify the impact in financial statements for both current and previous years, ensuring correct profit calculation. It emphasized that a change in accounting method does not imply profit understatement, as it is a legitimate decision guided by accounting standards. The ITAT upheld the assessee's right to choose the accounting method and instructed the AO to reevaluate the issue, allowing the assessee a fair opportunity to present their case. The assessee's grounds were allowed for statistical purposes.

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The ITAT addressed a case involving a change in accounting ...

Assessee switched from % of completion to project completion for revenue recognition. Legit change, no profit understatement found.

Case Laws Income Tax

June 26, 2024

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