Project Completion Method is Right Method Prescribed by ICAI for determining Profit, Eligible for Deduction u/s 80IB(10) of Income Tax Act: ITAT [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) confirmed  that the project completion method was the appropriate method for determining profit eligible for deduction under Section 80IB(10) of the Income Tax Act.

The Commissioner of Income Tax (Appeal) in holding that the project completion method adopted by the assessee is the right method for determining the profits. Further also held that the Assessing Officer should not have been disturbed the project completion method followed by the assessee regularly and there is no cogent reason to change the method.

The facts of the case held that the Project Completion Method followed by the appellant is a recognized method of accounting prescribed by the ICAI which has been regularly followed by the assessee. The assessee being a real estate developer and not a construction contractor, Project Completion Method is the right method for determining the profits. The Project Completion Method being followed should not have been disturbed by the Assessing Officer as it was being regularly followed by the assessee in earlier years also and there is no cogent reason to change the method.

The bench observed that the appeal of the revenue had been dismissed and held that there was no substantial question of law.

Further, the two member bench of the tribunal comprising Dr. B. R. R Kumar ( Accountant member) and C.N Prasad ( Judicial member) observed  that the High Court held that the question “whether the addition made by the Assessing Officer to the income of the Respondent for the relevant year based on percentage completion method was not correct as held by the ITAT” stands answered in favour of the assessee and against the Revenue in PCIT Vs. Shipra Estate Ltd. & Jai Krishan Estate Developers Pvt. Ltd. thus, respectfully following the decision of the High Court ITAT rejected the ground raised by the Revenue. Accordingly, the bench upheld the findings of the CIT (A) on this issue.

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