SEA SAGAR CONSTRUCTION CO Vs. V.A. NAIR

JUDGEMENT

(1.) All these Petitions take exception to the notices dtd. 19/1/2012 issued by Respondent No.1 to Petitioner under Sec. 148 of the Income-Tax Act, 1961 (the Act) and the order on objections dtd. 17/10/2012. By the said notices, Respondent No.1 sought to re-open the assessment for the Assessment Years 2001-02, 2002-03 and 2003-04.

(2.) On 22/4/1993, CIDCO Ltd. granted lease of a plot of land at Vashi to Sea Breeze Co-operative Housing Society Limited and to Sagar Darshan Co-operative Housing Society Ltd. (hereinafter referred to as "the said Societies"). By an Agreement dtd. 20/7/1993, the said Societies appointed one Mayuresh Builders as Contractor to construct buildings on the said plot of land (the said project).

(3.) In respect of the said project, Mayuresh Builders was following completed contract method of accounting, i.e., the amounts received from the members of the Societies were shown as advance received in its balance sheet and the amounts spent on the construction of the project was shown as capital work in progress. The revenue accepted this position for Assessment Years 1994-95, 1995-96 and 1996-97. For Assessment Year 1997-98 the Assessing Officer took a stand that a part of the income from the project should be assessed to tax based on percentage completion method. The Assessing Officer accordingly estimated 15% of the expenditure incurred by them for Assessment Year 1997-98 as profit for that year. The said issue was carried in Appeal, wherein, it was urged that they were following completed contract method as per which, income from the project would be offered for tax in the year of completion of the project. The Tribunal accepted the contention of Mayuresh Builders and this Court dismissed the Appeal filed by the Revenue against the Order of the Tribunal.