Advance received from clients against the bookings of shops

Last updated: 16 October 2012

Court :
INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘F’ NEW DELHI)

Brief :
Facts : The brief facts of the case are that the assessee is a private limited company and is engaged in the business as builder and developer. Return for the year under consideration was filed on 31.10.2007. The case of the assessee was selected for scrutiny under CASS. - advance in the balance sheet. The Assessing Officer asked the assessee to explain that since the project was completed as no further expenses were pending to be booked then why not as per percentage completion method the complete amount of advances received from customers against sale price of shops be considered as the trading receipts of the assessee and taxed accordingly. - Assessing Officer, the assessee Filed appeal before Ld CIT(A) - The Ld CIT(A) after considering the submissions of the assessee agreed with the contentions of Ld AR and deleted the addition. Observation - Assessee is engaged in the business of construction and it is a common practice in the construction business that shops/plots are booked in advance against initial amount and then during course of construction the installments are collected and the investor is generally given an option to exist any time and money is refunded to them if they do not intend to buy. Held - appeal filed by the revenue is dismissed.

Citation :
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘F’ NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. No.2498/Del/2011 Assessment year: 2007-08 ITO, Ward-14 (3), New Delhi. (Appellant) V. M/s Premium Buildwel (P) Ltd., A-53, Prashant Vihar, New Delhi. (Respondent) PAN /GIR/No.AADCP-9915-B Appellant by: Shri Rajiv Ranka, Sr. DR. Respondent by: Shri Suresh Kumar Gupta.