| Case ID |
43ee1251-c8c5-4d39-86da-99614d8da011 |
| Body |
View case body. Login to View |
| Case Number |
TAX CASE (APPEAL) No. 1167 OF 2007 |
| Decision Date |
Aug 29, 2007 |
| Hearing Date |
|
| Decision |
The Tribunal was justified in remanding the claim of the Assessing Officer with a direction to determine the stage to which the project was completed during the relevant year and allow the expenditure accordingly, which was permissible as per clause 21 of the AS-7. The authorities below had rightly rejected the claim of the assessee on the estimated loss. The appeal by the Revenue was dismissed due to lack of merit, affirming the Tribunal's decision to allow expenditure based on the stage of contract completion. |
| Summary |
This case involves the interpretation of Section 145 of the Income-tax Act, 1961, concerning the accounting method for a non-resident company engaged in construction. The case highlights the complexities surrounding the completed contract method of accounting, particularly in the context of provisions for expected losses. The Madras High Court upheld the Tribunal's decision to remand the matter to the Assessing Officer for determining the appropriate stage of project completion, allowing for expenditure recognition under AS-7. This ruling is significant for tax professionals and entities dealing with construction contracts, as it clarifies the treatment of estimates and provisions in accounting. Keywords: Income-tax Act, accounting methods, construction contracts, tax law, AS-7 accounting standards. |
| Court |
Madras High Court
|
| Entities Involved |
Secit Spa Societa Ecologica
|
| Judges |
K. Raviraja Pandian,
Mrs. Chitra Venkataraman
|
| Lawyers |
J. Nareshkumar
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
Secit Spa Societa Ecologica
|
| Citations |
2009 SLD 2985 = (2009) 316 ITR 378
|
| Other Citations |
CIT v. Secit SPA Societa Ecologica [2009] 316 ITR 378 (Mad.)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
145
|