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Sum received post construction can't be included in determining percentage of completion method as per AS-7

June 9, 2020[2020] 116 taxmann.com 893 (Delhi - Trib.)

INCOME TAX : Where the assessee company engaged in activities relating to water distribution, supply and related construction activity, was offered construction contract pertaining to rehabilitation and implementation of water supply for five years period and said contract consists of three parts, study phase, rehabilitation phase and operation and maintenance phase, since assessee had raised separate invoices for O and M phase on regular basis and same had been duly accounted in year of receipt and three different phases are totally different in execution and O and M phase commenced after construction activity of rehabilitation phase, amount pertaining to O and M phase needs to be separately considered while determining profits out of construction activity and it cannot be included in determining percentage of completion method in recognition of revenue as per AS 7

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