57. Revenue recognition for construction and service contracts.
(1)The profits and gains arising from a construction contract or a contract for providing services, shall be determined on the basis of percentage of completion method, subject to provisions of sub-section (2), as per the income computation and disclosure standards notified under section 276(2).(2)For the purposes of sub-section (1), the profits and gains arising from a contract for providing services shall be determined—(a)on the basis of project completion method, if the duration of such contract is not more than ninety days;(b)on the basis of straight line method, if the contract involves indeterminate number of acts over a specified period of time.(3)For the purposes of percentage of completion method, project completion method or straight line method under this section,—(a)the contract revenue shall include retention money;(b)the contract costs shall not be reduced by any incidental income in the nature of interest, dividends or capital gains.[Similar to Section 43CB from The Income Tax Act, 1961.-Also Refer]
