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T he project was co mpleted in the f inanc ial Year 2016-2017 relevan t to Assess men t Year 2017-2018 an d accor accordingly the revenue was off ered f or T ax in the Assess ment Ye ar 2017-2018 4.3 For the AY 2018-19, the AO observed that appellan t has not off ered inco me on percen tage co mpletion me thod. Hence, the AO issued sho w c ause to the appell ant that wh y the inco me should not co mpute under percentage comple tion me thod f ollo wing ICDS, as mand ated by section 43CB of the Act. Appellan t sub mitted bef ore that sec tion 43CB was no t appl icable to the applic ant since it was eng aged in real estate bus iness and not construc tion contr ac t. Af ter an alysing appellan t's sub miss ion AO concluded that re al estate business is also covered u/s 43CB of the Act and estimated the inco me under percentage co mplete me thod at Rs. 11,13,08,897/-

4.4 Dur ing the course of appeal proceedings, ap pellant sub mitted th at it was f ollo wing regul arly and consistently the pro jec t co mpletion me thod. For the FY 2016- 17, relev ant to AY 2017-18 in co me was off ered under pro jec t comple tion me thod wh ich was accepted by the depar tment. Hence, the appellan t should be allo wed to continue the project co mpletion me thod in the subsequent years also. T he inco me would be off ered on sale of f lats as and when the sale is co mpleted. Appellan t reques ted th at the addition of Rs.11,13,08,897/- based on the estimated prof it under 4.5 Appell an t's sub missions were caref ully considered. With in troduction of section 43CB, as in serted by the Finance Act 2020, with retrospective eff ect f rom 01/04/2017 percen tage co mpletion me thod, Section 43CB of the Act is reproduced as under: it is mandatory f or the businesses involving cons truction contract to off er inco me on "Co mpu tation of inco me f rom cons truction and serv ice contr acts.

4.7 Fro m the above, it is clear that the percentage co mpletion me thod as mandated in section 43CB of the Act is appl icable to real estate business also. Hence, the appellan t's sub mission that section 43CB should not appl ied in the appellan t's case is not acceptable. T he AO's action on applying section 43CB in appell ant' s case is conf irme d.

4.8 T he appellant sub mitted that there were errors in co mputing the estimated inco me u/s 43CB of the Act. Appellan t sub mitted th at secured and unsecured loan were cons idered f or estimating the prof it. T he sales f igure was cons idered thrice wh ile co mputing es timated prof it. Appellan t also sub mitted th at certain direc t and indirec t costs were not considered wh ile co mputing the estimated prof its. AO is directed to cons ider the appell ant's sub mission with respec t to such errors and reco mputed the estimated prof its in accordance with l aw.

4.9 T hus, the addition made of Rs. 11,13,08,897/- u/s 43CB of the Ac t is conf ir med, sub jec t to re moval of errors as poin ted out by the appellan t. Appeal on th is ground is dis missed.

6. Since Ld. CIT(A) has considered all the contentions raised by the assessee, more particularly wherein assessee had submitted that real-estate business will not be covered u/s 43CB of the Act as it is different from construction contract. However, Ld. CIT(A) after relying upon the decision in the case of Hi-tec Estates and Promoters Pvt Ltd., Vs. PCIT [2020] 117 taxman.com 965 (Cuttack - Trib) had reached to the conclusion that the percentage completion method as mandated in Sec. 43CB of the Act is applicable to real-estate business also, 7 IT A N o . 6 3 4 7 / M u m/ 2 0 2 5 Faithfull Developers , Mumbai therefore rejected the contentions of the assessee and confirmed the additions made u/s 43CB of the Act.