The query is regarding the TAX Audit for a Company engaged in real estate Development & Construction Business. The Company has not recognised any Revenue for the year ended March, 2010 since the company is following the Project completion method in Income Tax. The Work in Progress of the Company is in crores, and the advances received for flat booking from customers is also in crores.
I am confused because recently I have come across a judgement given by ITAT (2004) in the Case Law: Gopal krishan Builders [92 TTJ 215 (Luck)]
This case law clearly states that the advances money received are equilent to the gross receipts. Also since the WIP is accumulated out of several years, one cannot escape from tax audit by merely conduting the tax audit in the last year in which the assssee recognise revenue on project completion basis, and not conducting the audit in previous years.
Please suggest
CAclubindia
