Tax Audit - Real Estate

I guess you are pretty clear about coonducting the audit but just need vindication...

You need to get the books audited u/s 44AB, and project completion methid is not recognized by the department, there is an internal circular seeking % completion method

Thanks Nicky for the reply.

But i dont have any idea about such circular. can u give the reference for the same..

Instruction No. 4/2009, dated 30-6-2009

Under sub-section (10) of section 80-IB an undertaking developing and building housing projects is allowed a deduction of 100% of its profits derived from such projects if it commenced the project on or after 1.10.1998 and completes the construction within four years from the financial year in which the housing project is approved by the local authority.

2. Clarifications have been sought by various CCsIT on the issue whether the deduction u/s 80-IB(10) would be available on a year to year basis where an assessee is showing profit on partial completion or if it would be available only in the year of completion of the project u/s 80-IB(10).

3. The above issue has been considered by the Board and it is clarified as under:-

(a) The deduction can be claimed on a year to year basis where the assessee is showing profit from partial completion of the project in every year.

(b) In case it is late, found that the condition of completing the project within the specified time limit of 4 years as started in section 80-IB(10) has not been satisfied, the deduction granted to the assessee in the earlier years is should be withdrawn.

4. The above Instruction will override earlier clarififcation on this issue contained in Member(R)’s D.O. letter No. 58/Misc./2008/CIT(IT&CT) dated 29.04.2008 and Member (IT)’s D.O. letter No. 279/Misc./46/08-ITJ dated 2.5.2008.

5. This may kindly be brought to the notice to the notice of the all Assessing Officers in your charge.

Source: Taxmann

Great Nicky, u keep urself very well updated..

But what i understood from the above instruction is that the above clarification is only for those who have adopted % completion method. They (those adopting % completion method) might be having many issues / confusions regarding the exemption availability

The instruction is silent on the assessees adopting project completion method. As far as deduction of 80 IB is concerned, there is no doubt, since deduction is available when they recognise revenue on project completion
 

Anyways .. i m coming to my original query..

I should consider that Tax audit is compulsory for the company above mentioned.. isnt it ??

Yes, Tax Audit is compulsary....

and for the second thought of % completion, Guidance Note issued by ICAI for REal Estate Developers also proposes % completion method and department also sticks to the same