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2010 (10) TMI 1106 - ITAT MUMBAIMethod of valuation of Stock - enhancement of rates of sales - difference of opinion between the learned Members - Third Member Order - Whether, the order of the CIT(A) is liable to be confirmed or to be set aside and to restore the issue to his file to decide the same afresh ? - HELD THAT:- It is not in dispute that the assessee has followed percentage completion method consistently since inception and has been declaring income/loss from year to year and the same was accepted in earlier years. Despite the Assessing Officer’s stand for the assessment years 1998-99 and 1999-2000, with regard to correctness of the method of accounting followed by the assessee, in the year 2000-01 when the assessee declared profit of more than ₹ 5 crores the Assessing Officer appears to have accepted the same method to accept the income declared therein which in itself is an indication that the method of accounting followed by the assessee is an approved method of accounting. The decision of the Apex Court in the case of British Paints India Ltd.[1990 (12) TMI 2 - SUPREME COURT] comes into play only in a case where a plea of the assessee is accepted in contravention of law or an incorrect method of accounting followed by the assessee was accepted from year to year. As rightly submitted by the learned Counsel, appearing on behalf of the assessee, in the case of British Paints overheads which ought to have been taken into account to arrive at the correct cost of raw materials was not taken into consideration by the assessee but at the same time pleaded that the method has been consistently followed and hence the same deserves to be accepted. However, in the instant case, there is no such finding either by the Assessing Officer or by the learned CIT(A) ; Assessing Officer has not rejected the book results by pointing out any defect in the books maintained by the assessee. Categorical findings of the learned CIT(A) to highlight that assessee has not deviated from guidelines issued by the Institute of Chartered Accountants (under AS-7) , was not challenged before the Tribunal by learned D.R. by producing any evidence thereof. Learned CIT(A) has discussed the issue elaborately and met each point of dispute raised by the Assessing Officer to highlight that there is no merit in the conclusion reached by the Assessing Officer. In fact, learned J.M. has extracted the operative portion of the Order of the learned CIT(A) from paras 7 to 20 wherein learned CIT(A) not only analysed each issue raised by the Assessing Officer but also supported the conclusions drawn by him while holding that assessee has adopted correct method of accounting and the same was followed consistently. In addition to that, learned Judicial Member had highlighted that the project was ultimately completed in the previous year relevant to the assessment year 2000-01 wherein the assessee declared income of ₹ 5 crores plus and the same has been accepted by the department which has attained finality, in the absence of any proceedings initiated u/s 263 or otherwise. Neither the learned A.M. controverted the findings of the CIT(A) or the learned J.M. nor the learned DR sought to controvert the findings of the learned CIT(A) and learned Judicial Member. It is also not out of place to mention that with regard to deletion of addition of ₹ 2,70,230 (vide Ground No. 2 in assessment year 1998-99) though the learned J.M. has given cogent reasons while coming to the conclusion that the Order passed by the learned CIT(A) is in accordance with the law, the learned A.M. has not touched upon the said issue. Thus, I agree with the view taken by the learned J.M. on both the issues. In my considered opinion, order passed by the learned CIT(A) deserves to be upheld and thus I agree with the view taken by the learned Judicial Member. In the light of the majority view, the order passed by the learned CIT(A) is upheld. In the result the appeals filed by the revenue are dismissed and cross objections filed by the assessee are also dismissed being infructuous.
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