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2013 (11) TMI 1271 - ITAT MUMBAIRevision u/s 263 - Recognition of Income - Assessee recognized income from both the projects based on the 'project completion method' consistently followed over the years – Held that:- The Gym View Project is already completed in the year under consideration; whereas the Link Corner Project is yet to be completed as on 31st March of this PY - This approach of the CIT is not proper - There is no discussion in the order how the method of accounting followed by the assessee in respect of Link Corner Project is inappropriate - There is no discussion in the review order how following Project completion method is prejudicial to the interest of review and what is the revenue loss in this process - CIT has not demonstrated in his review order how AS-7 or AS-9 are legally binding on the assessee in matters of recognizing the income of the project when the said AS-7 and AS-9 are not notified by the CBDT for the purpose of section 145 of the Act - If they are binding on project say Link Corner Project of the assessee, the same is binding on the other project i.e; Gym View Project too - In that sense, the CIT turned Nelson's Eye to the method adopted in respect of the other project as the same is inconvenient to him - This approach of the CIT is not valid. Jurisdiction u/s 263 - Held that:- The assumption of jurisdiction by the CIT is not valid - the revenue cannot trust a method of accounting on the assessee though that method is superior and therefore, substitution of method of accounting is not allowed unless, the loss of revenue is made out of the project of the assessee - CIT has not made out that by following project completion method, the assessee fulfilled the condition relating to 'prejudicial to the interest of revenue' used in section 263 of the Act - Therefore, when the assessee is not held by the revenue guilty of change of method of accounting with the mala fide intention to reduce the tax liability, the CIT cannot allege the mala fide in the method followed by the assessee in respect of the income of the Link Corner project - the CIT cannot assume jurisdiction u/s 263 of the Act, when the issue relating to selection of method of account is debatable one in nature - Assessee has not committed any legal error by uniformly and consistently following 'Project Completion Method' in respect of his project - AO's order does not suffer from any error both on law or fact - it is a trite law that the CIT can only assume jurisdiction when there is erroneous assumption of law or fact or where the AO failed to apply his mind to an issue during making of an assessment or where AO failed to conduct reasonable enquiry into the claim made in the return – Decided in favour of Assessee.
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