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2006 (11) TMI 172 - HC - Income TaxMethod of accounting - business of execution of works contract - Whether the Tribunal was right in not accepting the valuation of closing work-in-progress in accordance with accounting standard (AS-7) as laid down by the ICAI and to work out the profit on the basis of the accounts maintained? - HELD THAT:- The assessee-firm/appellant being a private Ltd. company was maintaining its accounts following the said system and the accounts were duly audited by a qualified chartered accountant, maintenance of the accounts as well as the valuation of work-in-progress will not prejudice either side. Admittedly, the particular work contract was not completed and it comes under the category of work-in-progress. There is also no dispute that the ultimate liability of the assessee as regards tax will be dependant upon the total (fixed) amount received by the assessee against the particular work contract. We, therefore, hold that the income-tax authority has no option/jurisdiction to meddle in the matter either by directing the assessee to maintain its accounts in a particular manner or adopt a different method for valuing the work-in-progress. We reiterate the decision in Doom Dooma India Ltd.[1992 (12) TMI 41 - GAUHATI HIGH COURT] and hold that an assessee has as the option/liberty to adopt any recognized method of accounting for his business and the income shall be computed in accordance with such regularly maintained accounting system. In the result, the substantial question of law is answered in favour of the appellant and against the Revenue. The impugned order passed by the Tribunal is set aside and that of the CIT(A) is restored.
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