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2013 (11) TMI 1711 - HC - Income TaxAccrual of Income - Addition of amount in business income by computed percentage completion method - Question of applicability of AS-7 by ICAI - HELD THAT:- the income in the instant case is to be computed as per system of accounting followed by the assessee or as per accounting followed by the assessee or as per accounting standard AS-7 for charging of income tax. Therefore, as per the provisions of section 145 of the Act the business income is assessable under the Income Tax Act to be computed according to the consistent system of accounting followed by the assessee unless such system is defective and / or from such system of accounting, profit cannot be deduced. The option for choosing the system of account lies with assessee provided the system is consistently followed and non-defective system. Thus, provisions of AS-7 cannot override the provisions of Section 145 so far as the computation of business income for the determination of income is concerned. In Court's view, even a project completion method is also a recognized system of accounting. Simply the Institute of Chartered Accountants of India has recommended percentage completion method does not mean that project accounting or the same is a defective system of accounting. Therefore, the same is upheld and the appeal of the Revenue is dismissed. Thus it has been found that the assessee is consistently following accounting system of percentage completion method, which is permissible and accepted by ICAI and CBDT with respect to construction work The decision in the case of Nandi Housing (P.) Ltd. v. Dy. CIT [2003] 80 TTJ (Bang) 750 [2003 (4) TMI 224 - ITAT BANGALORE-C] followed. Hence, present appeal is dismissed - Decided against the Revenue.
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