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2013 (4) TMI 259 - AT - Income TaxAddition on account of business income by computed percentage Completion Method - CIT (A) deleted the addition - whether the A.O. is justified in changing the method of accounting of its profits in the year under consideration particularly when profits have been accounted for by appellant on the basis of project completion method in the subsequent year i.e. A.Y. 2007-08? - D.R. submitted assessee was following two separate methods for income taxable under one head following the percentage completion method in one and project completion method in other - Held that:- CIT (A) has given a finding that assessee has disclosed in A.Y. 2007-08 profits on the basis of project completion method. He has further given a finding that the system of accounting which has been followed by the assessee has been accepted in A.Y. 2005-06 in the scrutiny assessment. He has further noted that the assessee is acting as developer of property and therefore Accounting Standard 7 as prescribed by ICAI are not applicable to the assessee. The assessee has been consistently and regularly employing the project completion method and the Department has also accepted the said method in the past. Further the Revenue has not pointed out any defect in the system of accounting followed by assessee. As decided in Vraj Developers [2010 (5) TMI 697 - ITAT AHMEDABAD] the option for choosing the system of account is with the assessee and not with the A.O. provided the system chosen by the assessee is consistently followed by him and such system is not a defective system. Provisions of AS-7 cannot override the provisions of section 145 in so far as the computation of business income under the Income Tax Act for the purpose of determining income is concerned. Thus as A.O. has brought no material on record to show that the system of accounting adopted by the assessee for the year under appeal was not consistently followed by the assessee or the system adopted was a defective system. 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. As the Revenue could not controvert the findings of CIT (A)no reason to interfere with the order of CIT (A) - appeal of the Revenue is dismissed.
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