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2014 (3) TMI 498 - AT - Income TaxDeletion made on account of method of accounting u/s 145 of the Act – Held that:- The assessee was following a particular method of accounting regularly in the earlier as well as subsequent assessment years - the Assessee is a builder and developer and in such a case PCM is an accepted method of accounting. AS-7 is applicable only in case of contractors, engaged in the civil construction business, it does not apply to builder & developer - It is established principle of taxation that PCM and percentage completion method are recognised methods to assess correct income of an assessee under the Act - the assessee can follow any methods, only condition is that the same method has to be followed consistently - It is not open to the AO to change the method of accounting only because he finds another method of accounting better than the one adopted regularly by the assessee. The assessee had constructed the complete building over a period of time and received the purchase consideration from time to time from the purchasers and handed over the possession of the building when the building was fully completed and occupancy certificate was received - It was only at that time that the proverbial risks and rewards were transferred to the purchaser – thus, PCM followed by the assessee-AOP was in order and the action of the FAA to reject the stand taken by the AO was justified – thus, the order of the FAA upheld - Decided against Revenue. Disallowance of deduction u/s 80IB(10) of the Act - No income has accrued for assessment year 2007-08 based on the project completion method – Held that:- PCM followed by the assessee was the right method of accounting for determining the taxable income of the assessee, that project was completed in AY. 2009-10 – thus, the issue of eligibility of 80IB deduction has been left open by the FAA when he held that the AO would be at liberty to make necessary inquiries - no prejudice has been caused to the interest of the Revenue – thus, the order of the FAA upheld – Decided against revenue.
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