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2015 (3) TMI 847 - HC - Income TaxIncome recognition - accountancy practices of the assessee for the relevant year - AO recomputed the income by treating advances against properties which had NIL outstanding balances, as sales and consequently the income of the assessee as felt that the appropriate method of accounting for revenue recognition was AS-7 supported by the Institute of Chartered Accountant - Held that:- As in CIT vs. Manish Build Well Pvt. Ltd. [2011 (11) TMI 35 - DELHI HIGH COURT] differentiating between the project completion method and the percentage completion method, and commented that both can achieve the same result. The above ruling clearly establishes that the project completion method was appropriate in the circumstances of the case and the rationale for not adopting it in respect of the 22 transactions by the AO was illogical. The Court notices that in M/s. Excel Industries, [2013 (10) TMI 324 - SUPREME COURT]the Supreme Court had indicated three tests to deduce whether income accrued to the assessee is real or hypothetical i.e. if there is a corresponding liability of the other party to pass on the benefits even without the transaction; probability or improbability of realization of benefits by the assessee etc. In these circumstances, the AO’s decision was based on hypothetical income given that for the previous years AS-7 had been permitted. Furthermore, applying the decision in M/s. Excel Industries Ltd. (supra), we are of the opinion that the rule of consistency ought not to have been departed from in this case. No substantial question of law arises. - Decided against revenue.
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