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2016 (12) TMI 1538 - AT - Income TaxAddition of 10% of work in Progress - Method of accounting - AO following percentage completion method as against the project completion method adopted by the assessee - postponement of tax liability - assessee submitted that Accounting Standard AS-7 issued by the Institute of Chartered Accountants of India(ICAI) is applicable to contractor and not to builder - Held that:- It is not shown by learned DR that Government has prescribed adoption of Percentage completion method of accounting for builders u/s 145 and the builders cannot follow project completion method of accounting within the mandate of Section 145 of the Act. It is also not shown that project completion method followed by the assessee is in infringement of cash or mercantile method of accounting as stipulated u/s 145 of the Act. The Revenue has accepted the ‘project completion method’ in the immediately preceding two years i.e. assessment year 2009-10 and 2010-11. It is also not shown by learned DR that the project completion method of computing income is not allowed by the provisions of the Act or it does not yield in computing correct income of the assessee. It is well settled that project completion method is one of recognized method of accounting. After considering the various case laws cited by the assessee based on peculiar facts of the case, we are of the considered view that consistency has to be followed as the Revenue has accepted the ‘project completion method’ in the past . The entire profit from this project is stated to have been offered for taxation and due taxes are stated to have been paid to the Revenue albeit in assessment year 2014-15. In our considered view in order to render substantial justice and fair play in the instant case keeping in view peculiar facts and circumstances of the case, we are inclined to accept the appellate order of the ld. CIT(A) subject to verification by the A.O. that the entire profits earned by the assessee from this project ‘Quantum Tower’ in totality has been offered for taxation and due taxes on this project were duly paid to Revenue as contended by the assessee , albeit in the succeeding years by following ‘project completion method’, (including, inter-alia, profit earned on sales of ₹ 42.10 crores as well on closing stock of ₹ 29.50 crores) for which the assessee is directed to produce relevant evidence before the AO to substantiate that entire income from this project in totality has suffered tax and no prejudice is caused to the Revenue . In view of our detailed discussion and reasoning as detailed above, the appeal filed by the Revenue is dismissed subject to verification by the A.O. that the entire profits from this project has been offered for taxation by the assessee albeit in succeeding years and due taxes have been paid by the assessee to the Revenue with respect to the project ‘Quantum Tower’, on Rambaug, S.V. Road, Malad (W), Mumbai. - Decided in favour of assessee.
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