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2017 (4) TMI 1153 - HC - Income TaxRecognized system of accounting - maintain its accounts according to AS-7 or AS-9 - Held that:- Held that:- There is no dispute that the nature of business of the respondent-assessee from the inception is same and that it had been filing its returns as a Real Estate Developer since 2003 by adopting AS-9 system of accounting, which were all through accepted by the Department without any reservation. In view of the fact that the Department itself in the past had accepted the respondent-assessee as a Real Estate Developer, it cannot be permitted to shift the stand at this stage so as to contend that the respondent-assessee is actually not a Real Estate Developer but a Contractor. In the case at hand, there is no finding or even an averment that the system of accounting followed by the assessee is unable to show the true and correct profits or that it results in distortion of the profits. At the same time, we do not find any statutory provision or a Rule, which may compel the respondent-assessee to follow the AS-7 system of accounting alone. In view of the above, as the respondent-assessee is a Real Estate Developer and not a Contractor simplicitor, the system of accounting followed by it for the last many years is in accordance with recognized procedure, the Department cannot reject the said system followed by it for the reason that it ought to have followed the other recognized system AS-7 system i.e. percentage completion system. The Act or the Rules nowhere mandates for following a particular accounting system by the respondent-assessee, therefore, if any of the recognized mode of accounting has been followed, we find that no illegality has been committed by the respondent-assessee. In view of the aforesaid facts and circumstances as well as findings as returned by the Income Tax Appellate Tribunal, there is hardly any question of law, which arises for our consideration.
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