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2019 (6) TMI 282 - AT - Income TaxRevision u/s 263 by CIT - Change in accounting policy - assessee had changed its accounting policy, from recognise revenue on projects from milestone billing basis to percentage completion method AS 7' to consequent to which revenue from projects and work in progress is lowered and thus loss for the year was shown higher - meaning of "construction of asset " - HELD THAT:- It is abundantly clear from the reading of the definition that block of asset is not restricted to building machinery plant or furniture but is extended to know-how patents Copyright etc. Therefore, whenever there is a construction of an asset and a contract is negotiated for that on standalone basis or for closely interrelated or interdependent in terms of design technology and function than in set scenario the Accounting Standard 7 shall be applicable. In view of the above the change in accounting policy by the assessee from milestone billing to percentage completion method is a plausible view and therefore even if the view has not been examined specifically by the Assessing Officer, we do not find any fault in shifting of the accounting policy by the assessee. Even this simulator with high configuration and technical input in design would definitely fall within the realm of an asset and the construction of such asset would definitely fall within the category of construction of asset and therefore accounting standard 7 had rightly been applied by the assessee and hence the order passed by the Pr. CIT u/s 263 is liable to be quashed and we do accordingly. The facts of the present case are similar to that of the facts mentioned by the Hon'ble High Court in the case of A2Z Maintenance [2017 (2) TMI 682 - DELHI HIGH COURT] as in the present case also, the assessee has been consistently following the AS 7 from the financial year 2007-08 and therefore there cannot be any justification for the officer to doubt the bona fide of the assessee in following the AS 7 and therefore also there was no reason for the CIT to come to the conclusion that the order passed by the Assessing Officer was erroneous. - Decided in favour of assessee.
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