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2022 (7) TMI 472 - ITAT AHMEDABADRevision u/s 263 - Error in computing capital WIP - assessee despite following the Project Completion Method for accounting of Revenue and having debited interest to the profit and loss account, however the same was not included in the capital work in progress as at the end of the year - AO failed to verify whether the assessee had followed the Percentage Completion Method for recognizing revenue as prescribed by the guidance note issued by the Institute of Chartered Accountants of India(ICAI) for accounting income from Real Estate business - HELD THAT:- Assessee had explained all these facts to the Ld.PCIT also pointing out firstly to him that the assessee had all along been consistently following this method of recognizing Revenue and it had also been demonstrated to him from the Guidance Note of the ICAI(Revised in 2012) on accounting for Real estate transactions, that the project completion method was also recommended in the said Guidance Note in specific circumstances ,which the assessee had demonstrated existed in its case justifying the adoption of even as per the guidance note of the ICAI. This issue too had been duly examined during assessment proceedings and it had duly demonstrated to the PCIT also that the project completion method of revenue recognition followed by the assessee was in compliance with the accounting guidelines issued by the ICAI for Real Estate revised in 2012 in this regard. PCIT has not pointed out any infirmity in the above explanation, but simply dismissed it by stating that the assessee has not followed the Guidelines issued by the ICAI and the AO has not examined the issue, both observations we find are factually incorrect. Therefore vis a vis the issue of accounting for income by the assessee whether in accordance with the Guidelines of the ICAI, we find that there is no error in the order of the AO who had accepted the method followed by the assessee, i.e Project Completion, on being demonstrated that it was in accordance with the Guidelines issued by the ICAI, which fact has not been controverted by the Ld.PCIT when demonstrated to him also during revisionary proceedings. Also the uncontroverted fact that the assessee has been consistently following this method of accounting also renders the acceptance of the same by the AO to be correct and in accordance with law. Appeal of assessee allowed.
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