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2009 (7) TMI 708 - HC - Income TaxMethod of Accounting- Consistent Practice- The respondent-assessee is a registered firm. . It had entered into an agreement with the Reserve Bank of India for developing the property on commercial scale and thereafter to sell the land and property on package deal basis. The assessee had adopted a consistent practice of not disclosing the work-in-progress while working its profit and loss. The profits as disclosed during the previous assessment year, i.e., 1986-87 and the subsequent assessment year 1988-89 on this basis had been accepted by the Department. However, during the assessment years in question the Assessing Officer made an addition of Rs.5,47,000 being the value of the work-in-progress. The matter was taken up in appeal before the Commissioner of Income-tax (Appeals) who even though held that the value of the work-in-progress ought to be disclosed and taken into account while working out the profits, yet in the special circumstances of the present case as the trade results have been accepted both in the previous year and the subsequent year, it will disturb the entire method adopted by the assessee and would lead to reopening and adjustment in the opening and closing stock of the previous and subsequent year. The Commissioner of Income-tax (Appeals), therefore, accepted the claim of the assessee. Tribunal upheld the order of Commissioner(Appeals). Held that- The rate of profits shown by the assessee is more than 10 per cent. without retention money and the profits result of the year is fair and reasonable by any standard and the books of account have been regularly maintained and no fault has been found in them. Further the expenses allowed in the past had not been claimed against the money received this year and for the work done in the last year - Decided in favor of the assessee
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