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2010 (5) TMI 697 - ITAT AHMEDABADComputation of business income - choosing the system of accounting - Addition made on the basis of percentage of completion method as per revised Accounting Standard-7 (AS-7), the assessee is engaged in the business of builder and developer - CIT(A) held that it is AS-9 that is applicable to the case of the assessee HELD THAT:- As undisputed appellant is a developer and not a contractor. A reading of section 145 of the Act shows that the business income which is assessable under the income Tax Act is to be computed in accordance with the consistent system of accounting followed by the assessee unless such system of accounting is defective and /or from such system of accounting, profit cannot be deduced. Thus, in our considered opinion, the option for choosing the system of account is with the assessee and not with the Learned Assessing Officer provided the system chosen by the assessee is consistently followed by him and such system is not a defective system Provisions of AS-7 cannot override the provisions of section 145 in so far as the computation of business income under the Income Tax Act for the purpose of determining assessable income is concerned. A reading of section 145 of the Act shows that the business income which is assessable under the income Tax Act is to be computed in accordance with the consistent system of accounting followed by the assessee unless such system of accounting is defective and /or from such system of accounting, profit cannot be deduced. We find that AO has brought no material on record to show that the system of accounting adopted by the assessee for the year under appeal was not consistently followed by the assessee or the system adopted was a defective system. In our considered view, even a project completion method is also a recognised system of accounting. Simply, The Institute of Chartered Accountants of India has recommended percentage completion method does not mean that project completion method if consistently followed by the assessee, the same is not a bonafide system of accounting or the same is a defective system of accounting. The CIT (A) has recorded a finding after perusing the assessment records of the subsequent years that the assessee has offered for taxation its income in the subsequent year as per the consistent system of accounting followed by the assessee. Therefore, we do not find any error in the order of the CIT (A) and therefore, the same is upheld and the appeal of the revenue is dismissed.
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