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2019 (5) TMI 993 - AT - Income TaxIncome recognition - Project Completion Method - Accounting Standards (AS) 9 - Undisclosed sales addition - advances received from the two customers - HELD THAT:- The assessee builder/ developer had rightly not recognized advances received from the two customers as income ongoing by project completion method as per its past practice accounting system regularly followed. More so in view of the fact that it had actually sold the flats in issue in AY 2016-17. We therefore confirm the CIT(A) ‘s findings deleting the impugned addition of undisclosed sales. The Revenue fails in this former ground. Nature of loss - business loss or short term capital loss - assessee’s books treating the land in issue as a fixed asset than stock-in-trade - HELD THAT:- No reason to accept the Revenue’s instant arguments. The fact remains that the assessee is engaged in property development business. It has been developing residential projects throughout all preceding assessment years. We therefore are of the view that the assessee’s mere book treatment of the land in issue as a fixed asset cannot form the sole criteria to hold that the same gives rise to capital loss. As decided in KEDARNATH JUTE MANUFACTURING COMPANY LIMITED VERSUS COMMISSIONER OF INCOME-TAX (CENTRAL), CALCUTTA [1971 (8) TMI 10 - SUPREME COURT] an assessee’s book treatment cannot form the sole guiding factor giving rise to a tax incidence. This tribunal’s decision in Canara Bank v/s. JCIT [2017 (11) TMI 1425 - ITAT BANGALORE] also holds that any treatment given at the assessee’s behest in books of account; item-wise on expenditure, has no relevant to decide taxability or otherwise thereof under the provisions of the Income-tax Act, 1961. We reject Revenue’s instant substantive ground as well and cured that the assessee is entitled to treat its land as stock-in-trade than fixed assets/investments. DR contended that the AO in his assessment order had recorded assessee’s consent on the instant issue during scrutiny - No substance in the technical plea as well as the purpose of a scrutiny assessment is to determine appropriate taxable income as per provisions of the Act only. This tribunal’s co-ordinate bench’s decision in “Canara Bank” (supra) holds that estopple does not apply in income-tax proceedings. The Revenue’s latter substantive ground is rejected therefore. - Decided against revenue.
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