9911796707
TMI Blog2013 (11) TMI 1271X X X X Extracts X X X X X X X X Extracts X X X X ..... dm) further erred in this connection in holding that:- a) in almost all cases, the appellant has received advances from buyers in excess of 70% of the agreement value; b) the payments received indicate the commitment of the buyer and seller as also indicates transfer of significant risk & reward to buyer; c) applying Accounting standard 9, the appellant should have recognized revenue; d) notwithstanding non-recognition by the appellant, the AO ought to have recognized it; and e) in the premises, the foregoing non-action on the part of the AO is erroneous and prejudicial to the interest of the Revenue. 4. The Ld CIT (Adm) failed to appreciate that the appellant under section 145 of the Income Tax Act, 1961 follows the project completion method of accounting and accordingly, already offered the income arising from the Link Corner project in the Assessment Year 2008-2009. 5. The Ld CIT (Adm) further erred in this connection in passing the impugned revision order in contravention of the principles of natural justice." 3. Briefly stated relevant facts of the case are that the assessee is engaged in the business of building and developing residential as well as commercial propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Completion Method without satisfying the conditions relating to expression 'prejudicial to the interests of the Revenue'. In this regard, Ld Counsel relied on various decisions and conclusions to demonstrate that the decision of the AO/CIT(A) are invalid and the same are mentioned here under: "1. CIT vs. Bilahari Investment 299 ITR 1 (SC) Conclusion: Assessees subscribing to chits having all along followed the completed contract method in the context of discount and the Department having accepted the same over several years, the completed contract method adopted by the assessees is not required to be substituted by percentage completion method in the absence of any finding of the AO that the completed contract method distorts the profits of a particular year. 2. CIT vs. TATA Iron & Steel Co. Ltd. 106 ITR 363 Held: It would be difficult for a company which carries on business of the magnitude of the assessee-company to fix in which particular year a particular plant which was obsolete became non-existent, or in which particular year the company became aware of the non-existence of a particular plant. The Tribunal has, in its order, rightly stressed the method of accounting fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecall the case of CIT vs. Sarangpur Cotton Mfg. Co. Ltd (1938) 6 ITR 36 j(PC) where it was opined that s. 145 related to a method of accounting regularly employed by the assessee for its own purposes and in this case for the purpose of company's business and does not relate to a method of making up of the statutory return for assessment to income tax. Moreover, the section clearly makes certain method of accounting a compulsory basis of computation unless the profits cannot properly be deducted therefrom. The Departmental Representative fairly admitted that the method followed by the assessee was also a recognized one and indeed on this aspect there cannot be disputed and that is why the AO not only in AY 1982-83 but also in subsequent two years, found himself duty-bound to compute the profits on the basis of method of accounting adopted by the assessee. When the assessments are made on certain settled principles, we find no reason, why assessments should be reversed. We therefore, hold that assumption of jurisdiction under s. 263 was not in accordance with law, on facts of the case and therefore, we cancel the order passed under s. 263 and restore the assessments framed by the AO. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with reference to accounting principle ie AS-9, Ld Counsel took objection to the manner in which the said AS-9 was interpreted by the CIT and stated that AS-9 does not apply to the facts of this case, in so far as the fact that the agreements for sale of the stocks were not signed in the year under consideration. For this purpose, Ld Counsel took us through page 46 of the paper book and mentioned that AS-7 or AS-9 are not notified by the Government unlike the other accounting principles ie AS-1 and AS-2 and therefore, the Assessee is not under statutory obligation to maintain his accounts in tune with the AS-& or AS-9. Therefore, AS-7 is not statutorily binding on the assessee and the same is not legally enforceable. Ld Counsel also filed written submissions elaborating various decisions and the relevant parts to be noted while taking decision by the Tribunal. 6. Per contra, Ld DR dutifully relied on the order of the CIT. Shri Manoj Kumar, Sr AR who argued the case stated that the AS-9 applied to the facts of this case. In this regard, some agreements which are not signed between the parties were also brought to our notice relying on the date mentioned on page 46 of the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of revenue' used in section 263 of the Act. Therefore, when the assessee is not held by the revenue guilty of change of method of accounting with the mala fide intention to reduce the tax liability, the CIT cannot allege the mala fide in the method followed by the assessee in respect of the income of the Link Corner project. Further, it is a settled law that the CIT cannot assume jurisdiction u/s 263 of the Act, when the issue relating to selection of method of account is debatable one in nature. Should the assessee follow 'Percentage Completion Method' in respect of 'Link Corner Project', when the Project Completion Method is undisputedly followed in respect of 'Gym View Project', in our view, constitutes a debatable issue. Assessee has not committed any legal error by uniformly and consistently following 'Project Completion Method' in respect of his project. AO's order does not suffer from any error both on law or fact. Further, it is a trite law that the CIT can only assume jurisdiction when there is erroneous assumption of law or fact or where the AO failed to apply his mind to an issue during making of an assessment or where AO failed to conduct reasonable enquiry into the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
