TMI Blog2013 (11) TMI 1271X X X X Extracts X X X X X X X X Extracts X X X X ..... other project i.e; Gym View Project too - In that sense, the CIT turned Nelson's Eye to the method adopted in respect of the other project as the same is inconvenient to him - This approach of the CIT is not valid. Jurisdiction u/s 263 - Held that:- The assumption of jurisdiction by the CIT is not valid - the revenue cannot trust a method of accounting on the assessee though that method is superior and therefore, substitution of method of accounting is not allowed unless, the loss of revenue is made out of the project of the assessee - CIT has not made out that by following project completion method, the assessee fulfilled the condition relating to 'prejudicial to the interest 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 - 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 - Assessee has not committed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 properties. Assessee filed return of income declaring income at Rs. 1,51,05,598/- and the same was scrutinized u/s 143(3) of the Act determining the total income at Rs. 1,58,68,700/-. At the end of the scrutiny assessment proceedings, additions were made on account of disallowances u/s 14A, 40(a)(ia) and on account of sundry debtors written off. As per the records, the assessee follows 'project completion method' in respect of both the projects namely (i) Link Corner Project and (ii) Gym View Project. The CIT (Adm)-15, Mumbai reviewed the order of the AO and issued a show cause notice dated 13.4.2010 u/s 263 of the Act and few of the issues raised in the show cause notice relate to recognizing of income in respect of Link Corner Project and Gym View Project and also AO's failure to disallow the provisions relating to Direct Expenses pertaining to Gym View Projec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 followed by the assessee-company and has come the conclusion that the method could not be said to be unreasonable even if a better method could, perhaps, be visualized. There is nothing wrong in that view of the Tribunal, and, the allowing of this deduction by the Tribunal cannot be said to be against any provisions of law, having regard, particularly, to s.13 of the Indian IT Act, 1922. 3. Shapoorji Pallonji Co (Rajkot) (P) Ltd. vs. ITO , 49 ITD (Bom) 479. ............... We therefore, find no error in the assessment orders. Considering the nature of business and the manner in which it was carried on not only the assessee, but the independent Chartered Accountants have also found it appropriate to adopt project completion method for the purpose of true and fair view of the financial position including the profits earned by the assessee on vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. 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. ..... . 4. CIT vs. Advance construction Co. (P) Ltd. 275 ITR 30 (Guj): Conclusion: Assessee contractor having offered profits for tax on the basis of percentage completion method which is a standard accounting practice and has been consistently followed by the assessee in subsequent years, the same could not be rejected and impugned amount which has been deducted in working out the profit is not chargeable to tax in the year under consideration. 5. Commissioner of Income-tax Vs Triveni Engineering and Industries Ltd. (Del) 336 ITR 374. Held: dismissing the appeal, that where in relation to the project works undertaken by the assessee, the completed contract method of accounting is followed, which is consistent with the Accounting Standards and these accounting standards also lay down the norms indicating the particular point of time when p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion 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 order. 7. We have heard the parties and perused the facts relating to the issue raised before us. It is undisputed fact that the assessee has two different projects, namely (i) Link Corner Project and (ii) Gym View Project. Total income of the assessee includes the business income from both the projects. Assessee recognized income from both the projects based on the 'project completion method' consistently followed over the years. AO accepted the method of recognizing the income from these projects for this AY 2007-2008. However, the CIT reviewed the order of the AO and attempted to thrust on the assessee the percentage completion method of recognizing the income only on the Link Corner Project only leaving the income from other project to be recognized based on the 'project completion method' of accounting. Why this discrimination? Appa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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