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Commissioner of Income Tax-15 Versus M/s Aditya Builders

2015 (9) TMI 1304 - BOMBAY HIGH COURT

Revision u/s 263 - Tribunal held that the assumption of jurisdiction u/s. 263 by the CIT is not valid - whether the assessee has not committed any legal error by uniformly and consistently following 'Project Completion Method' when he should have followed 'Percentage Completion Method' as per Accounting Standard 9? - whether the Tribunal was justified in law in not appreciating that the order passed by the assessing officer in this case is prejudicial to the interest of the Revenue as the assess .....

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the Project Completion Method in respect of subsequent assessment year i.e. A.Y. 2008-09. It is a settled position of law that where the revenue has accepted a particular method of accounting over several years, the same is not to be lightly substituted unless the revenue is able to show that the same distorts the profit for a particular year. As held by the Apex Court in UCO Bank Vs. CIT 240 ITR 355, the choice of method of accounting is of the assessee. The respondent-assessee has chosen/adopt .....

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Revisional jurisdiction under Section 264 of the Act.

So far as the alternative submission viz. the Link View Project should have also been brought to tax under the Project Completion Method is concerned, the same does not arise for our consideration as Commissioner in his order dated 27 March 2012 has specifically directed adoption of Percentage Completion Method of accounting to subject the income arising on Link Corner Project to tax. In any view of the matter, the profits on Link .....

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ncome Tax Act, 1961 (the 'Act') challenges the order dated 6 February 2013 passed by the Income Tax Appellate Tribunal (the 'Tribunal'). 2. The Assessment Year involved is A.Y. 2007-08. 3. The revenue has raised following questions of law for our consideration: (1) Whether, on the facts and the circumstances of the case, the Tribunal was justified in law in holding that the assumption of jurisdiction u/s. 263 of the Act, by the CIT is not valid and that the assessee has not commi .....

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k Corner Project which was 88.78% complete in which case, the assessing officer should have recognized the revenue from this project? 4. The respondent-assessee is engaged in construction of commercial and residential premises. For the subject Assessment Year 2007-08, the respondent filed return of income declaring income of ₹ 1.51 crores. The Assessing Officer also in the course of assessment noticed that the respondent-assessee was undertaking two construction projections namely Link Cor .....

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he order dated 13 July 2009 of the Assessing Officer and directed him to recompute the income of the respondent-assessee in respect of Link Corner Project by applying the Percentage Completion Method. However the profits disclosed by applying the Project Completion Method in case of Gym View Project was not distrubed. 6. Being aggrieved, the respondent-assessee filed an appeal before the Tribunal. The Tribunal by the impugned order held that the respondent-assessee has been consistently followin .....

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n respect of Link Corner Project. Further, the impugned order relied upon the settled position of law that the method of accounting cannot be thrust upon the assessee and where the assessee has been consistently following a particular method of accounting, the same cannot be lightly disturbed. Moreover, the issue relating to the appropriate method of accounting is a debatable issue and thus the Commissioner would have no jurisdiction under Section 263 of the Act to direct application of one part .....

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the Act. 8. We find that the revenue has accepted the Project Completion Method in respect of Gym View Project of the respondent-assessee. Further as recorded by Commissioner in his order dated 27 March 2012, the respondent-assessee has offered to tax the income earned on Link Corner Project by following the Project Completion Method in respect of subsequent assessment year i.e. A.Y. 2008-09. It is a settled position of law that where the revenue has accepted a particular method of accounting ov .....

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another method is prefereable. In view of the above settled position, no fault can be found with the impugned order of the Tribunal. Moreover, the most appropriate method of accounting to correctly reflect the true financial statement is a matter of opinion and debate. Issues of debate are not amenable to Revisional jurisdiction under Section 264 of the Act. 9. So far as the alternative submission made by Mr. Malhotra viz. the Link View Project should have also been brought to tax under the Proj .....

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