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2015 (9) TMI 1304 - BOMBAY HIGH COURT

2015 (9) TMI 1304 - BOMBAY HIGH COURT - [2015] 378 ITR 75 (Bom) - 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 thi .....

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ered 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 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 accou .....

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matter of opinion and debate. Issues of debate are not amenable to 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 Cor .....

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hah, Adv ORDER P. C. This appeal filed under Section 260A of the Income 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 th .....

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s not recognized revenue as per Accounting Standard 9 from its Link 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-ass .....

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n exercise of his powers of revision under Section 263 set aside the 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 orde .....

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ce the Project Completion Method by Percentage Completion Method in 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 jurisdict .....

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issioner of Income Tax in exercise of powers under Section 263 of 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 w .....

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nue to reject a method because according to the Assessing Officer 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 Lin .....

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