TMI Blog2015 (10) TMI 2059X X X X Extracts X X X X X X X X Extracts X X X X ..... completion method followed by the assessee would result in deferment of the payment of the taxes which are to be assessed annually under the IT Act." The assessee-respondent had been consistently following one of the recognized methods of accountancy, i.e. project completion method, for computation of its income. In the absence of any prohibition or restriction under the Act for doing so, it cannot be held that the approach of the CIT(A) and the Tribunal was erroneous or illegal in any manner so as to call for interference by this Court. - Decided in favour of assessee. - ITA No. 19, 206, 218, 219, 220 and 228 of 2015 (O&M) - - - Dated:- 13-8-2015 - Ajay Kumar Mittal And Ramendra Jain, JJ. For the Appellant : Mr. Rajesh Sethi, Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT has committed error in law holding that in absence of any defect pointed out by the Assessing Officer in adoption of project completion method by the assessee the percentage completion method cannot be applied when the guidance note of ICAI requires that the accounts of business of Real Estate are to be maintained by percentage completion method? 3. Briefly put, the facts necessary for adjudication of the instant appeal as narrated therein may be noticed. The assessee filed its return of income under Section 153A of the Act on 28.10.2007 declaring a total income at ₹ 38,343/-. A search operation under Section 132(1) of the Act was conducted at the premises of the assessee on 7.7.2009. The Assessing Officer passed the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was delivered to him. It was pointed out that neither Accounting standard 9 (AS 9) or Accounting Standard 7 (AS 7) issued by the Institute of Chartered Accountants of India has been recognized by the Act and in such circumstances, there was no guidance or strict procedure for adopting a particular accounting standard under the Act and it depends upon facts and circumstances of each case. In other words, the assessee was entitled to adopt Project Completion method for determining its income which was being regularly followed by it. Though the Assessing Officer had rejected the plea of the assessee, but the CIT(A) while accepting the appeal of the assessee made the following observations:- It is however not the AO's case that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness of real estate developers. The case of the assessee is that it is following one of the accepted accounting standards approved by ICAI for recognizing the revenue generated by it. The assessee had followed project completion method which had been consistently followed by the assessee for the preceding years also. The Assessing Officer, on the other hand, had applied percentage completion method to compute the income in the hands of the assessee. The Commissioner of Income Tax (Appeals) had allowed the claim of the assessee. 48. Both the methods of accounting are i.e. project completion method and percentage completion method is accepted standards of accounting and either of the methods can be applied by the assessee. In the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , there is no reason to reject the same. 51. The Hon'ble Delhi High Court in CIT v. Manish Buildwell (P) Ltd. (supra) had held that it is well settled that the project completion method is one of the recognized methods of accounting. It cannot be said that the projection completion method followed by the assessee would result in deferment of the payment of the taxes which are to be assessed annually under the IT Act. AS-7 issued by the ICAI also recognizes the position that in the case of construction contracts, the assessee can follow either the project completion method or the percentage completion method. 52. Where the assessee was following a particular method of accounting consistently, which has been accepted by the de ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
