TMI Blog2014 (12) TMI 1324X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the order of the Commissioner (Appeals) is set aside - we allow the appeal of the Assessee and hold that the method of accounting followed by the Assessee has to be accepted. Liability to pay interest u/s.234A and 234B - Held that:- The charging of interest is consequential and mandatory and the Assessing Officer has no discretion in the matter and in this view of the matter, we uphold his action in charging the said interest. This proposition has been upheld by the Hon'ble Apex Court in the case of Anjum H Ghaswala & Others (2001 (10) TMI 4 - SUPREME COURT). Proportionate deduction u/s. 80IB(10) - profits derived from sale of residential units whose built-up area is less than 1500 sq.ft., even though some of the residential units in the very same project exceeds the built-up area of 1500 sq.ft. - Held that:- The same has been decided by the Hon’ble High Court of Karnataka in the case of CIT v. SJR Builders [2012 (3) TMI 615 - KARNATAKA HIGH COURT] as taken the view confirming the order of the Tribunal, by holding that where residential units exceed the built-up area of 1500 sq.ft., such units may be excluded for deduction, but the assessee will not lose the benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. making the addition, the Assessing Officer followed the order of the CIT(Appeals) in the assessee's own case for Assessment Year 2009-10. 2.2 As regards the assessee's claim for deduction under section 80 IB(10) of the Act in respect of the profits brought to tax under the Percentage Completed Method , the Assessing Officer was of the view that since the built up area of 26 flats were in excess of the prescribed limit of 1500 sq. ft., deduction claimed under section 80 IB(10) of the Act cannot be allowed, even in respect of the other flats having built up area not exceeding the prescribed limit of 1500 sq. ft. 3. Aggrieved by the order of assessment dt.28.2.2013 for Assessment Year 2010-11, the assessee preferred an appeal before the CIT(Appeals)-II, Bangalore. Thelearned CIT (Appeals) disposed off the assessee's appeal vide order dt.5.9.2013 allowing the assessee partial relief. In this order, the learned CIT (Appeals) confirmed the addition of ₹ 6,89,77,177 made on account of the income assessable to tax arising to the assessee under the Percentage Completed Method . The learned CIT (Appeals), however, allowed the assessee proportionate deduction un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aintain the accounts on the Percentage Completed Method and computing the taxable profits at ₹ 6,89,77,117 as against the Project Completed Method consistently followed by the assessee consistently, as their conclusions are not in conformity with accounting principles. It is submitted that the assessee has correctly computed its profits in accordance with the Percentage Completed Method . The learned Authorised Representative was heard in support of the grounds raised and submitted that the issue in question in this appeal is covered in favour of the assessee by the decision of the co-ordinate bench of this Tribunal in the assessee's own case for Assessment Year 2009-10 in ITA Nos.487 654/Bang/2013 dt.11.4.2014. The learned Authorised Representative prayed that in view of this decision of the co-ordinate bench in the assessee's case for Assessment Year 2009-10 (supra), the assessee's appeal ought to be allowed on this issue. 7.2 Per contra, the learned Departmental Representative vehemently supported the orders of the authorities below. 7.3 We have heard the rival contentions and perused and carefully considered the material on record, including the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in tune with the mercantile system of account. 17. We are also of the view that the AO cannot thrust any particular method of accounting on the assessee. In this regard, even the unamended AS-7 which applied to construction contacts could not have been thrust upon the assessee who is in the business of real estate development. Under section 145(2) of the Act, the assessee is free to adopt either cash or mercantile system of accounting. When a method of accounting is followed by the assessee, the jurisdiction of the AO only extends u/s. 145(2) of the Act to verify as to whether the method of accounting is being regularly followed by the assessee. Beyond this, the AO has no jurisdiction in the matter of accounting followedby the assessee. 18. The Hon ble Karnataka High Court in the case of CIT Vs. Rema Country Holdings Ltd. ITA No.1041 1042/2006 order dated 26.9.2011 has also taken the view that project completion method is a recognized method of accounting and can be followed by Assessee. We may also add that real estate developers are not pure contractors but are sellers of flats. It is not mandatory for all real estate developers to follow Percentage Completion Method as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following grounds :- 1. The order of learned CIT (Appeals) is clearly opposed to law as far as the findings are perverse, contrary to the facts and circumstances of the case and hence not sustainable. 2. The CIT (Appeals) erred in granting proportionate deduction u/s. 80IB(10) in respect of profits earned on flats which complied with the prescribed limit of built up area, although the provisions of section 80IB(10) do not expressly allow such proportionate deduction and the section envisages total compliance of the housing project as a whole with the conditions mentioned therein. 3. The CIT (Appeals) ought to have appreciated that the issue of granting proportionate deduction under section 80IB(10) in the above manner has not become final as the department s appeals u/s.260A on Bangalore ITAT orders on identical issue in many cases are pending before the Hon'ble High Court. 4. The CIT (Appeals) erred in allowing proportionate deduction under section 80IB(10) although no such alternative claim was made in the original return and accordingly contravened the provisions of section 80A(5). The learned Departmental Representative was heard in support of the groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther decisions of various benches of the Tribunal were filed in the paper book taking similar view. In view of the aforesaid decision of the Hon ble High Court of Karnataka, we are not making any reference to those decisions. In view of the aforesaid decision of the Hon ble Karnataka High Court, we are of the view that there is no merit in the appeals of the revenue and the same are dismissed. 10.3.2 Respectfully following the decision of the Hon'ble High Court of Karnataka in the case of CIT V SJR Builders in ITA No.32 of 2010 dt.19.3.2012 and of the co-ordinate bench of this Tribunal in the assessee's own case for Assessment Year 2009-10 (supra), we are of the view that there is no merit in this appeal of revenue and therefore dismiss the grounds raised. 11. In the result, Revenue s appeal for Assessment Year 2010-11 is dismissed. 12. In view of the cross appeals for Assessment Year 2010-11 in ITA Nos.1366 1707/Bang/2013 being disposed off as above, this stay petition preferred by the assessee is rendered infructuous and is therefore accordingly dismissed. 13. To sum up, the assessee's appeal for Assessment Year 2010-11 is partly allowed while Revenue s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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