TMI Blog2018 (11) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt and also Tribunal consistent taken a view that the assessee’s consistent method for determining income is completed project completion method and there is no change in the same. Once, this is the position there is no question of revision. Hence, in the given facts and circumstances, we quash the revision order passed by PCIT and allow the appeal of the assessee. - ITA No. 3885/Mum/2017 - - - Dated:- 26-9-2018 - Sri Mahavir Singh, JM And Sri Nk Pradhan, AM For the Appellant : Shri Madhur Agarwal, AR For the Respondent : Shri R. Manjunatha Swamy, DR ORDER PER MAHAVIR SINGH, JM: This appeal filed by the assessee is arising out of the revision order passed by the Pr. Commissioner of Income Tax-1, Mumbai under section 263 of the Income Tax Act, 1961 (hereinafter the Act ) [in short PCIT], vide No. Nil, dated 30.03.2017. The Assessment was framed by the Deputy Commissioner of Income Tax, Circle-1(3)(1), Mumbai (in short DCIT/ AO ) for the A.Y. 2012-13 vide order dated 05.01.2015 under section 143(3) of the Act. 2. The only issue in this appeal of assessee is against the revision order passed by PCIT under section 263 of the Act revising the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer, while completing assessment has failed to carry out relevant and meaningful enquiries as warranted by the facts and circumstances of the case and conclude it correctly as per Law. This will be apparent from the following discussion. It would be also clear from the discussion in the paragraphs below that Assessing Officer 'accepted the various claims of the assessee at face value and also the explanation filed without verifying the veracity of the details on account of non-application of mind. 3. The return of income for A.Y.2012-13 was filed on 28.09.20 12 declaring total income at Rs. Nil. and ₹ 35,88,88,394/- u/s. I 15JB of the Act. Subsequently, the case was 'selected for scrutiny. The assessment u/s.143 (3) of the Act, was completed on 05.01.2015 accepting the return income at Rs. Nil. 4. On examination of assessment records, it is observed that the assessee has been historically maintaining its accounts and computing the profit in the books as well as in its return for tax purpose on Percentage Completion Method but the same ''as changed in this year only for tax purposes to Project Completed Contract Method as a result ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee in its books of account and for income-tax purposes. As admitted by the assessee, it has been following Percentage Completion Method (PCM) for preparation of its financial statements and Completion Contract Method (CCM) for income-tax purpose. However, this issue was not at all examined by the Assessing Officer while completing the assessment u/s 143(3) of the Act. The assessment order is therefore, erroneous and is prejudicial to the interest of revenue. After considering the arguments put forth on behalf of the assessee, it is clear that many aspects related to revenue recognition, method of accounting as per books vis- -vis as per Income-tax Act and the impact of above two items of expense and revenue on the assessment requires deeper examination from all the aspects of the issue. These errors have already been considered for action u/s. 263 of the I.T. Act and I find no reason for not proceeding ahead in section 263 of the I. T. Act. 7. In view of the above facts and circumstances and after considering the submissions made by the assessee company, I am convinced that A.O. has committed errors described above which are also prejudicial to the interest of rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the actual sales made after reducing the actual cost of construction. This reflects the true profits from the project. Your goodselves will appreciate that a project may be completed over a period of time wherein in the initial years there will be no sates and booking profits on notional basis is avoided for Income Tax purposes whereas following the percentage completion in books reflects a correct position of booking cost in books. Further your goodselves desired the history of parent company of the assessee. In this regard, we state that the assessee is 100% subsidiary of MIs. Tata Housing Development Company Limited ('THDC'). THDC is a Public Limited Company carrying on the business of developing residential and commercial areas. The assessee's holding company i.e. THDC continued to offer its income under completed contract basis for IT purposes. The said method of accounting has been constantly followed by THDC over all these years. ITAT since inception i.e. from A.Y. 83-84 upto AN 2002-03 and the Commissioner of income Tax (Appeals) upto A.Y. 2008-09 has all along upheld THOC method of accounting for income-tax purposes i.e completed contract method offered b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pletion Method (PCM) in its books of accounts whereas follows Completed Contract Method (CCM) regularly since inception while reporting income under the ITA. This has been accepted in the past assessment i.e. in AY 2011-12. Further with respect to interest expenditure the assessee claims the same to the extent paid u/s. 36(1)(iii) r.w.s. 438 of ITA in its return of income. in books of accounts, the assessee does not claim the entire interest as a deductible expenditure for the year. Rather to the extent the funds are availed by project, the same are added to capital work in progress based on scientific allocation. The assesses carries out business of real estate development and during the course of business is required to borrow funds. Such borrowings are inevitable without which large projects cannot be undertaken. In the business of the assessee, interest incurred is treated as finance cost. None of the borrowings are made for the specific project but. funds are borrowed generally for the purpose of business of the assessee company. These sums were borrowed and utilized on various projects under constructions. The assessee has incurred interest cost on the borrowings in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee also drew our attention to the judgement of Hon ble Bombay High Court in assessee s own case in Income Tax Application No. 215 of 2000, 216 of 2000,217 of 2000 218 of 2000 in the case of The Commissioner of Income Tax vs. Tata Housing Development Co. Ltd. dated 3rd July 2006 confirmed the order of Tribunal, wherein method followed by assessee i.e. project completion method of accounting was accepted by Hon ble High Court. Even Tribunal in AY 2001-02 and 2002-03 in assessee s own case vide order dated 30.09.2010 accepted the project on completed method vide Para 4 as under: - 4. After hearing both the sides, we find identical issue has been decided by the Tribunal in the assessee s own case for the asst. years 1998-99 and 1999 2000 vide ITA No.2665 2666/Mum/2004. We find the Tribunal, vide order dated 05-04-2010, while dismissing the appeals filed by the Revenue, has held as under: 14. We have heard the learned representatives of the parties and perused the record. We find that issue is covered in favour of the assessee to follow completion method of accounting , by the earlier orders of the ITAT for AY 83-84/87-88 which have been confirm the Hon ble juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 filed during the course of assessment proceedings under section 143(3) of the Act. The AO has gone into the details and made enquiry about the completed project completion method and made assessment thereafter. As relied on by the learned CIT Departmental Representative, of the case laws of Amitabh Bachchan (supra), wherein Hon ble Supreme Court has clearly laid down that in case a view taken by AO is one of the possible view, the same should not be interfere with by the CIT while revising the assessment under section 263 of the Act. This situation has been explained by Hon ble Supreme Court in Para 21 and the relevant para reads as under: - 21. There can be no doubt that so long as the view taken by the Assessing Officer is a possible view the same ought not to be interfered with by the Commissioner under Section 263 of the Act merely on the ground that there is another possible view of the matter. Permitting exercise of revisional power in a situation where two views are possible would really amount to conferring some kind of an appellate power in the revisional authority. This is a course of action that must be desisted from. However, the above is not the situation in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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