TMI Blog2021 (11) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... and is hereby set aside. The corresponding orders of the CIT (A) and the AO on the same issue are set aside as well. The question framed is answered in favour of the Assessee and against the Department by holding that the Department is not right in rejecting the accounting method followed by the Assessee for the AYs in question. - I.T.A. Nos.4, 5 and 6 of 2005 - - - Dated:- 17-11-2021 - S. MURALIDHAR CHIEF JUSTICE AND A. K. MOHAPATRA Appeared in this case: For Appellants : Mr. S. K. Jena, Advocate For Respondent : Mr. T. K. Satpathy, Senior Standing Counsel JUDGMENT Dr. S. Muralidhar, CJ. 1. All these appeals arise out of a common set of facts and considering similar questions of law and are accordingly d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Swedish krona and Indian currency. The work had to be completed within 33 months. The effective date of the contract was agreed to be 16th July, 1985. 6. The Contractor with the approval of the Assessee and other statutory authorities engaged sub-contractors, who received payments directly from the Contractor from time to time as reflected in the accounts of the Contractor as debits and the accounts of the sub-contractor as receipts. The payments made to the Contractor were also reflected in the accounts of the Assessee. 7. The contract was executed across 5 AYs commencing from 1987-88 and concluded in AY 1991-92. For the AY 1986-87, no job was executed. The Contractor had no income and only advance of ₹ 124.38 lakhs was paid by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax (CIT) passed an order dated 15th February, 1994 exercising jurisdiction under Section 263 of the Act and set aside the assessment for the aforementioned AYs i.e. 1987-88 to 1989-90 and restored them to the file of the AO. 12. For the second time, by an order dated 29th March, 1996, the AO was of the view that the percentage completion method would be the best way to estimate the profit. It was considered fair and reasonable to estimate the net profit at 10% of the gross receipts, which worked out to ₹ 35,70,778/-. 13. The Assessee then went an appeal before the Commissioner of Income Tax (Appeals), Cuttack [CIT (A)]. By an order dated 21st February, 1997, the CIT (A) held that the AO had not examined the matter as req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncurred even after two rounds of assessment. It was held that the estimation of profit at 10% quite legal and justified in view of the fact that generally in all other contract work, the profit percentage adopted is normally 12.5%. 18. This Court has heard the submissions of Mr. S. K. Jena, learned counsel for the Appellant-Assessee and Mr. T. K. Satpathy, learned Senior Standing Counsel for the Revenue Department. 19. Mr. Jena pointed out that the Contract was spread over for 5 AYs while the Department had accepted the completed contract method adopted by the Assessee for AYs 1990-91 and 1991-92. It was only for the assessment years i.e. AYs 1987-88, 1988-89 and 1989-90 that the Assessee s books of accounts were rejected and a prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the construction of the documents or the weight of certain circumstances. If this were permitted, litigation would have no end, except when legal ingenuity is exhausted. It is a principle of law that this cannot be permitted and there is abundant authority reiterating that principle. Thirdly, the same principle, namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed. In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken. 30. Reference was also made to Parashu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the sake of it. 22. In the present case, with the Revenue having accepted the Assessee s method of accounting for AYs 1990-91 and 1991-92, there is no reason for it to reject it for the earlier three AYs particularly considering that it is the same contract spread over the five AYs. 23. For the aforementioned reasons, the impugned order of the ITAT on the above issue is unsustainable in law and is hereby set aside. The corresponding orders of the CIT (A) and the AO on the same issue are set aside as well. 24. The question framed is answered in favour of the Assessee and against the Department by holding that the Department is not right in rejecting the accounting method followed by the Assessee for the AYs in question. 25. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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