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TMI Blog2016 (3) TMI 1440X X X X Extracts X X X X X X X X Extracts X X X X ..... tage of completion method as per Accounting Standard-7 issued by ICAI. 3. Brief facts of the case are that during the course of assessment proceedings, the AO observed that the assessee company is engaged in the business of real estate. The assessee filed its return of income on 22.09.2008 declaring the total income at loss of Rs.(-) 24,58,790/-. The case was selected for scrutiny and notice was issued and served on the assessee. In response to the notice, the AR of the assessee attended and furnished the details called for. The AO observed that as per Profit & Loss Account, no sales were declared during the year, however, the assessee had carried out construction work and collected advances against sales from customer. The AO further obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ICAI issued Accounting Standard (AS) 7 - 'Construction Contract' in the year 1983 which was later on revised in the year 2002. The AS-7 laid down the principles of accounting for 'construction contracts' in the financial statements of the Contractors. As per the revised AS-7, the accounting was to be done as per percentage/progressive completion method. The revised AS-7 is applicable only to Contractors. (ii) That Recognition/identification of income under the Act is attainable by several methods of accounting including the completed contract method or the percentage of completion method. (iii) Every assessee is entitled to arrange its affairs and follow either the completed contract method of accounting or the perce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany cannot be said to be unreasonable, and that in such a case, even if a better method could be visualized, the method consistently followed should be accepted. (ix) That the Supreme Court in the case of CIT v. Realest Builders & Services Ltd.[200B] 170 TAXMAN 218 (SC) has held that the tax department needs to provide facts and figures that the impugned method of accounting adopted by the taxpayer results in underestimation of profits for changing the method of accounting under section 145 of the Act. Otherwise, it will be presumed that the entire exercise is revenue neutral. (LATEST JUDGEMENT - Unique Enterprises v. ITO [2010-TIOL-737-ITAT-MUM). (x) That recently, the Mumbai Bench of the Tribunal in the case of Unique Enterprises h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicable to the facts of the assessee's case as the construction is completed up to 53.95%, therefore, the project was not complete and real profits cannot be estimated from the same. The ld. CIT (A) has rightly held that the AO has not pointed out any discrepancy that method followed regularly by the assessee was distorting or under estimating the profits and since no such facts and figures have been brought on record by the AO, therefore, the method regularly followed by the assessee cannot be interfered with. Therefore, the percentage completion method applied by the AO cannot be applied in the case of the assessee. Therefore, in view of the above, we do not find any infirmity in the order of the CIT (A) and accordingly, we uphold the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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