TMI Blog1993 (11) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. The construction contracts as also various projects undertaken to be completed take several years for completion. The work also continues at various sites on account of various works undertaken. For example in assessment year 1983-84, the work started on behalf of Crompton Greaves Ambad, Nasik continued up to assessment year 1989-90. So is the case in respect of Thane work undertaken on behalf of Precision Fasteners Ltd. For the purpose of accounts, the year adopted is financial year and for the purpose of books of account the assessee adopted project completion method, that is to say the profit or loss to be accounted for in the books of account of the year in which the project is completed. For example, the project undertaken on behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts accruing to the assessee for each of the accounting year during the pendency of the contract and accordingly he directed the Assessing Officer, after setting aside the assessments, to work out the profits on the work-in-progress. He drew support from decision In the cases of P.M. Mohammed Meerakhan v. CIT [1969] 73 ITR 735 (SC), Sri Sukhdeodas Jalan v. CIT [1954] 26 ITR 617 (Pat.) and Tirath Ram Ahuja (P.) Ltd. v. CIT [1976] 103 ITR 15 (Delhi). A decision of the Tribunal in the case of Champion Construction Co. v. First ITO [1983] 5 ITD 495 (Bom.) was also considered by the Commissioner. 3. At the time of hearing, the learned counsel for the assessee, Shri Harish, was quite emphatic in stating that the controversy was covered in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cent in respect of project of Crompton Greaves, Ambad, Nasik and in respect of the project of Precision Fasteners, Thane the percentage of profit shown on completion of project work was still higher. Thus there was no need to disturb the assessments completed by the Assessing Officer. The project completion method was recognised one for which various decisions of the Tribunal were relied upon, such as in the cases of ITO v. W.D. Estates (P.) Ltd. [1993] 45 ITD 473 (Bom.); D.K. Enterprises v. ITO [1991] 39 ITD 394 (Bom.) and an unreported decision of the Tribunal appearing at page 64 of the paper-book as also at page 267 of the paper-book No. III. He also distinguished on facts the decision considered by the Commissioner. 4. The Senior De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the nature of business and the manner in which it was carried on not only the assessee, but the independent Chartered Accountants have also found it appropriate to adopt project completion method for the purpose of true and fair view of the financial position including the profits earned by the assessee on various projects. Merely because the profit on a project is postponed from the year of commencement of the project to the year of completion of the project, the same would not be the basis for considering the assessment made on that basis as erroneous. In this case the rate of tax is constant and, therefore, in the context of the aforesaid circumstances, it cannot be said that the assessments were in any way prejudicial to the interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he section clearly makes certain method of accounting a compulsory basis of computation unless the profits cannot properly be deduced therefrom. The Departmental Representative fairly admitted that the method followed by the assessee was also a recognised one and, indeed, on this aspect there cannot be dispute and that is why the Assessing Officer not only in assessment year 1982-83 but also in subsequent two years, found himself duty-bound to compute the profits on the basis of method of accounting adopted by the assessee. When the assessments are made on certain settled principles, we find no reason why assessments should be revised. We, therefore, hold that assumption of jurisdiction under section 263 was not in accordance with law, on f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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