Consistent accounting method accepted in earlier years cannot ordinarily be disturbed without compelling reason, preserving claimed overhead allocation.

A consistently followed accounting method for allocating head office overheads, once accepted by the Revenue in earlier years, should not ordinarily be disturbed in later years without a compelling reason. The Court upheld deletion of the disallowance relating to overhead expenses attributable to the incomplete project, noting that the assessee had applied the same method year after year and that prior acceptance by the Revenue weighed against changing the position for the relevant assessment years. The question was answered in favour of the assessee and against the Revenue, and the Revenue's appeal failed.

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Issues: Whether the Tribunal was right in deleting the disallowance of overhead expenses attributable to the incomplete project, when the assessee had consistently allocated head office overheads to the completed project and that method had been accepted by the Revenue in earlier years.

Analysis: The assessee had followed the same accounting method year after year, and that method had been accepted by the Revenue in earlier years. Although a different allocation could arguably present a more accurate picture of project-wise expenditure, the Revenue's prior acceptance of the method meant that it would be unfair to require a change for the relevant assessment years. The consistency of the method weighed against disturbing the position already adopted and acted upon over the years.

Conclusion: The deletion of the disallowance was upheld; the question was answered in favour of the assessee and against the Revenue.

Final Conclusion: The Revenue's appeal failed, and the Tribunal's view deleting the disallowance of overhead expenses was sustained.

Ratio Decidendi: Where a method of accounting has been consistently followed by the assessee and accepted by the Revenue in earlier years, it should not ordinarily be disturbed for later years in the absence of a compelling reason.

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