ITAT dismisses Revenue and Assessee appeals on income addition, citing builder not bound by accounting standard.

The appeals by Revenue and Cross-Objections by the assessee were dismissed by the ITAT. The primary issue was the addition of income by the Assessing Officer based on differing accounting methods. The ITAT upheld the Ld. CIT(A)'s decision, stating that the assessee, a builder, was not bound by the accounting standard in question. The additions based on estimated profit were deemed unwarranted, as income recognition was tied to sale deed execution. Upholding the additions would lead to double taxation. Consequently, all appeals were dismissed, concluding the matter without further relief granted.

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Issues:
Revenue's appeals and COs by the assessee against the common order of Ld. CIT(A)-I dated 29-014-2010.

Analysis:
The Revenue's appeals and COs were consolidated and disposed of together as they belonged to the same assessee. The primary issue revolved around the addition of income made by the Assessing Officer based on the difference between project completion method and percentage completion method prescribed by the ICAI under Accounting Standard 7. The AO contended that income accrued yearly and estimated income based on net working progress. However, the assessee argued that AS-7 applied to construction contracts, not builders, and income should be recognized upon significant risk or obligation transfer, which had not occurred as no sale deeds were executed until A.Y. 2007-08. The assessee also highlighted the distinction between construction contracts and builders' activities, citing relevant case law and the inapplicability of the AO's references. The Ld. CIT(A) allowed the appeal, noting that the revised AS-7 and the AO's reliance on specific cases were not applicable to the assessee's situation. The Ld. CIT(A) found no justification for estimating profits without evidence of under-assessment, leading to the direction to delete the additions.

The Revenue appealed the Ld. CIT(A)'s decision, leading to a hearing where the AO's order and the Ld. CIT(A)'s decision were contested. The ITAT upheld the Ld. CIT(A)'s ruling, emphasizing that the assessee, a builder, was not engaged in construction contracts and thus not bound by AS-7. The ITAT agreed that the additions based on estimated profit were unwarranted, as the assessee declared income upon executing sale deeds in A.Y. 2008-09 and 2009-10. Confirming the Ld. CIT(A)'s decision, the ITAT noted that upholding the additions would result in double taxation for the assessee. Consequently, all appeals by the revenue were dismissed.

Regarding the Cross-Objections (COs) filed by the assessee, the learned counsel did not press them during the hearing, leading to their dismissal. Ultimately, the appeals by the revenue and the COs filed by the assessee were dismissed, affirming the Ld. CIT(A)'s decision and concluding the matter with no further relief granted.

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