Tax Appeal Dismissed Due to Consistent Project Completion Method

The Tax Appeal was dismissed as the court found that the assessee had followed the recognized accounting principle of booking profit based on the project completion method for ongoing construction projects. Despite discrepancies in the Commissioner's calculations, there was no evidence of deviation from this method in the past or objections raised by the department, leading to the dismissal of the appeal.

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Issues:
1. Distribution of income offered by the assessee during survey operation
2. Applicability of project completion method for ongoing construction project

Analysis:

Issue 1 - Distribution of Income:
The Tribunal noted that no further additions were made by the Assessing Officer even after a reminder by the Commissioner exercising revisinal power under section 263. As a result, the first question raised by the revenue became infructuous and was not examined further.

Issue 2 - Applicability of Project Completion Method:
The Commissioner, in the revisional order, referred to a sum of &8377; 121.18 crores as booking receipts and added profit at the rate of 8 per cent. However, the Tribunal found that the actual booking receipts were only &8377; 22.42 crores, on which the assessee had already paid tax at 8 per cent. The Commissioner was deemed factually incorrect in making additional additions based on this discrepancy. The revenue's counsel argued that the Commissioner's mention of the higher figure was based on the context of the assessee's accounts using the project completion method. Despite this error, the court observed that the assessee was involved in construction projects where booking profit based on project completion method was a recognized accounting principle. There was no evidence to suggest that the assessee had deviated from this method in the past or that the department had objected to it. Consequently, the Tax Appeal was dismissed.

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