TaxTMI 
TaxTMI 
2013 (4) TMI 259
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....sessment was framed u/s. 143(3) vide order dated 30-12-2008 and total income was determined at Rs.2,00,01,140/-. Aggrieved by the order of A.O. assessee carried the matter before the CIT (A). CIT (A) granted partial relief vide his order dated 9-12-2009. Aggrieved by the order of CIT (A), the Revenue is now in appeal before us. The Ground of appeal of Revenue reads as under;- "The Ld. CIT (A) has erred in law and on facts in deleting addition of Rs.1,66,70,811/- made on account of account of business income by computed percentage Completion Method." 4. On perusing the details submitted by the assessee A.O. noticed that in the case of M/s. Sahjanand Enterprise the assessee has followed the percentage completion method and no income was off....
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....rther of the view that the project completion method as followed by the assessee did not confirm to the scheme of Income tax. He therefore, relying on the decision of CIT vs. British Paints India Ltd. (1991) 188 ITR 44 (SC) and the Accounting Standard 7 prescribed by Institute of Chartered Accountants of India (ICAI) was of the view that the Revenue had to be recognized following percentage completion method. He further observed that the assessee was following the mixed method of accounting (namely percentage completion method and project completion method) for the same source of income, which according to him was not permissible. He accordingly following percentage completion method, determined the income offered on the total work done dur....
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.... facts, the point for determination is to whether the A.O. is justified in changing the method of accounting of its profits in the year under consideration particularly when profits have been accounted for by appellant on the basis of project completion method in the subsequent year i.e. A.Y. 2007-08. The assessing officer has relied on Accounting Standard 7(A.S.7) and Delhi High Court Judgment in the case of Tirath Ram Ahuja Pvt. Ltd. vs. CIT (186 ITR 428) wherein ratio laid down in the same case by the Delhi High Court was confirmed (103 ITR 15 )(Delhi.). 10.1. The Accounting Standards A.S-7 applies in case of construction contracts. These standards have come into affect in respect of contracts entered into during accounting period, comm....
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....e, in such cases, there is no construction contract. In the present case, there is no such construction contract, as the appellant is acting as a developer of properties. Therefore, A.S-7 is not applicable in the case of the appellant and it is not bound to follow the percentage completion method. The appellant is following the consistent practice of accounting profits in respect of 3 proprietary concerns viz. M/s. Neelkanth Enterprise, M/s.Ghanshyam Enterprises and M/s. Swaminarayan Enterprises on the basis of project completion method. The Supreme Court in the case of Sanjeev Woolen Mills vs. CIT (279 ITR 434) has held that what is material for the purpose of Section 145 of the I.T. Act, is that the method should be such that the real inc....
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....ee was following two separate methods for income taxable under one head. He further submitted that in view of the provisions of Sec.145 mixed system of accounting is not permissible w.e.f. 1-4-1997. He thus supported the order of A.O. 9. On the other hand the Ld. A.R. submitted that Accounting Standard- 7 prescribed by the Institute of Chartered Accountants of India are not applicable to the assessee as the assessee is a developer, he further submitted that in the case of 3 firms the assessee was following the project completion method and has declared profit in the subsequent year and has paid the taxes thereon. Assessee has been following similar method in earlier years and the same has been accepted by Revenue. He further placed relianc....
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.... the income in the instant case is to be computed as per system of accounting followed by the assessee or as per accounting standard AS-7 for the purpose of charging of income tax. We find that the issue is to be decided in accordance with the provisions of section 145 of the Income Tax Act,1961. A reading of section 145 of the Act shows that the business income which is assessable under the Income tax Act is to be computed in accordance with the consistent system of accounting followed by the assessee unless such system, of accounting is defective and/or from such system of accounting, profit cannot be deduced. Thus, in our considered opinion, the option for choosing the system of account is with the assessee and not with the Ld. A.O. prov....