2013 (10) TMI 833

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....Developer, as per the Revised Accounting Standard - 9(AS-9)(which is made mandatory by the Institute of Chartered Accountants to Builders and Developers) the appellant had correctly determined its income at Rs.79,04,222/-. 2. Incorrectly interpreting the Revised Accounting Standard-9.In doing so the CIT (A) has erred in holding that an once an agreement for sale in respect of a flat or unit in a building has been entered into by the appellant with the buyer, all the significant risk or reward of owner ship of a unit /flat stand transferred by the appellant in favour of the buyer, without waiting for the event regarding completion of the building in which the unit /flat is located. 3. Estimating the business profits of the appellant at Rs.....

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.... AO.AO held that assessee had taken recourse to AS-9 for recognition of its project, that when the risk of ownership was transferred to the customer assessee could not present its accounts as per AS-9,that it had deferred the tax liability of Rs. 2.89 Crores, that it had shown booking advances amounting to Rs. 2,89,28,599/- in the balance-sheet for the year under consideration. After discussing the provisions of AS-7 and relying upon the judgments of Sukhdev Jalan (26ITR617),Uttam Singh Duggal & Co. P. Ltd.(127ITR2), Durga Prasad More (82ITR540)Sumati Dayal(214ITR80), Nandram Huntram (103 ITR 433),he held that claim made by the assessee could not be accepted. 2.1. Assessee preferred an appeal before the First Appellate Authority(FAA). Foll....

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....ods to assess correct income of an assessee under the Income Tax Act 1961.However,the choice of method of accounting, lies with the assessee. We are of the considered view that the assessee can follow any recognized method of accounting and the condition is that the same method has to be followed consistently. It is not open to the Assessing Officer to change his own opinion or change the method of accounting only because he finds another method of accounting better than the one adopted regularly by the assessee and thereafter substitute the same with another method of accounting without any just and reasonable cause.We are of the considered view that the revenue has not been able to demonstrate that the method of accounting provided under ....

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....rmined by reference to the stage of completion and can be looked at Lflder this method by taking into consideration the proportion that costs incurred to date bears to the estimated total costs of contract. 15. The Hon'ble Delhi High Court while dealing with the similar situation in the case of CIT vs. Manish Buildwell Pvt. Ltd. in ITA No. 928/2011 dated 15.11,2011 held that 'after the above judgment of Supreme Court in CIT vs. Bilahari Investment Pvt. Ltd.,299 ITR 1 it cannot be said that the project completion method followed by the assessee would result in deferment of the payment of taxes which are to be assessed annually under the Income-tax Act. Accounting Standard AS-7 issued by the Institute of Chartered Accountants of India also r....