TaxTMI 
TaxTMI 
2012 (4) TMI 621
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....ff by this common order for the sake of convenience. 2. The grounds raised in ITA No. 4572/Del/2009 read as under:- "1. Ld. Commissioner of Income Tax (Appeals) erred in law and on the facts and circumstances of the case, in deleting the addition of Rs. 49,55,725/- made by Assessing Officer on account of method of accounting adopted by the assessee company for revenue recognition. 2. The appellant craves to amend modify, alter, add or forego any ground of appeal at any time before or during the hearing of this appeal." 3. The grounds raised in ITA No. 2813/Del/2010 read as under:- "1. Ld. Commissioner of Income Tax (Appeals) erred, in law and on the facts and circumstances of the case, in deleting the additi....
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....buyers of the flats, if any is stated to be shown as advance from customers. The Assessing Officer was of the view that revenue recognition should be on the basis of AS-7 (Revised) i.e. Construction Contracts which requires revenue to be recognized on Percentage Completion Method and hence made the additions while computing the total income of the assessee company. The additions so made were Rs. 4955725/- for Assessment Year 2006-07 and Rs. 5913828/- for assessment year 2007-08. 5. Before the Ld. Commissioner of Income Tax (Appeals) assessee made elaborate submissions. Considering the same Ld. Commissioner of Income Tax (Appeals) has observed that it is clear that the assessee falls in the category of real estate developer and not a cons....
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....tances of the case, it is held that the Assessing Officer was not correct in applying the percentage completion method in order to arrive at the net profit of the assessee company. Since the assessee company has been consistently following accepted method of accounting for a number of years, the Assessing Officer was also not justified in rejecting the assessee's method of accounting u/s. 145. Accordingly, Ld. Commissioner of Income Tax (Appeals) decided the issue in favour of the assessee. 6. Against the above order the Revenue is in appeal before us. 7. We have heard the rival contentions in light of the material produced and precedent relied upon. 8. Ld. counsel of the assessee contended that since 1987 assessee has been followi....
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....which is called the concept of contract accounts. Under that concept, two methods exist for ascertaining profit for contracts, namely "completed contract method" and "percentage of completion method". To know the results of his operations, the contractor prepares what is called a contract account which is debited with various costs and which is credited with revenue associated with a particular contract. However, the rules of recognition of cost and revenue depend on the method of accounting. Two methods are prescribed in Accounting Standard No. 7. They are "completed contract method" and "percentage of completion method". This view was reiterated by the Supreme Court in Commissioner of Income Tax vs. Bilahari Investment P Ltd. (20....
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....d that the project completion method followed by the assessee would result in deferment of the payment of the taxes which are to be assessed annually under the Income Tax Act. Accounting Standards 7 (AS7) issued by the Institute of Chartered Accountants of India also recognize the position that in the case of construction contracts, the assessee can follow either the project completion method or the percentage completion method. In view of the judgements of the Supreme court (Supra), the findings of the Commissioner of Income Tax (Appeals), upheld by the Tribunal, does not give rise to any substantial question of law. Further, the tribunal has also found that there was no justification on the part of the assessing officer to adopt the perce....