AI Drafter 
TaxTMI 
TaxTMI 
2013 (11) TMI 1711
X X X X Extracts X X X X
X X X X Extracts X X X X
....her the Appellate Tribunal is correct in deleting the addition of Rs. 1,66,70,811/- made on account of business income by computed percentage completion method? B. Whether the Appellate Tribunal is correct in holding the Accounting Standard 7 as prescribed by ICAI are not applicable to the assessee ?" 2.0. The facts leading to the present appeal in nutshell are as under: 2.1 That the assessee filed return of income for the AY 2006-07 disclosing total income at Rs. 32,33,520/-. The case was taken up for scrutiny assessment and notice under Section 143(2) which was duly served upon the assessee. Subsequently, under Section 143(2) and 142(1) alongwith detailed questionnaire issued and served to the assessee. In response to the n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns M/s. Swaminarayan Enterprise, Ghanshyam Enterprise and Neelkanth Enterprise. Since no income against the project undertaken has offered by the assessee, specific show cause notice was given on 1.12.2008 calling upon the assessee to furnish the details with respect to income against the project undertaken, total work done, booking advance received and income offered, if any. In reply to the same, assessee filed in reply dated 27.12.2008. The Assessing Officer was not satisfied with the assessee reply and held that assessee's contention of income offering by project completion method is not acceptable and assessee ought to have shown income of percentage completion method, which is recognized method of showing income. Consequently, it ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and order dated 15.2.2013 learned ITAT has dismissed the appeal preferred by the revenue confirming the deletion of Rs. 1,66,70,811/- made by the CIT(A). 2.4 Feeling aggrieved and dissatisfied with impugned judgment and order passed by the learned ITAT, the revenue has preferred present appeal with the aforesaid proposed substantial question of law. 3.0. Ms. Mauna Bhatt, learned counsel for the appellant has vehemently submitted that assuming that both accounting system i.e. project completion and percentage completion methods are held to be permissible, in that case also, assessee cannot be permitted to follow method of accounting such as percentage completion as well as project completion method for same source of income. It is subm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it cannot be said that the assessee could not have followed the accounting system of project completion method. 4.2 From the perusal of the order passed by the learned CIT(A) while deleting the addition of Rs. 1,66,70,811/, it appears that in para 10.4 and 10.5, learned CIT (A) has observed as under: "10.4. In the present case, it is not the Assessing Officer's case that the appellant is not reporting or under reporting its income. In fact, I find in the subsequent assessment year i.e. A.Y. 2007-08, the appellant has disclosed substantial income from the projects undertaken in the business proprietary concerns viz. M/s. Neelkanth Enterprises, M/s. Ghanshyam Enterprises and M/s. Swaminarayan Enterprises. In the subsequent yea....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....2009. Therefore, the Assessing Officer is not considered justified in bringing to tax the profit of Rs. 1,66,70,811/- in the year under consideration, particularly when such profits have already been offered to tax by the appellant in the AY 2007-08. The addition of Rs. 1,66,70,811/- are directed to be deleted." 4.3 It is also required to be noted that while passing the impugned judgment and order, learned ITAT has heavily relied upon the decision of the Coordinate Bench Tribunal in the case of Vraj Developers (supra) passed in ITA No. 19/AHD/2008, in which, the Coordinate Bench, has held as under: "5. The Ld. D.R supported the order of the Ld. A.O and the L.D A.R of the assessee supported the order of Ld. CIT(A) and also place....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m of accounting adopted by the assessee for the year under appeal was not consistently followed by the assessee or the system adopted was a defective system. In our considered view, even a project completion method is also a recognized system of accounting. Simply the Institute of Chartered Accountants of India has recommended percentage completion method does not mean that project accounting or the same is a defective system of accounting. The ld. CIT(A) has recorded a finding after perusing the assessment records of the subsequent years that the assessee has offered for taxation its income in the subsequent year as per the consistent system of accounting followed by the assessee. The Ld. D.R could not point out any error in the above find....