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Issues involved: Interpretation of profit calculation method based on complete contract basis and proportionate turnover basis for non-resident company's project spanning multiple years.
Summary: The case involved a non-resident company's contract with an Indian entity for a project spanning several years. The company maintained its accounts on a "complete contract" basis to determine real profit at the end of the contract. Disputes arose regarding the proper method of assessing the company's income for the years 1965-66 to 1968-69. The Income-tax Officer initially accepted the net profit on a complete contract basis, but subsequent assessments were challenged by the Revenue. The Commissioner of Income-tax set aside the assessments, leading to appeals and further directions for fresh assessments. The Tribunal ultimately upheld the method of accounting adopted by the company, leading to the Revenue seeking clarification on the proper determination of profits. The High Court, after considering the facts and previous judgments, found that the Tribunal's earlier decision regarding the company's accounting method for the years 1965-66 and 1966-67 had not been disputed by the Revenue. The Court concluded that the method of maintaining accounts on a complete work basis was appropriate for determining the company's income. It was held that the Tribunal was justified in following its previous view, and no question of law arose from the Tribunal's order. The Court declined to answer the referred question, emphasizing that the method of accounting adopted by the company was sufficient for determining profits, and the company should not be subjected to assessment using different methods for the same contract. In conclusion, the High Court upheld the Tribunal's decision, emphasizing the importance of consistency in assessing income based on the method of accounting adopted by the assessee. The Court found no legal question arising from the Tribunal's order and declined to provide further clarification.
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