2013 (3) TMI 828 - HC - Income Tax

Summary

Issues Involved: The judgment involves the following issues:
1. Whether the Tribunal was justified in deleting the addition based on cash receipts and project completion method.
2. Whether the Tribunal was justified in holding that the addition failed to follow accounting standards.

Issue 1: Addition based on Cash Receipts and Project Completion Method
The Tribunal deleted the addition after considering whether the assessee actually received cash receipts and if the declaration by the partner was towards total sale receipts, not income for the year. Additionally, the Tribunal examined if the project completion method applied to the receipts of Rs. 5 crores, despite not being accounted for in the regular books of accounts. The Tribunal's decision was based on the fact that the disputed income had already been offered for tax under the project completion method in a subsequent assessment year, which was accepted by the revenue. Consequently, the Court found no reason to entertain the proposed questions of law as it would be an academic exercise, leading to the dismissal of the appeal.

Issue 2: Compliance with Accounting Standards
The Tribunal also considered whether the addition of Rs. 5 crores failed to adhere to accounting standards, specifically AS-7 and section 145 of the Income Tax Act, 1961, regarding the disclosure of receipts. The Tribunal's decision highlighted that the addition did not follow the norms of accounting standards, further supporting the dismissal of the appeal.

Therefore, the High Court of Bombay dismissed the appeal, emphasizing that the disputed income had already been addressed in a subsequent assessment year, and the addition did not comply with accounting standards.