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Issues involved: Appeal against deletion of addition of TDRs taxed on receipt basis u/s 2004-2005 to 2007-2008.
Summary: The batch of four appeals by the Revenue challenged the common order by the Commissioner of Income-tax (Appeals) for the assessment years 2004-2005 to 2007-2008. The main issue raised was the deletion of addition of TDRs taxed on receipt basis. The Assessing Officer contended that the value of TDRs should have been accounted for to determine the correct income, as the assessee was crediting the value of TDRs after sale. However, the learned CIT(A) held that the project completion method followed by the assessee was justified, and the sale proceeds of TDRs should be included in the year when the project is completed. The Revenue appealed against this finding. The Appellate Tribunal considered whether TDRs should be taxed on receipt basis or in the year of project completion. It was noted that the assessee followed the mercantile system of accounting and the project completion method. Previous Tribunal decisions supported including sale proceeds of TDRs in the year of project completion. As the project was unfinished in the assessment years under consideration, the sale of TDRs could not be included in the assessee's income. The Tribunal ruled that the sale proceeds of TDRs should be accounted for in the year of project completion, i.e., assessment year 2008-2009. The assessee had voluntarily included the amount in the income for 2008-2009. Therefore, the Tribunal upheld the order on this issue, and all appeals were dismissed. *Order pronounced on September 15, 2010.*
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