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TMI Blog2012 (10) TMI 349X X X X Extracts X X X X X X X X Extracts X X X X ..... ed CIT(A) are set aside and Assessing Officer has to accept the returns as filed by the assessee in the respective AYs under consideration - Appeals of the assessee are allowed - in favour of assessee. - ITA No.277,278,279 and 280/CTK/2012 - - - Dated:- 29-6-2012 - Shri K.K. Gupta, and Shri K.S.S. Prasad Rao, JJ. For the appellant: Shri P.K. Mishra/M.R. Sarangi, ARs For the respondent: Shri S.C. Mohanty, DR ORDER Shri K.K.Gupta, AM : These appeals for the Assessment Years 2003-04 to 2006-07 are preferred by the assessee arising out of separate orders of the Commissioner of Income-tax (Appeals) in respective AYs raising a common grounds, which read as under : 1. That the Rejection of Books of Accounts under Section 145 without bringing material defects in such books of accounts is unjust, un-reasonable and uncalled for. 2. That the rejection of books of accounts u/s. 145 with reasons cited as per the assessment order is not as per law. 3. That the determination of net profit at 7.2% of the Advance Receipts from allottees is not proper considering the accounting standard followed and prescribed for such type of business. 4. That the estimation of net ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finding that the assessee is not a builder rather a mere construction contractor not by interpreting the facts but being biased with the fact that the counsel who was appearing before him was also the counsel for others who were the construction contractors. 4. Aggrieved, the assessee has filed the present appeals before the Tribunal. 5. The learned Counsel for the assessee submitted that the authorities below are not justified in adopting the percentage completion method for recognition of revenue on year to year basis, on the ground that the percentage completion method is not acceptable under the Income Tax Act, 1961, particularly when the same has not been denied under the said Act. If section 145 and section 145A will be looked in to simultaneously, then it will be found that no where the Act prescribes /notifies any particular method of Accounting to be followed, rather, the Act authorizes the assessee to choose the method of accounting and the Assessing Officer is duty bound to follow the same. The project completion method is also one of the recognized method of accounting. Law in this aspect is well settled that where a recognized method of accounting whereby profits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounting differs from business to business taking in to consideration of nature of work, liability and risk factor. Therefore the same cannot be equated for the sake of revenue and the finding of the A.O being illogical and contrary to the principles of Accounting standard is liable to be rejected in the interest of justice. The learned Counsel for the assessee further contended that the plea of the A.O that in the project completion method, there will be postponement of disclosure of income and payment of tax which cannot be a ground for rejection of the method of accounting consistently followed by the Assessee if the same is one of the recognized method of accounting. That apart basically in a real estate business actual profit can be correctly derived only after the completion of the project and not prior to that. Further the finding of the A.O that International Accounting Standard Committee has revised the international accounting standards and scrapped the completed contract method. It has suggested the percentage completion method for adoption is nothing but just a miss interpretation/construction of the revised accounting standard. It is established legal position that an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The same income, therefore, could not be assessed in the earlier year by rejecting the regular and recognized method being followed by the assessee. Before passing the impugned assessment order, it was well within the knowledge of the assessing officer , that the assessee has already declared the said income in the assessment year 2006-07 and has already paid the tax on the same. For the above proposition the learned Counsel for the assessee relied on the decisions in the case of Awadesh Builders v. Income-tax Officer [37 SOT 122 (Mum)], of ITAT, Ahmemdabad Bench in the case of Asst.Commissioner of Income-tax v. National Builders, reported in (2012) (Ahmedabad- Tribunal) and the decision of ITAT, Hyderabad Bench in the case DCIT-VRS-Omega Shelters Pvt. Ltd.(copy placed on record). 6. As regards the rejection of books of account, the learned Counsel for the assessee contended that the reasoning assigned by the Assessing Officer in his order for rejection of books of account are not justified insofar as the assessee had never employed more than 17 labours , as it took permission from the District labour Officer for 17 labours only. The Wages rate as mentioned by the A.O is not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d insofar as it was not the case of the Assessing Officer to compute income at the projected income which is submitted to bank for obtaining loan. The total income justifies the income rendered by the assessee to the extent that the income in the respective years on the basis of percentage completion method is to be subjected to tax on the concept of real income and not on the basis of how the income is treated to be taxed by the assessee. The learned CIT(A) therefore was justified in upholding the orders of the Assessing Officer which he fully supported for his part of submissions. 9. We have heard the rival contentions of the parties and perused the material available on record. The learned Counsel relied on various citations indicating the method of accounting adopted by the assessee cannot be challenged unless specific defects have been found in the books of account to thrust upon a particular accounting standard which coexist with the accounting standard adopted by the assessee in the impugned AYs. The change in accounting method has been addressed by the learned Counsel for the assessee giving a effect insofar as the estimation of income on the basis of projected balance sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee the income had been correctly declared as per project completion method in the year of completion. Even if one applies the old accounting standards on the ground that the project of the assessee had been undertaken prior to 1-4-2003, the assessee was free to follow either percentage completion method or project completion method. The assessee has followed project completion method which was one of the prescribed methods and the same method has been accepted by the department in the earlier years. Department, therefore, cannot reject the method and apply percentage completion method in a subsequent year. This view is also supported by several decisions of the Tribunal as mentioned in para 2.5 of this order earlier which have been relied upon by the learned AR of the assessee. The assessee already, following the same method, has declared the entire income in assessment year 2007-08 when the project was complete. The same income, therefore, cannot be assessed in the earlier year by rejecting the regular and recognized method being followed by the assessee. .. He placed reliance on the decisions which case laws have been cited by the learned Counsel for the assessee ins ..... X X X X Extracts X X X X X X X X Extracts X X X X
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