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TMI Blog2013 (4) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... letion method and the Department has also accepted the said method in the past. Further the Revenue has not pointed out any defect in the system of accounting followed by assessee. As decided in Vraj Developers [2010 (5) TMI 697 - ITAT AHMEDABAD] the option for choosing the system of account is with the assessee and not with the A.O. provided the system chosen by the assessee is consistently followed by him and such system is not a defective system. Provisions of AS-7 cannot override the provisions of section 145 in so far as the computation of business income under the Income Tax Act for the purpose of determining income is concerned. Thus as A.O. has brought no material on record to show that the system 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. 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. As the Revenue could not controvert the findings of CIT (A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was completed. Further the assessee was following the recognized system of revenue recognition. The submission of the assessee was not found acceptable to the A.O. He was of the view that the assessee has carried out the construction activity which had commenced in the preceding years and during the period under consideration project was nearing completion. He also noticed that in all the projects the assessee had taken booking advance against each unit under construction. He was thus of the view that the income had accrued to the assessee. He was further of the view that the project completion method as followed by the assessee did not confirm to the scheme of Income tax. He therefore, relying on the decision of CIT vs. British Paints India Ltd. (1991) 188 ITR 44 (SC) and the Accounting Standard 7 prescribed by Institute of Chartered Accountants of India (ICAI) was of the view that the Revenue had to be recognized following percentage completion method. He further observed that the assessee was following the mixed method of accounting (namely percentage completion method and project completion method) for the same source of income, which according to him was not permissible. He a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andatory in nature from that date. The objective of these accounting standards is to prescribe the accounting treatment of revenue and cost associated with construction contracts. The construction contracts have been defined in paragraph to Accounting Standard A.S.7 as "a construction contract specifically negotiated for the construction of an asset or a combination of assets that are closely inter-related and interdependent....." A contract may be fixed price contract or cost plus contract. Paragraph 21 of Accounting Standard A.S-7 had laid down the principles of recognition of contract revenue and expense. When an outcome of construction contract can be estimated reliably, contract revenue and contract cost associated with the construction contract, should be recognized as revenue and expense respectively by reference to the stage of completion of the contract activity at the reporting date. This is what is known as percentage of completion method. Under this method, contract revenue is matched with the contract cost incurred in reaching the stage of completion, resulting in the reporting of revenue, expense and profit which can be attributed to the proportion of work completed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letion method but in the case of other firms the assessee was following the project completion method. Thus the assessee was following two separate methods for income taxable under one head. He further submitted that in view of the provisions of Sec.145 mixed system of accounting is not permissible w.e.f. 1-4-1997. He thus supported the order of A.O. 9. On the other hand the Ld. A.R. submitted that Accounting Standard- 7 prescribed by the Institute of Chartered Accountants of India are not applicable to the assessee as the assessee is a developer, he further submitted that in the case of 3 firms the assessee was following the project completion method and has declared profit in the subsequent year and has paid the taxes thereon. Assessee has been following similar method in earlier years and the same has been accepted by Revenue. He further placed reliance on the decision of Ahmedabad Tribunal in the case of Vraj Developers in ITA No.19/AHD/2008 dated 14-5-2010. He thus supported the order of CIT (A). 10. We have heard the rival submissions and perused the material on record. CIT (A) has given a finding that assessee has disclosed in A.Y. 2007-08 profits on the basis of project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 foilowed by the assessee. The Ld. D.R. could not point out any error in the above finding of Ld. CIT (A). In view of the above discussion, we do not find any error in the order of the Ld. CIT (A) and therefore, the same is upheld and the appeal of the Revenue is dismissed." 12. Before us the Revenue could not controvert the findings of CIT (A). Considering the totality of facts and respectfully following the order of co- ordinate Bench we find no reason to interfere with the order of CIT (A) and thus uphold his order. Thus the appeal of the Revenue is dismissed. 13. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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