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TMI Blog2013 (11) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... run a business – Decided against the Revenue. Change in method of accounting adopted u/s 145 of the Income Tax Act – Held that:- The Assessing Officer cannot force assessee to change the method of accounting specially in a case where in earlier years the method employed by assessee was accepted by Department – Decided against the Revenue. - ITA No.2038 & 2039/Del/2012 - - - Dated:- 26-9-2013 - R K Gupta And T S Kapoor, JJ. For the Appellant : Shri R S Gill, CIT-DR For the Respondents : Shri Salil Kapoor, Adv. Shri Sanat Kapoor, Adv. Shri Mahesh Kumnar, CA Shri Vikas Jain, CA ORDER:- PER : T S Kapoor These are two appeals directed against the order of Ld CIT(A) both dated 29.2.2012. The assessee has also filed cross objections against the appeals filed by the revenue. The grounds of revenue s appeals as well as cross objections are as under:- I.T.A. No.2038/Del/2012:- 1. The order of the Ld CIT(A) is not correct in law and facts. 2. On the facts and in the circumstances of the case, the Ld CIT(A) has erred in law as well as in facts holding that interest income of Rs.24,19,085/- is to be taxed under the head Income from business and professio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer himself noticed that assessee company was engaged in the business of real estate development. b) The business expenditure, if not adjusted against interest income being assessed as income from other sources the business loss to be adjusted against income from other sources u/s 71 of the Income Tax Act, 1961. C.O. No.238/Del/2012:- 1. That the CIT(A) has erred in law as well as on facts in rejecting the contention raised in Ground No.1 that impugned assessment order is also bad in law because the assessment as well as additions or computation of income has not been framed/made on the basis of any material seized pursuant to an action taken u/s 132 of the Act in the case of Rajdarbar Group which itself makes the assessment contrary to law, illegal leading to be quashed. 2. That Ld ACIT has erred in law as well as on facts ion raising ground No.2 in deleting the addition of Rs.24,19,085/- made by the Assessing Officer on account of estimating the profit under percentage completion method because CIT(A) has appreciated which Assessing Officer ignored that: a) The Assessing Officer has not made an addition but estimated the profits. b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count treating them as not related to earning of interest income, In the subsequent year i.e. 2008-09 the Assessing Officer observed that though the assessee had received advances to the extent of 90% of total receipts but the assessee had not booked these as sale as the possession was not handed over to the purchasers. The Assessing Officer held that by not recognizing the income following the percentage completion method, the assessee was deferring its tax liability and therefore the assessee was asked to furnish a chart computing the profit derived by the company during the year, had it followed the percentage completion method of accounting. From the details submitted by the assessee the Assessing Officer arrived at the conclusion that during the assessment year under consideration 44% of project was complete and assessee had also received of substantial amount as advances. Therefore, on the basis of 44% of completed project, the Assessing Officer computed the income of the assessee at Rs.5,13,48,000/-. The Assessing Officer further made an addition of Rs.2,34,594/- as other income as per P L Account. Both the assessment orders were challenged before Ld CIT(A) And Ld CIT(A) on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regularly from the buyers as the construction progress. Therefore, income should be taxable on year to year basis on percentage of completion of the project. Against the contention of the Assessing Officer, AR has submitted that plots are being sold on payment basis which is varying from 45 days to 6 months. The AR has also stated that department cannot compel the appellant to follow any particular method. Income tax Act does not force any one to follow any particular accounting standard. The appellant was following project completion method which is in accordance of the existing law and it is the settled law that if one method is employed, it should regularly be employed. After considering the argument of both and in view of the judgment announced b the Hon'ble Delhi High Court in case of CIT v. Manish Build Well (P) Ltd. (HC) (2011) 063 DTR 369. I am of the considered opinion that no evidence was found during the course of search to show that the books of account are not properly maintained by the appellant. The main thrust of the Assessing Officer while making the addition is that the appellant is deferring the payment of taxes. However, this allegation of the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heavily relied on the assessment order. 6. The Ld AR, on the other hand, submitted that the assessee was in the business of real estate development and had set up an office for undertaking various activities and certain expenses for running of the said business was incurred which were not related to a particular project and therefore were debited in the P L Account. Therefore, the Ld CIT(A) after appreciating the facts of the case has rightly deleted the disallowance. It was further submitted that even if interest income earned by the assessee was considered as income from other sources even then the business loss in the form of business expenses against NIL business receipt was eligible for set off against income from other sources and Ld CIT(A) has rightly done the same. Our attention was invited to last para of Ld CIT(A) s order in this respect. It was further submitted that allowability of expenses under the business head was not disputed and rather Ld CIT(A) had disallowed two expenses out of expenses debited in the P L Account. In view of the above, it was argued that Ld CIT(A) has rightly deleted the addition. With respect to second year, the Ld AR heavily relied upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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