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TMI Blog2015 (10) TMI 2059X X X X Extracts X X X X X X X X Extracts X X X X ..... ELHI HIGH COURT) noted that project completion method is one of the recognized methods of accounting. It cannot be said that the project completion method followed by the assessee would result in deferment of the payment of the taxes which are to be assessed annually under the IT Act." The assessee-respondent had been consistently following one of the recognized methods of accountancy, i.e. project completion method, for computation of its income. In the absence of any prohibition or restriction under the Act for doing so, it cannot be held that the approach of the CIT(A) and the Tribunal was erroneous or illegal in any manner so as to call for interference by this Court. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ercentage completion method? c) Whether ITAT has committed error in law holding that in absence of any defect pointed out by the Assessing Officer in adoption of project completion method by the assessee the percentage completion method cannot be applied when the guidance note of ICAI requires that the accounts of business of Real Estate are to be maintained by percentage completion method? 3. Briefly put, the facts necessary for adjudication of the instant appeal as narrated therein may be noticed. The assessee filed its return of income under Section 153A of the Act on 28.10.2007 declaring a total income at ₹ 38,343/-. A search operation under Section 132(1) of the Act was conducted at the premises of the assessee on 7.7.2009. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de to it by the person concerned and possession was delivered to him. It was pointed out that neither Accounting standard 9 (AS 9) or Accounting Standard 7 (AS 7) issued by the Institute of Chartered Accountants of India has been recognized by the Act and in such circumstances, there was no guidance or strict procedure for adopting a particular accounting standard under the Act and it depends upon facts and circumstances of each case. In other words, the assessee was entitled to adopt Project Completion method for determining its income which was being regularly followed by it. Though the Assessing Officer had rejected the plea of the assessee, but the CIT(A) while accepting the appeal of the assessee made the following observations:- &qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee in the course of carrying on the business of real estate developers. The case of the assessee is that it is following one of the accepted accounting standards approved by ICAI for recognizing the revenue generated by it. The assessee had followed project completion method which had been consistently followed by the assessee for the preceding years also. The Assessing Officer, on the other hand, had applied percentage completion method to compute the income in the hands of the assessee. The Commissioner of Income Tax (Appeals) had allowed the claim of the assessee. 48. Both the methods of accounting are i.e. project completion method and percentage completion method is accepted standards of accounting and either of the meth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the method of accounting adopted by the assessee and thus, there is no reason to reject the same. 51. The Hon'ble Delhi High Court in CIT v. Manish Buildwell (P) Ltd. (supra) had held that "it is well settled that the project completion method is one of the recognized methods of accounting. It cannot be said that the projection completion method followed by the assessee would result in deferment of the payment of the taxes which are to be assessed annually under the IT Act. AS-7 issued by the ICAI also recognizes the position that in the case of construction contracts, the assessee can follow either the project completion method or the percentage completion method." 52. Where the assessee was following a particular met ..... X X X X Extracts X X X X X X X X Extracts X X X X
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