9911796707
TMI Blog2002 (2) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... 1984-85, the assessing authority found that there were no accounts much less proper accounts maintained by the assessee. In the returns, initially a loss of Rs. 21,557 was shown and thereafter by another return, a loss of Rs. 24,935 was shown. The assessee-firm used to take small contracts as well as big contracts. At the relevant time, there were some small contracts which were completed more or less in a year or sometimes spilled over a year, while there was one big contract worth Rs. 30 lakhs for construction of a hotel, which was to continue from year to year and was not completed in one year. Before the assessing authority, the assessee gave in writing that it was not possible for it to complete the account books and that it was trying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity, however, came to the conclusion that in so far as the smaller contracts were concerned, the method adopted by the assessee should not be disturbed in the sense that the profitability of those small contracts could be assessed only after their completion. However, in so far as the big contract of Rs. 30 lakhs was concerned and which contract was spread out in more than one year, there should be a year to year assessment on the basis of ad hoc profits and by calculating the profits on the basis of the percentage of the receipts received in a particular assessment year. Accordingly, he directed the Income-tax Officer not to disturb the appellant's method of accounting in so far as various smaller contracts are concerned. However, regardi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd it is clear therefrom that we would not be concerned as to what happened with the smaller contracts which have been directed to be assessed on the basis of their completion. We will be only concerned with the bigger contract of Rs. 30 lakhs, in which a direction has been given to assess it on the yearly basis and more particularly on the receipts received every year. Learned counsel appearing on behalf of the Revenue firstly contended that the Tribunal was completely in error in allowing the cross-objection filed by the assessee. Learned counsel argued that all that was possible only if there were any accounts properly maintained by the assessee. Learned counsel pointed out that it was the admitted case that proper accounts were not ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54] 26 ITR 617 (Patna) and found that in the aforementioned case a military contract extended beyond the accounting period and the accounts were closed only after the completion of the contract. The court had held that merely because the contract was completed after the accounting period, it could not be presumed that no profits arose or accrued to the assessee in the accounting year and that in the case of an incomplete contract, there is a well established method of calculating profits accruing in the accounting year, which was pointed out in Batliboi's Advanced Accounting. Learned counsel further pointed out that this decision was later on confirmed by the Supreme Court also in Tirath Ram Ahuja P. Ltd. v. CIT [1990] 186 ITR 428. Thus, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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