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TMI Blog2016 (3) TMI 1440X X X X Extracts X X X X X X X X Extracts X X X X ..... construction is completed up to 53.95%, therefore, the project was not complete and real profits cannot be estimated from the same. The ld. CIT (A) has rightly held that the AO has not pointed out any discrepancy that method followed regularly by the assessee was distorting or under estimating the profits and since no such facts and figures have been brought on record by the AO, therefore, the method regularly followed by the assessee cannot be interfered with. Therefore, the percentage completion method applied by the AO cannot be applied in the case of the assessee. Therefore, in view of the above, we do not find any infirmity in the order of the CIT (A) and accordingly, we uphold the same. - Decided against revenue. - ITA No.2102/De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applying AS-7. The AO, therefore, asked the assessee to furnish the working of the profit as applied in the last year. The assessee s representative attended the assessment proceedings and submitted the following working of percentage completion method:- Total estimated sales Rs.8,38,92,000/- Total estimated cost Rs.7,29,63,555/- Estimated Profit Rs.1,09,28,445/- Percentage Completion Total cost incurred up to 31.03.2008 Rs.3,17,82,480/- Total cost of land Rs.1,15,13,006/- Land development char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uding the completed contract method or the percentage of completion method. (iii) Every assessee is entitled to arrange its affairs and follow either the completed contract method of accounting or the percentage completion method of accounting and the same is binding on the department unless it is shown the chosen method distorts the profits. (iv) Under the mercantile system of accounting, the matching of expenses and revenue (matching concept) is required to be done on accrual basis. (Taparia Tools vs. JCIT 260 ITR 102 (Bom)) (v) That the method followed by the assessee company cannot be called as an unreasonable method and any change in the method is revenue neutral. Further, the tax department cannot change the method of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med that the entire exercise is revenue neutral. (LATEST JUDGEMENT - Unique Enterprises v. ITO [2010-TIOL-737-ITAT-MUM). (x) That recently, the Mumbai Bench of the Tribunal in the case of Unique Enterprises has held that the Accounting Standard (AS)-7 - 'Construction Contract' (revised) issued by the Institute of Chartered Accountants of India (ICAI) is applicable only to contractors and not to builders and real estate developers. Accordingly, the Project Completion Method followed by the taxpayer for recognizing revenue in the books of accounts cannot be regarded as an unreasonable. Further, the tax department cannot change the method of accounting as any change would be a tax neutral. In view of the above, ld. AR for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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