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TMI Blog2022 (7) TMI 1310X X X X Extracts X X X X X X X X Extracts X X X X ..... tation of income and in the absence of any prohibition or restriction under the provisions of the Income Tax Act. For doing so it cannot be held that approach of the CIT(A) and the tribunal was erroneous or illegal in any manner so as to call for interference by Court. Accordingly, the appeal filed by the revenue was dismissed. In the case on hand the CIT(A) as well as the tribunal have noted the aforementioned decision and also the fact that the method of accounting, namely, the project completion method was followed by the assessee and has been accepted by the Department and, thus, by applying the principle of consistency, the appeal of the revenue is dismissed. Thus, we find that there is no error in the order passed by the tribunal nor any substantial question of law arises for consideration in this appeal. - THE HON BLE JUSTICE T. S. SIVAGNANAM And THE HON BLE JUSTICE BIVAS PATTANAYAK Ms. Smita Das De , Adv. Ms. Sangita Das , Adv. For Appellant Mr. J. P. Khaitan , Sr. Adv. Mr. S. Kejriwal , Adv. Ms. Swapna Das , Adv. Mr. Siddhartha Das , Adv. For Respondent ORDER The Court : We have heard Ms. Smita Das De, learned Counsel appearing for the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntended that they had been consistently following this method which has been accepted by the Department in the assessment year 2014-15. The assessing officer stated that the assessee s case was selected for scrutiny for the reason as to whether percentage computation method should be followed instead of project completion method followed by the assessee. The assessing officer while completing the assessment under Section 143(3) of the Act, by order dated 28th December, 2016 by placing reliance on the decision of the Hon ble Supreme Court in Chintaman Rao vs. State of Madhya Pradesh reported in AIR 1958 SC 388 held that the assessee was a mere contractor and they ought to have adopted the percentage completion method as per Accounting Standard-7. Aggrieved by such order, the assessee preferred appeal before the Commissioner of Income Tax (Appeals)-12, Kolkata [CIT(A)]. By order dated 16th August, 2018 the appeal was allowed. The CIT(A) while considering the appeal framed three questions; firstly, as to whether the method of accounting followed consistently by the assessee can be disturbed by the assessing officer. Secondly, whether the assessee can be treated as a contractor and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opment and construction business of the assessee get assessed over a period of years, keeping pace with the progress in the construction/development of the project. The CIT(A) however held that the assessee had no reason to withhold the handing over of possession of the space to the purchaser in respect of a project which is completed and that whatever possession was not handed over to the purchaser, it was for the reason that the project was not completed. He further found that a buyer who has paid the entire sale consideration would immediately demand possession and the entire sale consideration could be received by the assessee only on completion of the project. On these facts it was noted by the CIT(A) that unless the buyer makes full payment the assessee could not hand over possession nor get the sale transaction registered. A further finding recorded by the CIT (A) was that the impugned project was completed only in the accounting period relevant to the assessment year 2008-09 and in support of this finding, he noted that a copy of the completion/occupancy certificate was placed on the record of the Assessing Officer. He further recorded a finding that after the issue of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . [2007] 291 ITR 482 / 161 Taxman 191 (SC) the Supreme Court held as follows:- Lastly, there is a concept in accounts which is called the concept of contract accounts. Under that concept, two methods exist for ascertaining profit for contracts, namely, competed contract method and percentage of completion method . To know the results of his operations, the contractor prepares what is called a contract account which is debited with various costs and which is credited with revenue associated with a particular contract. However, the rules of recognition of cost and revenue depend on the method of accounting. Two methods are prescribed in Accounting Standard No.7. They are completed contract method and percentage of completion method . This view was reiterated by the Supreme Court in CIT v. Bilahari Investment (P.) Ltd. [2008] 299 ITR 1/168 Taxman 95 with the following observations: Recognition/identification of income under the 1961 Act is attainable by several methods of accounting. It may be noted that the same result could be attained by any one of the accounting methods. The completed contract method is one such method. Similarly, the percentage of comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by the CIT(A) and holding that the percentage completion method of accounting has to be followed by the assessee. The said application was answered in favour of the assessee in the following terms : 19. The settled legal position as far as section 145 of the Act is concerned is that it is not open to an Assessment Officer to reject the accounts of an assessee unless he comes to a determination that notified accounting standards have not been regularly followed by the assessee. As pointed out by the Commissioner of Income-tax (Appeals) in the order dated July 2, 2010, the Accounting Standard of the ICAI did not have any statutory recognition under the Act although it was binding under the Companies Act, 1956. The method of accounting followed by the assessee in the present case, i.e. project completion method was certainly one of the recognised methods and has been consistently followed by it. The Court also took note of the decision of the Hon ble Supreme Court in Bilahari Investment (P) Ltd. (supra) in Commissioner of Income-Tax Vs. Principal Officer, Hill View Infrastructure (P.) Ltd., reported in (2016) 384 ITR 451 (P H). Similar question arose as to whether ..... 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