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TMI Blog2008 (1) TMI 422X X X X Extracts X X X X X X X X Extracts X X X X ..... ribed by the ICAI or CBDT under section 145. (iii) The method of accounting adopted by the Assessing Officer taking toll collection and allowing deduction for amortisation of the value of cost of construction suffers from serious defects in view of u (iv) The appellant had consistently following the completed contract method and reported this accounting policy since beginning; and (v) The impugned project could be said to have been completed at the end of the concessional period or at the earliest when specific costs of the project have been recouped for the reason that the project is linked with toll collection and the project can be said to have been substantially completed when the cost of the project is considerably recouped. (c) In reaching to the conclusion and confirming such huge addition, learned CIT(A) omitted to consider relevant factors, considerations, principles and evidences while he was overwhelmed, influenced and prejudiced by irrelevant considerations and factors. 2. The learned CIT(A) erred in not passing any speaking order in respect of losses of earlier years to be calculated as per accounting policy adopted by the Assessing Officer in making the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction cost till the completion of project of Rs. 3,415.44 lakhs; and accordingly, he allowed amortization of Rs. 213.46 lakhs during this year. The assessee carried the matter in appeal before learned CIT(A); but without success; and now, the assessee is in further appeal before us. 4. It is submitted by learned AR of the assessee that there was receipt of Rs. 4,15,81,150 on account of toll collection during the year ended 31-3-2000, i.e., assessment year 2000-01. It is also submitted that in that year, the assessee has followed the same method of accounting and this receipt of toll collection of Rs. 415.81 lakhs was reduced from work-in-progress and the return of income was filed on 30-11-2000 without offering any income from this project and this return of income filed by the assessee stands accepted by the department under section 143(1). It is submitted that as per the rule of consistency, there is no reason to disturb this method of accounting followed by the assessee in the present year. As an alternative contention, it is submitted by him that, if the method adopted by the Assessing Officer and confirmed. by learned CIT(A) is upheld, then the Assessing Officer should be di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved toll charges for the first time in that year only. It is submitted that if the method followed by the Assessing Officer in the present year is followed in the preceding year also, i.e., assessment year 2000-01,there will be a loss of Rs. 1019.16 lakhs in that year; and if, that loss is set off in the present year, there will be no taxable income in the present year; and still there will be a loss to be carried forward to subsequent years. Reliance has been placed on the judgment of Hon'ble Apex Court rendered in the case of Radhasoami Satsang. In this case, Radhasoami Satsang, a religious institution, was founded in 1861 for the purpose of promoting the ideals of the Radhasoami faith among the public. Out of the donations and offerings to the Satgurus, large funds were built up and properties were acquired over the years. In 1902, during the time of the third Satguru, a Central council was established and the right, title and interest of all the properties were vested in the council under the direction of the Satguru whose mandate was paramount. In 1904, a trust deed was also executed. The trust deed was revocable at the discretion of the Central council. On the death of the th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling revised return in subsequent years. In the light of these facts, we feel that ideally, the view taken by the Assessing Officer in the present year should be confirmed but at the same time, the assessment in the preceding year, i.e., assessment year 2000-01 should also be completed on the same basis as has been done by the Assessing Officer in the present year and which is accepted by the assessee also in the subsequent years; but earlier year is not open before us. It is also to be noted that, if earlier year is disturbed, there will be assessed loss of Rs. 10 19.16 lakhs in that year as against the returned income of Rs. 12.54 lakhs. The assessed income is of Rs. 142.67 lakhs in the present year; and therefore, there will be carry forward loss of Rs. 876.49 lakhs at the end of the present year and there will be nil taxable income in the present year as against total income of Rs. 10.47 lakhs declared by the assessee itself in the present year as per return of income. In the subsequent years, gross total income before deduction under section 80-IA, deduction under section 80-IA and the net income is as under:- ---------------------------------------------- Assessment Gross to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ositive returned income in all years of Rs. 39.60 lakhs (Total) and there will be loss to be carried forward of total Rs. 335.49 lakhs at the end of assessment year 2004-05. We, therefore, delete the addition made by the Assessing Officer in the present year and we direct the Assessing Officer to complete the assessment by accepting the method of accounting followed by the assessee in the present year. However, we want to make it clear that in the subsequent years, the assessee itself has revised the return on the basis of accounting system, which was followed by the Assessing Officer in the present year and because, we have allowed the assessee to continue the old method of accounting in the present year, this will not give rise to a claim by the assessee that in the subsequent years also, the same method should be followed because in the subsequent years, the assessee itself has revised the return which is duly accepted by the department also; and hence, in the subsequent years, the new method has attained finality, which should not be disturbed. However, regarding the quantum of deduction allowable to the assessee on account of amortization, we find that the same was worked out ..... X X X X Extracts X X X X X X X X Extracts X X X X
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