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Income Tax Appellate Tribunal, JAIPUR BENCHES, JAIPUR
Before: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM vk;dj vihy la-@ITA No. 822/JP/2013
PER SHRI KUL BHARAT, JM.
This appeal by the assessee is directed against the order of ld. CIT (A)-I,
Jaipur dated 01/08/2013 pertaining to A.Y. 2009-10. The assessee has raised the
following grounds of appeal :-
“1. (i) Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) was justified in deleting the addition of Rs. 3,50,18,617/- made by the AO after invoking the provisions of section 145 (3) since the assessee has not maintained its books on percentage completion method prescribed by the institute of Chartered Accountants,India. (ii) Whether one the facts and in the circumstances of the case and in law the ld. CIT(A) was justified in ignoring the fact that by following project completion method assessee has not followed the accounting standards prescribed in AS-9 and AS-7 which tentamounts to not following AS-1 provided in sec. 145(2) of the I.T.Act”
Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) was justified in ignoring the act that the assessee was
2 ITA No. 822/JP/2013 M/s Shakuntalam Colonizers Pvt. Ltd
not maintain stock register & certain expenses were not supported by bills & therefore rejection of books by the AO was justified.
Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) was justified in holding that the average selling price of plots taken by the AO at Rs. 1750/- Sq. yards is not correct, despite the fact that the AO has considered the various plots sold during the year by the assessee and worked out the average selling price of plots.”
Briefly stated the facts are that the case of the assessee was picked up for
scrutiny assessment and the assessment was framed under section 143(3) of the
Income Tax Act, 1961 (hereinafter referred to as the Act). While framing the
assessment, the AO observed that assessee was following project completion
methods. In the opinion of the Assessing Officer, the assessee should have followed
the percentage completion method and the proceeded to apply the percentage
completion methods. Thereby, the AO computed net profit for the assessment year
2009-10 of Rs. 57,34, 529/- and proceeded to make addition of Rs.3,50,18,617/-.
Aggrieved by this, the assessee preferred an appeal before the Ld. CIT(A), who after
considering the submission allowed the appeal. The Ld. CIT(A) after considering the
various jurdicial pronouncement, held that the assessee who is admittedly a
colonizer and real estates developers is not bound to follow percentage of
completion method and the same cannot be imposed on it by the assessing officer.
Now, revenue aggrieved by the Ld. CIT (A) has preferred the present appeal.
The Ld. Departmental Representative supported the orders of the Assessing
Officer and submitted that the Ld. CIT (A) was not justified in deleting the addition
by applying percentage completion method. He relied on the Judgment of Hon’ble
3 ITA No. 822/JP/2013 M/s Shakuntalam Colonizers Pvt. Ltd
Supreme Court rendered in the Case P.M Mohammed MeeraKhan Vs. Commission of
Income Tax ,Kerela ,73 ITR 735(SC).
On the contrary, Ld. Counsel for the Assessee supported the order of Ld.
CIT(A) and submitted that there is no illegality into the order of Ld. CIT(A) as the
issue is no more res-integra as the Hon’ble Supreme Court in the case of CIT Vs.
Bilahari Investment Private Ltd. 299 ITR 1 (SC) has decided the issue. The reliance
is also placed on the judgment of the hon. Delhi High Court in the case of Paras
Buildtech India Pvt. Ltd. Vs. Commissioner of Income Tax and another, 382 ITR 630
(Delhi).
We have heard the rival contention and perused the material available record
and gone through the order of the authorities below. The Hon’ble Delhi High Court
under the identical facts in the case of Paras Buildtech India Pvt. Ltd. Vs.
Commissioner of Income Tax and another held that it is a settled legal position as
per section 145 of the Act that it is not open to A.O. to reject the account of
assessee unless he gives to determination that notified accounting standards have
not been regularly followed by the assessee. It is further observed by the Hon’ble
Court that as pointed out by the CIT(A) in order dated, 2 July, 2010 as ICAI did not
have any statutory recommendation under the Act that it was binding upon the
company under the Act of 1956, the method of accounting followed by the assessee.
In the present case the assessee is following project completion method certainly
one of the recognized methods and has been constantly followed by it. In view of
the aforementioned binding judicial precedents, we do not see any reason to
interfere into the order of Ld. CIT (A), the same is hereby upheld.
4 ITA No. 822/JP/2013 M/s Shakuntalam Colonizers Pvt. Ltd
In the result, appeal of the revenue is dismissed.
Order is pronounced in the open court on: 28/2/2017.
Sd/- Sd/- ( HkkxpUn ½ ( dqy Hkkjr) ( BHAGCHAND) ( KUL BHARAT ) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Jaipur Dated:- 28/2/2017. POOJA आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू
The Appellant. The ACIT Circle-2, Jaipur 2. The Respondent –M/s Shakuntalam Colonizers Pvt. Ltd., Jaipur. 3. The CIT(A). 4. The CIT, 5. The DR, ITAT, Jaipur 6. Guard File (ITA No. 822/JP/2013)
vkns'kkuqlkj@ By order,
सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत