M/s. True Zone Buildwell Pvt. Ltd., New Delhi V. ACIT, New Delhi

CO 249/DEL/2012

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8237 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-01-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 29-11-2012
• Assessment Year: 2009-2010
• Appeal Filed On: 10-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS SUSHMA SINGH
• Assessee Lawyers: MAYANK GOYAL; ABHISHEK VERMA S
• Keywords: Rejection of books of accounts; Search and seizure; Question of law; Difference of opinion; Change of opinion
• Section: 69C; 143(3); 153A; 145; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H : NEW DELHI) SHRI R.P. TOLANI, JUDICIAL MEMBER AND BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.1696/DEL./2012 (ASSESSMENT YEAR : 2009-10) ACIT, CENTRAL CIRCLE 12, VS. M/S. TRUE ZONE BUILDW ELL PVT. LTD., NEW DELHI. 12, RING ROAD, LAJPAT NAGAR IV, NEW DELHI. (PAN : AABCT9812B) CO NO.249/DEL/2012 (IN ITA NO.1696/DEL./2012) (ASSESSMENT YEAR : 2009-10) M/S. TRUE ZONE BUILDWELL PVT. LTD., VS. ACIT, CENT RAL CIRCLE 12, 12, RING ROAD, LAJPAT NAGAR IV, NEW DELHI. NEW DELHI. (PAN : AABCT9812B) ITA NO.2094/DEL./2012 (ASSESSMENT YEAR : 2009-10) M/S. TRUE ZONE BUILDWELL PVT. LTD., VS. ACIT, CENT RAL CIRCLE 12, 12, RING ROAD, LAJPAT NAGAR IV, NEW DELHI. NEW DELHI. (PAN : AABCT9812B) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI RAJIV SAXENA & ABHISHEK VERMA, ADVOCATES AND SHRI MAYANK GOYAL, CA REVENUE BY : MRS. SUSHMA SINGH, CIT DR ITA NO.1696/DEL/2012 CO NO.249/DEL/2012 ITA NO.2094/DEL/2012 2 ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THE REVENUE HAS FILED ITA NO.1696/DEL/2012 AND THE ASSESSEE HAS PREFERRED CROSS OBJECTION NO.249/DEL/2012 AGAINST T HIS APPEAL. THE ASSESSEE HAS ALSO FILED ITA NO.2094/DEL/2012 ON CERTAIN ISSU ES AGAINST THE ORDER OF CIT (A) DATED 31.01.2012. THE GROUNDS OF APPEAL TA KEN IN THESE THREE MATTERS ARE AS UNDER :- ITA NO.1696/DEL/2012 1. THE ORDER OF LD. CIT(A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD CIT(A) HAS ERRED IN LAW AND FACTS IN DELETING THE A DDITION OF RS.6,26,860/- IN RESPECT OF M/S. UTTARANCHAL REALTO RS PVT. LTD. OUT OF THE TOTAL ADDITION OF RS.14,85,009/- MADE BY THE AS SESSING OFFICER IN RESPECT OF DISALLOWANCE OF COMMISSION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD CIT(A) HAS ERRED IN HOLDING THAT THE ESTIMATION OF PROFIT AMOUNTING TO RS.4,17,12,850/- BY THE ASSESSING OFFICER IN PLACE OF PROFIT DECLARED BY THE ASSESSEE OF RS.3,89,49,700/- ON PERCENTAGE C OMPLETION METHOD IS NOT ACCEPTED. 4. THE ORDER OF LD CIT(A) IS PERVERSE IN LAW AND ON FACTS. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HE ARING OF THE APPEAL. CO NO.249/DEL/2012 1. THAT LD. ACIT HAS ERRED IN LAW AS WELL AS ON FA CTS IN RAISING GROUND NO.3 IN DELEING THE ADDITION OF RS.41712850/ - MADE BY THE AO ON ACCOUNT OF ESTIMATING THE PROFIT UNDER PE RCENTAGE ITA NO.1696/DEL/2012 CO NO.249/DEL/2012 ITA NO.2094/DEL/2012 3 COMPLETION METHOD BECAUSE CIT(A) HAS APPRECIATED WH ICH AO IGNORED THAT: A) THE AO HAS NOT MADE ANY ADDITION BUT ESTIMATED T HE PROFITS. B) THE AO HAS REJECTED THE BOOKS OF ACCOUNTS U/S 14 5(3) WITHOUT ANY VALID REASONS. C) THE AO HAS APPLIED METHOD OF ACCOUNTING NOT RELE VANT TO THE ASSESSEE'S BUSINESS WHILE ASSESSEE HAS ADOPTED AND OPTED STANDARD METHOD OF ACCOUNTING APPROVED BY ACCOUNTIN G STANDARDS OF ICAI AND HELD TO BE STANDARD METHOD BY THE HON'BLE SUPREME COURT AND RECENTLY DELHI HIGH COURT IN MANISH BUILDWELL'S CASE. D) THE AO HAS FAILED TO APPRECIATE THAT ASSESSEE IS NOT ENGAGED IN THE BUSINESS OF CONSTRUCTION OF BUILDING OR STRUCTU RES BUT ENGAGED IN THE BUSINESS OF DEVELOPMENT OF LAND/SELL ING OF PLOTS OF LAND. E) THE AO HAS ALSO FAILED TO APPRECIATE THAT SALE O F PLOT OF LAND IS MADE BY REGISTERED DOCUMENTS BY HANDING OVER THE PL OT AND NO OWNERSHIP VEST IN THE PROPERTY BEFORE FINAL PAYMENT IS MADE WHILE IN CONSTRUCTION ACTIVITIES BUILDING IS MADE B Y THE BUYER BY MAKING PART PAYMENTS ON CONSTRUCTION BASIS. 2. THE RESPONDENT CRAVES LEAVE FOR ADDITION, MODIFI CATION, ALTERATION, AMENDMENT OF ANY OF THE CROSS OBJECTION . ITA NO.2094/DEL/2012 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A)-XXXI IS CORRECT IN UPHOLDING THE ASSESSMENT FRAMED OUTSIDE THE SEARCH MATERIAL AND AFTER THE CHANGE OF OPINION ? 2. THAT ON THE FACTS AND CIRCUMSTANCE OF THE CASE, THE LD. CIT(A)- XXXI ERRED IN CONFIRMING THE ADDITION OF RS.8,58,14 9/- BEING THE AMOUNT OF OUT OF BOOKS COMMISSION PAID BY THE ASSES SEE COMPANY U/S 69C OF THE INCOME TAX ACT, 1961. 3. THE ASSESSEE CRAVES FOR THE ADDITION, MODIFICATI ON AND DELETION OF THE GROUNDS OF APPEAL. ITA NO.1696/DEL/2012 CO NO.249/DEL/2012 ITA NO.2094/DEL/2012 4 2. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT U /S 132 OF THE INCOME- TAX ACT, 1961 ALONG WITH OTHER GROUP CASES ON 31.07 .2008. THE SEARCH WAS ALSO CARRIED OUT AT THE RESIDENCE OF THE DIRECTOR, SHRI RAKESH KUMAR GARG WHERE CERTAIN DOCUMENTS RELATING TO THE ASSESSEE WE RE FOUND AND SEIZED. 3. GROUND NOS.1, 4 & 5 OF REVENUES APPEAL (ITA NO. 1696/DEL/2012), GROUND NO.2 OF CROSS OBJECTION AND GROUND NO.3 OF A SSESSEES APPEAL (ITA NO.2094/DEL/2012) ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION, HENCE THE SAME ARE DISMISSED. 4. FIRST OF ALL, WE CONSIDER GROUND NO.1 OF ASSESSE ES APPEAL WHERE THE ASSESSEE HAS RAISED THE ISSUE THAT THE ASSESSMENT H AS BEEN FRAMED OUTSIDE THE SEARCH MATERIAL AND AFTER THE CHANGE OF OPINION. 5. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. WE H AVE ALREADY UPHELD THE ASSESSMENT ON THE BASIS OF SIMILAR FACTS AND CIRCUM STANCES IN ASSESSEES OWN CASE IN ITA NO.2092/DEL/2012 FOR ASSESSMENT YEAR 20 07-08 VIDE ORDER DATED 04.01.2013. THE RELEVANT PARA OF THE SAID ORDER I S REPRODUCED AS UNDER:- 5. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. WE HAVE UPHELD THE ASSESSMENT ON THE BASIS OF SIMILAR FACTS AND CIRCUMSTANCES IN ASSESSEES OWN CASE IN ITA NO.2091 /DEL/2012 FOR ASSESSMENT YEAR 2006-07 VIDE ORDER DATED 31.12. 2012. THE RELEVANT PARA OF THE SAID ORDER IS REPRODUCED AS UN DER:- 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS ON THE ISS UE AND HAS GONE THROUGH THE MATERIAL ON RECORD AND RELEVANT PA GES OF THE PAPER BOOK. IN OUR CONSIDERED VIEW, THERE WAS A SEIZED M ATERIAL FOUND AT THE RESIDENCE OF THE DIRECTOR WHICH HAS TO BE CONSI DERED FOR MAKING THE ASSESSMENT U/S 153A IN THE CASE OF ASSESSEE COM PANY AND ON THE BASIS OF SUCH SEIZED MATERIAL AS FAR AS IT RELATES TO THE UNDISCLOSED INCOME OF THE ASSESSEE THE ADDITION IS REQUIRED TO BE MADE. IT IS NOT ITA NO.1696/DEL/2012 CO NO.249/DEL/2012 ITA NO.2094/DEL/2012 5 THE MATERIAL, WHETHER THE SEIZED MATERIAL WAS FOUND AT THE PREMISES OF THE ASSESSEE OR AT THE RESIDENCE OF THE DIRECTOR . THE COMPANY IS REPRESENTED THROUGH ITS DIRECTORS, THEREFORE, MATER IAL FOUND AT THE RESIDENCE OF THE DIRECTOR IS RELEVANT AND HAS TO BE CONSIDERED FOR MAKING THE ASSESSMENTS U/S 153A. AS FAR AS THE SCO PE OF THE ASSESSMENT IS CONCERNED, WE HOLD THAT WHEREVER THE ISSUES HAVE BEEN CONSIDERED U/S 143(3) AND THE ASSESSMENT HAS B EEN CONCLUDED PRIOR TO THE INITIATION OF THE SEARCH THE SCOPE OF ASSESSMENT REMAINS LIMITED TO THE SEARCH MATERIAL AND OTHER ISSUES NOT CONSIDERED AT THE TIME OF MAKING THE ASSESSMENT U/S 143(3) OF THE ACT . CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, WE ARE UNABLE TO AGREE WITH THE CONTENTION OF THE ASSESSEE THAT ASSESSMENT U/S 153A HAS BEEN MADE ON THE BASIS OF OUTSIDE THE SEARCH MATERI AL AND AFTER THE CHANGE OF OPINION. MOREOVER, IN THIS YEAR, THE ASSESSMENT WAS MADE U/S 144 OF THE INCOME-TAX ACT, 1961 ON 09.12.2009. THE SAME WAS H ELD INVALID AS THERE WAS A SEARCH OPERATION AT THE PREM ISES OF THE ASSESSEE ON 31.07.2008. IN VIEW OF THE PROVISIONS OF SECTION 153A, THE PENDING ASSESSMENTS ABATE. THE ORDER PAS SED U/S 144 WAS AGAINST THE LAW. CONSIDERING ALL THE RELEVANT FACTS, WE DISMISS THIS GROUND OF ASSESSEES APPEAL. CONSIDERING ALL THESE FACTS, WE DISMISS THIS GROUND . 6. GROUND NO.2 IN THE REVENUES APPEAL AND GROUND N O.2 IN ASSESSEES APPEAL ARE AGAINST THE DELETING/SUSTAINING OF ADDIT ION ON THE ISSUE OF DISALLOWANCE OF COMMISSION. 7. THE TOTAL ADDITION MADE BY THE ASSESSING OFFICER WAS RS.14,85,009/-. CIT (A) DELETED THE ADDITION OF RS.6,26,860/- RELAT ED TO M/S. UTTARANCHAL REALTORS P. LTD. AGAINST WHICH THE REVENUE IS IN AP PEAL AND CIT (A) SUSTAINED THE ADDITION OF RS.8,58,149/- AGAINST WHICH THE ASS ESSEE IS IN APPEAL. 8. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE BILLS FOUND AT THE TIME OF SEARCH WAS AS UNDER :- ITA NO.1696/DEL/2012 CO NO.249/DEL/2012 ITA NO.2094/DEL/2012 6 PERIOD 01.04.2008 TO 31.03.2009 PARY A-7 S.NO. ANN./PG.NO. DATE NAME OF THE PARTY AMOUNT 1 A-9/24 19.06.2008 BASERA PROPERTIES 8,58,149 2 A-2/25 19.06.2008 UTTRANCHAL REALTORS P. LTD. 6,26,860 TOTAL 14,85,009 THE CIT (A) DELETED THE ADDITION BY HOLDING AS UNDE R :- 6.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSION, PE RUSED THE ORDER OF ASSESSMENT AND EVIDENCE ON RECORD. THE DISPUTE, AS RAISED BY THE APPELLANT, PERTAINS TO THE ADDITIONS OF RS.14,85,009/- MADE BY THE A.O. ON ACCOUNT OF COMMISSION PAID OUT OF BOOKS U/S 69C OF THE INCOME TAX ACT. AS PER THE AO, AMOUNT PAID FOR COMMISSION DURING THE YEAR IS L ESS THAN THE AMOUNT OF BILLS OF COMMISSION SEIZED BY THE DEPARTMENT AT THE TIME OF SEARCH AND THEREFORE AN ADDITION OF DIFFERENCE AMOUNT WAS MADE BY THE AO. IN CONTENTION TO THAT AR HAS SUBMITTED DETAILED EXPLAN ATION PARTY WISE AND ALSO SUBMITTED THE RECONCILIATION FOR THE DIFFERENC E AMOUNT. AFTER CONSIDERING THE SUBMISSIONS MADE AND DOCUMENTS SUBM ITTED, I AM OF THE CONSIDERED OPINION THAT IN CASE OF M/S BASERA ADDIT ION OF RS.8,58,149/- IS CONFIRMED. CONCERNING AN ADDITION OF RS.6,26,860/- OF M/S. UTTRANCHAL REALTORS PVT. LTD. IT IS REQUIRED TO BE DELETED AS THE SAME AHS BEEN ADDED IN THE PRECEDING ASSESSMENT YEAR 2008-09. IN RESULT O UT OF ADDITION O RS.14,85,000/- AND AN ADDITION OF RS.8,58,149 IS RE TAINED AND CONFIRMED. THEREFORE, THE GROUND RAISED BY THE APPELLANT IS PA RTLY ALLOWED. WE HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECO RD AND WE FIND THAT THE CIT (A) HAS RIGHTLY DELETED THE ADDITION OF RS.6,26 ,860/- RELATED TO UTTRANCHAL REALTORS PVT. LTD. AND THE SAME HAS BEEN ACCOUNTED FOR IN THE PRECEDING ASSESSMENT YEAR 2008-09. WE ALSO FIND THAT ASSESSE E HAS FAILED TO EXPLAIN THE REASONABLE EXPLANATION WITH REGARD TO THE COMMI SSION OF BASERA PROPERTIES, THEREFORE, WE FIND NO FAULT IN THE ORDE R OF THE CIT (A) AND WE SUSTAIN THE SAME. THUS, GROUND NO.2 OF REVENUES A PPEAL AND GROUND NO.2 OF ASSESSEES APPEAL ARE DISMISSED. ITA NO.1696/DEL/2012 CO NO.249/DEL/2012 ITA NO.2094/DEL/2012 7 9. IN THE GROUND NO.3, THE REVENUE HAS RAISED THE I SSUE OF ESTIMATION OF THE PROFIT AMOUNTING TO RS.4,17,12,850/- INSTEAD OF THE PROFIT DECLARED BY THE ASSESSEE OF RS.3,89,49,700/- ON PERCENTAGE COMPLETI ON METHOD. IN THE CROSS OBJECTION, THE ASSESSEE HAS SUPPORTED THE ORDER OF CIT (A) ON THE BASIS THAT ASSESSING OFFICER HAS NOT MADE ANY ADDITION BUT EST IMATED THE PROFITS. THE ASSESSING OFFICER HAS REJECTED THE BOOKS OF ACCOUNT S OF THE ASSESSEE WITHOUT ANY REASON. THE ASSESSING OFFICER HAS APPLIED THE METHOD OF ACCOUNTING NOT RELEVANT TO THE ASSESSEES BUSINESS. THE ASSESSEE HAS ADOPTED AND OPTED STANDARD METHOD OF ACCOUNTING APPROVED BY ACCOUNTIN G STANDARDS OF ICAI AND ALSO BY HON'BLE SUPREME COURT AND HON'BLE JURIS DICTIONAL HIGH COURT IN THE CASE OF MANISH BUILDWELL. THE ASSESSEE HAS ALS O PLEADED THAT ASSESSING OFFICER HAS FAILED TO APPRECIATE THAT ASSESSEE IS N OT ENGAGED IN THE BUSINESS OF BUILDING OR STRUCTURES BUT ENGAGED IN THE BUSINESS OF DEVELOPMENT OF LAND AND SELLING OF PLOTS OF LAND. THE ASSESSEE HAS ALSO PL EADED THAT ASSESSING OFFICER HAS FAILED TO APPRECIATE THE FACT THAT SALE OF PLOT OF LAND IS MADE BY REGISTERED DOCUMENTS BY HANDING OVER THE PLOT AND NO OWNERSHIP IS TRANSFERRED PRIOR TO THE FINAL PAYMENT RECEIVED IN RESPECT OF THE SALE O F THE PLOT OF LAND. WHILE IN CONSTRUCTION ACTIVITIES THE PAYMENTS ARE MADE ON TH E CONSTRUCTION BASIS. THEREFORE, THE PERCENTAGE COMPLETION METHOD IS NOT APPLICABLE TO THE FACTS OF ASSESSEES CASE. ITA NO.1696/DEL/2012 CO NO.249/DEL/2012 ITA NO.2094/DEL/2012 8 10. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE ASSESSEE HAS RECOGNIZED THE SALES OF THE PLOT WHEN THE POSSESSIO N OF THE PLOT IS TRANSFERRED TO THE CUSTOMER AND FULL CONSIDERATION FOR THE PLO T HAD BEEN RECEIVED. THE ASSESSEE WAS FOLLOWING THE PROJECT COMPLETION METHO D WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT IN THE EARLIER YEARS. T HE CIT (A) HAS GRANTED THE RELIEF TO THE ASSESSEE BY HOLDING AS UNDER :- 7.1.1 THE AO HAS NOTICED FROM THE NOTE MENTIONED WITH THE BALANCE SHEET, THAT THE ASSESSEE HAS RECOGNIZED THE SALES, WHEN POSSESSION OF PLOT HAS BEEN TRANSFERRED TO THE CUSTOMERS AND FULL CONSIDERATION OF THAT PLOT HAS BEEN RECEIV ED. AS THE ASSESSEE WAS NOT FOLLOWING THE PERCENTAGE COMPLETIO N METHOD, THEREFORE, THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE PROFIT FOR THE ASSESSMENT YEAR SHOULD NOT BE COMPUT ED BY FOLLOWING THE PERCENTAGE COMPLETION METHOD. 7.1.2 THE AR OF THE APPELLANT HAS SUBMITTED THAT T HE ASSESSEE HAS BEEN FOLLOWING THE PROJECT COMPLETION METHOD OF ACCOUNTING AND THE SAME HAS BEEN ACCEPTED BY THE DE PARTMENT ALSO WHILE MAKING ASSESSMENT U/S 143(3) OF THE ACT FOR THE ASSESSMENT YEAR 2005-06. THE DEPARTMENT HAS ACCEPTE D THE METHOD OF ACCOUNTING AND NOT ONLY THEY HELD IT THE RIGHT AND APPROPRIATE METHOD BUT ALSO WERE CONVINCED AS NOT H AVING DEFERRED THE TAX LIABILITY AND WERE PLEASED TO FOLL OW THE SAME FOR THE A.Y 2006-2007. THE AR ALSO SUBMITTED THE COPY O F ASSESSMENT ORDERS AND SUBMITTED THAT IF SAME HAS BE EN ACCEPTED BY THE DEPARTMENT EARLIER ALSO, THEN HOW THE SAME C AN BE HELD AS AN INAPPROPRIATE METHOD TO COMPUTE THE INCOME AS PE R PROJECT COMPLETION METHOD WHICH THE ASSESSEE HAS FOLLOWED. AGAIN, AR HAS BROUGHT THE ATTENTION THAT EVEN THE I NCOME TAX ACT, 1961 HAS NOT MADE IT MANDATORY TO FOLLOW AS SE CTION 145 AND 145A OF THE ACT, WHICH IS INSCRIBED AS UNDER :- 'SECTION 145:- (1) INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' OR 'INCOME FRO M OTHER ITA NO.1696/DEL/2012 CO NO.249/DEL/2012 ITA NO.2094/DEL/2012 9 SOURCES', SUBJECT TO THE PROVISIONS OF SUB-SECTION (2), BE COMPUTED IN ACCORDANCE WITH EITHER CASH OR MERCANTI LE SYSTEM OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE. (2) THE CENTRAL GOVERNMENT MAY NOTIFY IN THE OFFICI AL GAZETTE FROM TIME TO TIME ACCOUNTING STANDARDS TO BE FOLLOW ED BY ANY CLASS OF ASSESSEE OR IN RESPECT OF ANY CLASS OF INC OME. (3) WHERE THE ASSESSING OFFICER IS NOT SATISFIED AB OUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, OR WHERE THE METHOD OF ACCOUNTING PROVIDED IN SUB-SECT ION (1) OR ACCOUNTING STANDARDS AS NOTIFIED UNDER SUB-SECTION (2) HAVE NOT BEEN REGULARLY FOLLOWED BY THE ASSESSEE, THE ASSESS ING OFFICER MAY MAKE AN ASSESSMENT IN THE MANNER PROVIDED IN SE CTION 144. SECTION 145A NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTION 145.- (A) THE VALUATION OF PURCHASE OR SALE OF GOODS AND INVENTORY FOR THE PURPOSES OF DETERMINING THE INCOME CHARGEAB LE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' SHALL BE- (I) IN ACCORDANCE WITH THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE; AND (II) FURTHER ADJUSTED TO INCLUDE THE AMOUNT OF ANY TAX, DUTY, CESS OR FEE (BY WHATEVER NAME CALLED} ACTUALL Y PAID OR INCURRED BY THE ASSESSEE TO BRING THE GOODS TO THE PLACE OF ITS LOCATION AND CONDITION AS ON TH E DATE OF VALUATION. EXPLANATION.- FOR THE PURPOSE OF THIS SECTION, ANY TAX, DUTY, CESS OR FEE (BY WHATEVER NAME CALLED) UNDER ANY LAW FOR THE TIME BEING IN FORCE, SHALL INCLUDE ALL SUCH PAYMENTS NOT WITHSTANDING ANY RIGHT ARISING AS A CONSEQUENCE TO SUCH PAYMENT; (B) INTEREST RECEIVED BY AN ASSESSEE ON COMPENSATIO N OR ENHANCED COMPENSATION, AS THE CASE MAY BE, SHALL BE DEEMED OF BE THE INCOME OF THE YEAR IN WHICH IT IS RECEIVED. ITA NO.1696/DEL/2012 CO NO.249/DEL/2012 ITA NO.2094/DEL/2012 10 AS PER INCOME TAX ACT PROVISIONS, ONLY TWO ACCOUNTI NG STANDARDS ARE MANDATORY IN NATURE WHICH ARE ELABORA TED BELOW AND OTHER STANDARDS ARE RECOMMENDATORY. OFFICIAL GAZETTE: AS PER NOTIFICATION NO. SO 69(E), DATED 25-1- 1996 FOR NOTIFIED ACCOUNTING STANDARDS, NOTIFIED ST ANDARDS IS AS UNDER: A. ACCOUNTING STANDARD I RELATING TO DISCLOSER OF A CCOUNTING POLICIES. B. ACCOUNTING STANDARD II RELATING TO DISCLOSER OF PRIOR PERIOD ITEMS AND EXTRA ORDINARY ITEMS AND CHANGES IN ACCOU NTING POLICIES. IN ACCORDANCE TO THAT THE ASSESSEE IS NOT FOLLOWING PERCENTAGE COMPLETION METHOD WHICH FALLS UNDER ACCOUNTING STAN DARD -7, I.E. ACCOUNTING FOR CONSTRUCTION CONTRACTS. THEY ARE FOL LOWING PROJECT COMPLETION METHOD. MOREOVER, THIS STANDARD DEALS WI TH THE ACCOUNTING FOR THE CONSTRUCTION CONTRACTS AND NOT W ITH THE TAXATION MATTERS. HOWEVER, ACCOUNTING STANDARD-7 STATES THAT THERE AR E TWO METHODS OF ACCOUNTING FOR CONTRACTS COMMONLY FOLLOW ED BY CONTRACTORS ARE THE PERCENTAGE OF COMPLETION METHOD AND THE COMPLETED CONTRACT METHOD. A) UNDER THE PERCENTAGE OF COMPLETION METHOD, REVEN UE IS RECOGNIZED AS THE CONTRACT ACTIVITY PROGRESSES BASE D ON THE STAGE OF COMPLETION REACHED. THE COSTS INCURRED IN REACHING THE STAGE OF COMPLETION ARE MATCHED WITH T HIS REVENUE, RESULTING IN THE REPORTING OF RESULTS WHIC H CAN BE ATTRIBUTED TO THE PROPORTION OF WORK COMPLETED. ALT HOUGH (AS PER THE PRINCIPLE OF 'PRUDENCE') REVENUE IS REC OGNIZED ONLY WHEN REALIZED, UNDER THIS METHOD, THE REVENUE IS RECOGNIZED AS THE ACTIVITY PROGRESSES EVEN THOUGH I N CERTAIN CIRCUMSTANCES IT MAY NOT BE REALIZED. B) UNDER THE COMPLETED CONTRACT METHOD, REVENUE IS RECOGNIZED ONLY WHEN THE CONTRACT IS COMPLETED OR ITA NO.1696/DEL/2012 CO NO.249/DEL/2012 ITA NO.2094/DEL/2012 11 SUBSTANTIALLY COMPLETED; THAT IS, WHEN ONLY MINOR W ORK IS EXPECTED OTHER THAN WARRANTY OBLIGATION. COSTS AND PROGRESS PAYMENTS RECEIVED ARE ACCUMULATED DURING T HE COURSE OF THE CONTRACT BUT REVENUE IS NOT RECOGNIZE D UNTIL THE CONTRACT ACTIVITY IS SUBSTANTIALLY COMPLETED. THE PRINCIPAL ADVANTAGE OF THE COMPLETED CONTRACT M ETHOD IS THAT IT IS BASED ON RESULTS AS DETERMINED WHEN THE CONTR ACT IS COMPLETED OR SUBSTANTIALLY COMPLETED RATHER THAN ON ESTIMATES WHICH MAY REQUIRE SUBSEQUENT ADJUSTMENT AS A RESULT OF UNFORESEEN COSTS AND POSSIBLE LOSSES THE RISK OF RE COGNIZING PROFITS THAT MAY NOT HAVE BEEN EARNED IS THEREFORE MINIMIZED. THE AR OF THE APPELLANT INFERRED THAT THE INCOME TA X ACT HAS NOT PRESCRIBED ANY METHOD OF ACCOUNTING AS PER SECT ION 145 OR 145A OF THE ACT, FOR THE BUILDERS AND REAL ESTATE; THEREFORE, THE OBSERVATION OF THE AO IS ERRONEOUS. THE AR HAS INSCRIBED THAT ASSESSEE HAS THE CHOICE O N METHOD, BUT SUCH METHOD SHOULD BE SHOWN AS REGULARLY FOLLOW ED. DEPARTMENT CANNOT COMPEL TO CHOSE A PARTICULAR METH OD AND IN SUPPORT OF THAT HAS PLACED THE FOLLOWING CASE LAWS TO DEFEND HIS CONTENTION. A) CIT V. MCMILLAN & CO. [1958] 33 ITR 182 (SC). B) INVESTMENTS LTD V. CIT [1970] 77 ITR 533 (SC) C) MKB ASIA (P) LTD. V. CIT [2008] 167 TAXMAN 256 (GAU.). D) CIT VS. HYUNDAI HEAVY INDUSTRIES CO. LTD. (2007) 210 CTR (SC) 178 . (2007) 291 ITR 482 (SC) E) CIT VS. BILAHARI INVESTMENT (P) LTD. (2008) 215 CTR (SC) 201 : (2008) 3 DTR (SC) 329 : (2008) 299 ITR 1 (SC) F) JUGGILAL KAMLAPAT BANKERS V. CIT [1975] 101 ITR 40 (ALL.) G) CIT V. SMT. VIMLA O. SON WANE [1994] 75 TAXMAN 3 35 (BOM.) H) AWADHESH BUILDERS VS. ITO (2010) 37 SOT 122 I) VASTUKAR VS ITO (ITAT CUTTAK) J) FORT PROJECTS (P) LTD. V. DEPUTY COMMISSIONER OF INCOME TAX (2011) 63 DTR (KOL)(TRIB) 145 ITA NO.1696/DEL/2012 CO NO.249/DEL/2012 ITA NO.2094/DEL/2012 12 7.2.1 THE AO HAS DISCUSSED THE LEGAL POSITION OF T HE ACCOUNTING PRINCIPLES TO BE FOLLOWED IN THE CASE OF THE REAL ESTATE DEVELOPERS. AS PER THE AO THE PROJECT TAKES NORMALLY 4-5 YEARS BEFORE IT IS COMPLETED. THE DEVELOPER RECEIVE S ADVANCES RIGHT FROM THE BEGINNING RATHER PRIOR TO WORK OF CO NSTRUCTION COMMENCES AND CONTINUES TAKING INSTALLMENTS REGULAR LY FROM THE BUYERS AS THE CONSTRUCTION PROGRESSES. THEREFORE, Q UESTION ARISES THAT WHEN INCOME BECOMES TAXABLE IN SUCH CASES. IS IT THE YEAR OF COMPLETION OF THE PROJECT OR SHOULD THE INCOME BE O FFERED ON A YEAR TO YEAR BASIS. IF THE INCOME IS TO BE OFFERED ON A YEAR TO YEAR BASIS SHOULD IT BE COMPUTED ON PERCENTAGE OF COMPLE TION METHOD OR SHOULD IT BE ESTIMATED? 7.2.2 THE AR HAS SUBMITTED THAT THE ASSESSEE HAS C ARRIED OUT THE BUSINESS OF REAL ESTATE DEVELOPERS BY DEVEL OPING LAND AND THEN PLOTTING IT. THE LAND HAS BEEN DEVELOPED IN TH E EARLIER YEAR AND THE PLOTS ARE BEING SOLD ON PAYMENT BASIS WHICH IS VARYING FROM 45 DAYS TO 6 MONTHS. THERE IS NO PERIOD OF 4-5 YEARS IS INVOLVED AS HAS BEEN ENVISAGED BY THE AO IN HIS ASS ESSMENT ORDER. THE OBSERVATION OF THE AO IS HIS OWN OBSERVA TION AND HAS GOT NOTHING TO DO WITH THE BUSINESS OF THE ASSESSEE AS THE ASSESSEE HAVE NOT CARRIED OUT THE CONSTRUCTION WORK S AND HAS RECEIVED INSTALLMENTS AS THE CONSTRUCTION PROGRESSE S. AR STATED THAT THE OBSERVATION OF AO IS NOT RELATED WITH THE BUSINESS OF THE ASSESSEE, AS SUCH, THE SAME CANNOT BE THE BASIS FOR CONVERTING THE PROJECT COMPLETION METHOD TO PERCENTAGE COMPLETION METHOD. THE ASSESSEE HAS ACCOUNTED FOR ITS INCOME ON THE BA SIS OF THE SALE OF THE PLOTS AS AND WHEN THE FULL PAYMENT OF T HE PLOT HAS BEEN RECEIVED THE INCOME HAS BEEN RECOGNIZED IN THA T VERY YEAR AND NO DEFERMENT HAS BEEN MADE AS ALLEGED BY THE AO . 7.3.1 THE AO HAS INFERRED THAT IT IS A WELL SETTLE D PRINCIPLE THAT FOR THE PURPOSE OF INCOME TAX, INCOM E HAS TO BE DETERMINED ON A YEAR TO YEAR BASIS. THIS WAS SO DEC IDED BY THE SUPREME COURT IN THE CASE OF P.M. MOHAMMED VS. CIT (1969) 73 ITR 735. THEREFORE, IN THE CASE OF REAL ESTATE D EVELOPERS ALSO, THE INCOME IS TO BE OFFERED ON A YEAR TO YEAR BASIS. ITA NO.1696/DEL/2012 CO NO.249/DEL/2012 ITA NO.2094/DEL/2012 13 7.3.2 THE AR IN HIS REPLY SUBMITTED THAT THE FACTS OF THE CASE AS QUOTED BY THE AO ARE TOTALLY DIFFERENT WITH THE FACTS OF THE APPELLANT AND THE DISTINGUISHMENT OF THE FACTS IS AS UNDER : DIFFERENTIATION AND DISTINGUISHMENT :- THE FACTS OF THE CASE ARE ALTOGETHER DIFFERENT THAN THE FACTS OF THE ASSESSEE. IN THE CASE CITED BY THE LD AO, IT HAS BEEN HELD:- BUSINESS-ADVENTURE IN THE NATURE OF TRADE-AGREEMENT FOR PURCHASE OF VAST AREAS OF LAND - DIVISION OF AREA I NTO 23 PLOTS-SALE OF 22 PLOTS TO OTHERS AND 23RD RETAINED BY THE ASSESSEE-WHETHER TRANSACTIONS IN THE NATURE OF TRAD E- PROFITS FROM TRANSACTION HOW ASCERTAINED- VALUE OF PLOT RETAINED BY ASSESSEE, WHETHER TO BE TAKEN INTO ACCO UNT. IN THE CASE OF THE ASSESSEE, NO SUCH SITUATION FOR PURCHASE OF VAST AREA OF LAND, DIVISION OF THE AREA INTO 23 PLOTS AND ONE PLOT RETAINED BY THE ASSESSEE HIMSELF, AND WHET HER THE VALUE OF PLOT RETAINED BY THE ASSESSEE IS TO BE TAK EN INTO ACCOUNT WAS PRESENT RATHER THERE HAS BEEN A SUBSTAN TIAL QUESTION OF LAW AS HAS BEEN RAISED BY THE AO THAT W HETHER, THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE F ORM THE PAST SO MANY YEARS AND ACCEPTED BY THE DEPARTME NT AS THE CORRECT METHOD OF DEDUCING PROFITS IS LIABLE TO BE CONVERTED INTO PROJECT COMPLETION METHOD TO PERCENT AGE COMPLETION METHOD. THE FACTS OF THE CASE AND THE SUBSTANTIAL QUESTION RAISED BY THE AO ARE NOWHERE COVERED, AS SUCH, THE SAME IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE COMPANY AND IS NOT TO BE RELIED UPON. 7.4.1 THE AO HAS OBSERVED THAT IT IS A WELL SETTLE D PRINCIPLE AS TO IF NO SPECIFIC METHOD OF RECOGNIZIN G REVENUE HAS BEEN PRESCRIBED IN THE INCOME TAX ACT, IN THAT CASE THE USUALLY ACCEPTED METHODS OR PRINCIPLES SHOULD BE ADOPTED. I N THIS CONNECTION IT IS STATED THAT THE COUNCIL OF THE INS TITUTE OF CHARTERED ACCOUNTANTS OF INDIA HAD ISSUED A GUIDANC E NOTE IN THE YEAR 2006, RECOMMENDING THE PRINCIPLES FOR RECO GNITION OF REVENUES ARISING FROM REAL ESTATE SALES BY THE ENTE RPRISES ENGAGED IN SUCH ACTIVITIES (COMMONLY REFERRED TO AS 'REAL ESTATE ITA NO.1696/DEL/2012 CO NO.249/DEL/2012 ITA NO.2094/DEL/2012 14 DEVELOPERS', 'BUILDERS' OR 'PROPERTY DEVELOPERS'). AS PER THE GUIDANCE NOTE REVENUE IN THE CASE OF REAL ESTATE SA LES SHOULD BE RECOGNIZED WHEN THE FOLLOWING CONDITIONS ARE SATISF IED: 1. THE SELLER HAS TRANSFERRED TO THE BUYER ALL SIGN IFICANT RISKS AND REWARDS OF OWNERSHIP AND THE SELLER RETAINS NO EFFECTIVE CONTROL OF THE REAL ESTATE TO A DEGREE US UALLY ASSOCIATED WITH OWNERSHIP; 2. NO SIGNIFICANT UNCERTAINTY EXISTS REGARDING THE AMOUNT OF THE CONSIDERATION THAT WILL BE DERIVED FROM THE REA L ESTATE SALE; AND 3. IT IS NOT UNREASONABLE TO EXPECT ULTIMATE COLLEC TION. IT IS ALSO PROVIDED IN THE GUIDANCE NOTE THAT IN TH E CASE OF REAL ESTATE SALE, ALL SIGNIFICANT RISKS AND REWARDS OF O WNERSHIP ARE NORMALLY CONSIDERED TO BE TRANSFERRED WHEN LEGAL TI TLE PASSES TO THE BUYER (E.G., AT THE TIME OF THE REGISTRATION, W ITH THE RELEVANT AUTHORITIES, OF THE REAL ESTATE IN THE NAME OF THE BUYER) OR WHEN THE SELLERS ENTERS INTO AN AGREEMENT FOR SALE. ALL SIGNIFICANT RISKS AND REWARDS OF OWNERSHIP ARE ALSO CONSIDERED TO BE TRANSFERRED, IF THE SELLER HAS ENTERED INTO A LEGALLY ENFORCEABL E AGREEMENT FOR SALE WITH THE BUYER EVEN THOUGH THE LEGAL TITLE IS NOT PASSED OR THE POSSESSION OF THE REAL ESTATE IS NOT GIVEN TO T HE BUYER. WHEN THE SELLER HAS TRANSFERRED TO THE BUYER ALL TH E SIGNIFICANT RISKS AND REWARDS OF OWNERSHIP, IT WOULD BE APPROPR IATE TO RECOGNIZE REVENUE AT THAT STAGE. HOWEVER, IN CASE T HE SELLER IS OBLIGED TO PERFORM ANY SUBSTANTIAL ACTS AFTER THE T RANSFER OF ALL SIGNIFICANT RISKS AND REWARDS OF THE OWNERSHIP, REV ENUE SHOULD BE RECOGNIZED ON THE PROPORTIONATE BASIS AS THE ACT S ARE PERFORMED, I.E., BY APPLYING THE PERCENTAGE OF COMP LETION METHOD IN THE MANNER EXPLAINED IN ACCOUNTING STANDA RD (AS) 7, CONSTRUCTION CONTRACTS. THEREFORE, IN THE CASE OF R EAL ESTATE DEVELOPERS ALSO, THE INCOME IS TO BE OFFERED ON A Y EAR TO YEAR BASIS. 7.4.2 THE AR HAS SUBMITTED THAT THE GUIDANCE NOTES ISSUED BY THE ICAI IN 2006 HAS BEEN WITHDRAWN AND I S NOT ITA NO.1696/DEL/2012 CO NO.249/DEL/2012 ITA NO.2094/DEL/2012 15 APPLICABLE. AS PER ACCOUNTING STANDARD PRESCRIBED W HAT HAS BEEN HELD AS MANDATORY IS REPRODUCED BELOW :- IN ACCOUNTING FOR CONSTRUCTIONS CONTRACTS IN FINANC IAL STATEMENTS, EITHER THE PERCENTAGE OF COMPLETION METHOD OR THE C OMPLETED CONTRACT METHOD MAY BE USED. WHEN A CONTRACTOR USES A PARTICULAR METHOD OF ACCOUNTING FOR A CONTRACT THEN THE SAME METHOD SHOULD BE ADOPTED FOR ALL OTHER CONTRACTS WH ICH MEET SIMILAR CRITERIA. THEREFORE, THE OBSERVATION MADE BY THE AO ARE NOTHI NG BUT A DISTORTED INFERENCE MADE BY HIM. THEREFORE, THE SAM E ARE NOT LIABLE TO BE CONSIDERED AND THE CONSEQUENT ADDITION S MADE, BASED THEREON IS LIABLE TO BE DELETED. THE AR HAS P ROVIDE THE RECENT JUDGMENT OF HON'BLE DELHI HIGH COURT CIT VS. MANISH BUILD WELL (P) LTD. (DEL.) (HC) (2011) 63 DTR 369 W HICH HAS ENDORSED THE SUBMISSION OF THE APPELLANT. 7.5 I HAVE CAREFULLY CONSIDERED THE SUBMISSION, PE RUSED THE ORDER OF ASSESSMENT AND EVIDENCE ON RECORD. THE DISPUTE, AS RAISED BY THE APPELLANT, PERTAINS TO THE ESTIMATION OF THE PROFIT BY THE AO ON PERCENTAGE COMPLETION METHOD INSTEAD OF P ROJECT COMPLETION METHOD. THE AO HAS THE CONTENTION THAT P ROJECT OF THE APPELLANT TAKES NORMALLY 4-5 YEARS BEFORE IT IS COMPLETED. THE ASSESSEE RECEIVES ADVANCES PRIOR TO COMMENCEMEN T OF THE CONSTRUCTION WORK AND CONTINUES TAKING INSTALLMENTS REGULARLY FROM THE BUYERS AS THE CONSTRUCTION PROGRESSES. THE REFORE, INCOME SHOULD BE TAXABLE ON YEAR TO YEAR BASIS ON P ERCENTAGE OF COMPLETION OF THE PROJECT. AGAINST THE CONTENTION O F THE AO, AR HAS SUBMITTED THAT PLOTS ARE BEING SOLD ON PAYMENT BASIS WHICH IS VARYING FROM 45 DAYS TO 6 MONTHS. THE AR HAS ALS O STATED THAT DEPARTMENT CANNOT COMPEL THE APPELLANT TO FOLL OW ANY PARTICULAR METHOD. INCOME TAX ACT DOES NOT FORCE AN YONE TO FOLLOW ANY PARTICULAR ACCOUNTING STANDARD. THE APPE LLANT WAS FOLLOWING PROJECT COMPLETION METHOD WHICH IS IN ACC ORDANCE OF THE EXISTING LAW AND THE SAME HAS ALSO BEEN ACCEPTE D BY THE INCOME TAX DEPARTMENT DURING ASSESSMENT DONE EARLIE R U/S 143(3) AND IT IS THE SETTLED LAW THAT IF ONE METHOD IS EMPLOYED, IT SHOULD REGULARLY BE EMPLOYED. AFTER CONSIDERING THE ARGUMENT OF BOTH AND IN VIEW OF THE JUDGEMENT ANNOUNCED BY THE HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. MANISH BUILD WE LL (P) LTD. ITA NO.1696/DEL/2012 CO NO.249/DEL/2012 ITA NO.2094/DEL/2012 16 (DEL.) (HC) (2011) 63 DTR 369, I AM OF THE CONSIDER ED OPINION THAT NO EVIDENCES WAS FOUND DURING THE COURSE OF SE ARCH TO SHOW THAT THE BOOKS OF ACCOUNT ARE NOT PROPERLY MAINTAIN ED BY THE APPELLANT. THE MAIN THRUST OF THE AO WHILE MAKING T HE ADDITION IS THAT THE APPELLANT IS DEFERRING THE PAYMENT OF T AXES. HOWEVER, THIS ALLEGATION OF THE AO IS DEVOID OF MERITS AND C ANNOT BE ACCEPTED BECAUSE THE APPELLANT IS CONSISTENTLY FOLL OWING A METHOD OF ACCOUNTING WHICH IS RECOGNIZED IN REAL ES TATE DEVELOPMENT BUSINESS. IT CANNOT BE SAID THAT THE PR OJECT COMPLETION METHOD COULD RESULT IN DEFERMENT OF PAYM ENT OF TAXES. IT HAS BEEN HELD BY THE HON'BLE HIGH COURT, DELHI IN ABOVE CASE THAT AS-7 ISSUED BY ICAI ALSO RECOGNIZES THE POSITION THAT IN CASE OF CONSTRUCTION CONTRACTS THE ASSESSEE CAN FOLLOW EITHER OF THE TWO METHODS. THIS PROJECT COMP LETION METHOD HAS BEEN ACCEPTED BY THE A.O IN EARLIER YEAR S, HENCE, ARGUMENTS OF THE AR OF THE APPELLANT HAS A STRONG A CCEPTANCE THUS, ESTIMATION OF PROFIT AMOUNTING TO RS.4,17,12, 850/- IN PLACE OF PROFIT DECLARED BY THE APPELLANT OF RS.3,8 9,49,700/- ON PERCENTAGE COMPLETION METHOD IS NOT ACCEPTED. THIS GROUND OF APPEAL IS THUS ALLOWED. WE HAVE CAREFULLY GONE THROUGH THE FACTS OF THE CAS E AND CONSIDERED SUBMISSIONS OF THE CASE AND HAS ALSO CONSIDERED THE EVIDENCES ON RECORD. THE ONLY DISPUTE IS REGARDING THE ESTIMATION OF PROFIT. THE ASSESSING OFFICER ADOPTED PERCENTAGE COMPLETION METHOD WHILE ASSESSEE IS ADOPTING PROJECT COMPLETION METHOD. AS PER ASSESSING OFFICER, THE P ROJECT TAKES 4 5 YEARS TO BE COMPLETED, THEREFORE, THE INCOME SHOULD BE TAXED YEAR TO YEAR BASIS ON PERCENTAGE COMPLETION METHOD OF THE PROJECT. IN AS SESSEES CASE, THE PLOTS ARE BEING SOLD AND THE PAYMENT IS BEING RECEIVED WITHIN A PERIOD OF 45 DAYS TO SIX MONTHS. THE ASSESSEE IS ADOPTING PROJECT COMPLETI ON METHOD REGULARLY. THE ONLY PRESUMPTION OF THE ASSESSING OFFICER IS DIFFER ING THE PAYMENT OF TAXES ITA NO.1696/DEL/2012 CO NO.249/DEL/2012 ITA NO.2094/DEL/2012 17 AND ON THAT BASIS, THE ASSESSING OFFICER HAS ADOPTE D THE PERCENTAGE COMPLETION METHOD. IN OUR CONSIDERED VIEW, THERE W AS NO SUFFICIENT MATERIAL WITH THE ASSESSING OFFICER WHICH COULD ESTABLISH TH AT THE ASSESSEE WAS DIFFERING THE PAYMENT OF TAXES BY ADOPTING THE PROJ ECT COMPLETION METHOD. HE ASSESSEE WAS CONSISTENTLY FOLLOWING THIS METHOD WHICH IS A RECOGNIZED METHOD OF ACCOUNTING INCOME IN THE BUSINESS OF REAL ESTATE DEVELOPMENT. CONSIDERING TOTALITY OF THESE FACTS, WE FIND NO FAU LT IN THE ORDER OF CIT (A) AND WE DISMISS THIS GROUND OF REVENUES APPEAL AND ALLOW THE CROSS OBJECTION FILED BY THE ASSESSEE. 11. IN THE RESULT, THE APPEAL OF THE REVENUE AND AP PEAL OF THE ASSESSEE ARE DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSE SSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 24 TH DAY OF JANUARY, 2013. SD/- SD/- (R.P. TOLANI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 24 TH DAY OF JANUARY, 2013 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A) 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.