KRISH INFRASTRUCTURE PVT. LTD., Jaipur V. ACIT, Alwar

ITA 1096/JPR/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3049 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-11-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 15-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law
• Section: 80IB; 132; 144

Judgement Text

IN THE INCOMETAX APPELLATE TRIBUNAL JAIPUR BENCH: JAIPUR (BEFORE SHRI B.R. JAIN AND SHRI V. DURGA RAO) I.T.A. NO. 1096 AND 1097/JP/2011 ASSTT. YEARS- 2008-09 & 2009-10 PAN NO. AACCK8871A M/S KRISH INFRASTRUCTURE (P) LTD., THE ASSISTANT C OMMISSIONER OF INCOME TAX OPP. ASHIANA GARDENS,. VRS. CENTRAL CIRC LE, ALWAR. ALWAR BYE PASS ROAD, INDUSTRIAL AREA, BHIWADI. (APPELLANT) (RESPONDENT) ASSESSEE BY:- SHRI RAJEEV SOGANI. DEPARTMENT BY:- SHRI SHUBHASH CHANDRA. DATE OF HEARING: 16/4/2013 DATE OF PRONOUNCEMENT: 25/04/2013 PER: B.R. JAIN, A.M. THESE TWO APPEALS ARISE FROM THE COMMON ORDER DATE D 23/11/2011 OF LD. CIT(A), CENTRAL, JAIPUR BY RAISING THE IDENTICAL GROUNDS AS UNDER:- 1. THE LD. CIT (APPEALS) ERRED IN FACTS AS WELL AS LAW BY CONFIRMING THE INCOME OF RS. 90,43,690/- AGAINST THE LOSS OF RS. 2 0,80,021/- AS WORKED BY LEARNED ASSESSING OFFICER, BY ADOPTING TH E PERCENTAGE COMPLETION METHOD, FOR THE HOUSING PROJECTS, OF TH E ASSESSEE COMPANY, ON HYPOTHETICAL FIGURES OF THE PROJECTED T URNOVER AND PROJECTED PROFITS. THE LD. CIT (APPEALS) FURTHER ERRED IN LAW AS WELL FACTS BY REJECTING THE PROJECT COMPLETION METHOD ADOPTED BY THE ASSE SSEE COMPANY AND FURTHER REJECTING THE AUDITED FIGURES OF LOSS RETUR NED BY IT. THE LD. CIT (APPEALS) FURTHER ERRED IN LAW AS WELL FACTS THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTIO N 80IB OF THE INCOME TAX ACT, WHILE CONFIRMING THE ASSESSABLE INCOME FOR THE RELEVANT ASSESSMENT YEAR. 2. THE LEARNED CIT (APPEALS) ERRED IN LAW AS WELL F ACTS BY NOT ADJUDICATING UPON, INITIATION OF PENALTY PROCEEDING S INITIATED UNDER SECTION 271AAA OF THE INCOME TAX ACT, 1961. 2. BRIEFLY THE FACTS ARE THAT THE ASSESSEE, A PRIVA TE LIMITED COMPANY WAS INCORPORATED ON 21/9/2006. IT HAS ENGAGED ITSELF IN THE BUSINESS OF DEVELOPING AND SELLING REAL ESTATE PROJECT IN 2 THE NAME OF KRISH VATIKA AT BHIWADI. AN ACTION U/ S 132 OF THE ACT WAS CARRIED AT BUSINESS PREMISES OF THE ASSESSEE ON 17/9/2008. THE ASSESSEE HAS FILED NIL RETURN OF INCOME BOTH FOR ASSESSMENT YEARS 2008-09 AND 2009-10 BY ADOPTING PR OJECT COMPLETION METHOD. THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE U/S 14 2(1) OF THE ACT ON 1/12/2010 INFORMING HIM THAT SINCE IT HAS NOT FOLLOWED ACCOUNTING SLAN DERED AS7 AND AS-9, WHICH IT WAS REQUIRED TO FOLLOW AS PER THE PROVISIONS OF SECTION 145(2) A ND 145(3), ASSESSMENT IN THE CASE WAS PROPOSED TO BE MADE AS PER THE PROVISIONS OF SECTIO N 144 AS HAS BEEN LAID OUT IN SECTION 145(3) OF THE ACT AND ASSESSEE INCOME FOR ASSESSMEN T YEAR 2008-09 AT RS. 90,43,688. THE ASSESSEE FURNISHED DETAILED REPLY VIDE LETTER DATED 13/12/2010 AS IS ALSO REPRODUCED AS UNDER:- 1. THE ASSESSEE HAS BEEN STRICTLY FOLLOWING THE PRO VISIONS OF SECTION 145(1) & 145(2) OF THE ACT AND ACCOUNTING STANDARDS NOTIFIED IN OFFICIAL GAZETTE BY THE CENTRAL GOVERNMENT VIDE ITS NOTIFICATION NO. SO.69( E) DATED 25.01.1996. 2. SINCE THE PROJECT WAS NOT COMPLETED DURING THE Y EAR, THERE WAS NO OCCASION FOR THE ASSESSEE COMPANY TO RECOGNIZE EITHER THE PROJEC T EXPENSES OR THE PROJECT REVENUE AND ACCORDINGLY THE METHOD OF ACCOUNTING FO LLOWED BY THE ASSESSEE IS STRICTLY MERCANTILE. 3. AS-7 IS NOT NOTIFIED BY THE CENTRAL GOVERNMENT U /S 145(2) OF THE ACT. AS-7 IS APPLICABLE ONLY IN THE CASE OF CONTRACTORS AND NOT ON BUILDERS AND DEVELOPERS. THEREFORE, AS-7 IS NOT APPLICABLE ON ASSESSEE AS IT IS A REAL ESTATE DEVELOPER AND NOT A CONTRACTOR. 4. AS-9 IS APPLICABLE WHEN A PROJECT IS COMPLETED, FLATS ARE SOLD AND THIS HAPPENS ONLY WHEN THE LEGAL TITLE PASSES TO THE BUYER OR WH ERE POSSESSION IS HANDED OVER TO THE BUYER. 5. AS PER THE AGREEMENT WITH THE ALLOTEES THE ASSES SEE IS ENTITLED AT ITS OWN OPTION TO CANCEL AND TERMINATE THE AGREEMENT WHEN THE ALLO TTEE DOES NOT MAKE THE PAYMENTS DUE AS PER THE PAYMENT SCHEDULE WITHIN 60 DAYS FROM THE DATE OF SAID AMOUNT BECAME PAYABLE AND/OR THE ALLOTTEE COMMITS A NY BREACH OF THE TERMS. 6. REVENUE CAN BE RECOGNIZED BY THE ASSESSEE ONLY A FTER POSSESSION IS HANDED OVER TO THE ALLOTTEES. 3. THE LD. ASSESSING OFFICER EXAMINED THE ACCOUNTIN G STANDARD AS-7 AND AS-9 AS IS ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS AN D OPINED THAT THE ASSESSEE HAS IGNORED THE GUIDELINES ISSUED BY THE INSTITUTE OF CHARTERED ACC OUNTANTS WHEREBY HE HAS FAILED TO PRESENT A 3 TRUE AND FAIR PICTURE OF ITS ACCOUNTS. THE LD. ASSE SSING OFFICER VIDE PARA 3.17 OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2008-09 TOOK A VIEW THAT AS-9 AND AS-7 SHOULD HAVE BEEN APPLIED TO PRESENT THE CORRECT, TRUE AND FAIR PICTURE OF ACCOUNTS & WORK OUT THE PROFITS IN A CORRECT FORM, WHICH THE ASSESSEE HAS FAILED TO DO . SO WE HAD NO ALTERNATIVE BUT TO INVOKE THE PROVISIONS OF SECTION 145(3) OF THE I.T. ACT AND RE JECT THE BOOKS OF ACCOUNT AND PROCEED TO WORK OUT THE TRUE AND FAIR PICTURE OF ACCOUNTS BY F OLLOWING AS-9 FOR REVENUE RECOGNITION AND AS-7 I.E. PERCENTAGE COMPLETION METHOD FOR WORKING OUT THE PROFIT. HE, THEREFORE, AFTER REJECTING THE ACCOUNTS, COMPUTED THE PROFIT ON PERC ENTAGE COMPLETION METHOD AT RS. 90,43,688/- AND FOR SIMILAR REASONS, THE INCOME FOR ASSESSMENT YEAR 2009-10 STOOD ASSESSED AT RS. 99,07,650/-. 4. THE LD. CIT(A) UPHELD THE REJECTION OF ACCOUNTS AS WELL AS ESTIMATION OF INCOME BY PERCENTAGE COMPLETION METHOD. HE CONSIDERED VARIOUS TERMS OF THE AGREEMENT AND AGREED WITH THE ASSESSING OFFICER THAT THE ASSESSEE OUGHT TO HAVE PREPARED HIS ACCOUNTS IN ACCORDANCE WITH AS-7 AND AS-9 SO THAT TRUE AND CORR ECT POSITION OF ITS PROFITS COULD BE PRESENTED FROM THE BOOKS OF ACCOUNT MAINTAINED BY I T. HE WAS OF THE VIEW THAT SIGNIFICANT RISK IN THE REAL ESTATE IS THE PRICE RISK AND IN THE AGR EEMENT, SUCH PRICE IS FIXED AND AGREED BY THE ALLOTTEES. ACCORDINGLY, ANY SUBSEQUENT VARIATION IN THE MARKET PRICE OF THE FLAT WILL AFFECT THE BUYER/ALLOTTEE. IN CASE, MARKET PRICE OF FLAT GOES UP, IT IS A REWARD TO THE BUYER AND IF IT GOES DOWN IT IS THE RISK OF THE BUYER IN RESPECT OF A FL AT THAT HAS ALREADY BEEN BOOKED BY HIM. IN THIS VIEW OF THE MATTER, ALL THE RISKS AND REWARDS HAVE BEEN TRANSFERRED TO THE ALLOTTEE AT THE TIME OF BOOKING/ENTERING INTO AGREEMENT WITH HIM. THE GUIDA NCE NOTE ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS ALSO EMPHASIZED THAT UNDER SU CH CIRCUMSTANCE, THE RISK AND REWARD OF OWNERSHIP IS TREATED TO HAVE BEEN TRANSFERRED. IN T HIS BACKGROUND AND HAVING REGARD TO THE JUDGMENT BY HON'BLEBLE APEX COURT IN THE CASE OF C IT VS. BRITISH PAINTS INDIA LIMITED 188 ITR 44 (SC) AND ALSO IN THE CASE OF SUTLEJ COTTON M ILLS VS. CIT 116 ITR 01, HE UPHELD 4 REJECTION AND ESTIMATION MADE BY THE ASSESSING OFFI CER. THE GROUND RAISED IN APPEAL STOOD DISMISSED. 5. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE CONTROVERSY REGARDING OPTION TO FOLLOW PERCENTAGE OF COMPLETION METHOD VIS--VIS COMPLETED CONTRACT METHOD IS RESOLVED IN FAVOUR OF THE ASSESSEE BY THE UNDER NOTED CASES OF THE HON 'BLE JAIPUR BENCH. * M/S UNIQUE BUILDERS & DEVELOPERS, JAIPUR VS. DCI T, CENTRAL CIRCLE-2, JAIPUR. ITA NOS. 73 TO 77/JP/2012, 689 TO 690/JP/2012. A.Y. 200 3-04, 04-05, 05-06, 06-07, 09-10, 07-08 & 08-09. * DCIT, CENTRAL CIRCLE-2, JAIPUR VS. M/S UNIQUE BU ILDERS & DEVELOPERS. ITA NOS. 211 TO 215/JP/2012. A.Y. 2003-04, 04-05, 05-06, 06- 07 & 09-10. * M/S UNIQUE BUILDERS & DEVELOPERS (KRISHNA), JAIP UR VS. DCIT, CENTRAL CIRCLE-2, JAIPUR. ITA NOS. 78 TO 80/JP/2012. ASSESSMENT YEAR 2007-08 TO 2009-10. * DCIT, CENTRAL CIRCLE-2, JAIPUR VS. M/S UNIQUE BU ILDERS & DEVELOPERS (KRISHNA) JAIPUR. ITA NOS. 208 TO 2010/JP/2012. ASSESSMENT YE AR 2007-08 TO 2009-10 THE HON'BLE JAIPUR BENCH AT PARAS 12.15, 12.16, 13 & 14 AT PAGES 62 TO 65 HAS HELD AS UNDER:- 12.15 THE APEX COURT HAD ALSO AN OCCASION TO CONS IDER THE PERCENTAGE OF COMPLETION METHOD AND COMPLETED PROJECT METHOD IN T HE CASE OF CIT VS. BILAHARI INVESTMENT PVT. LTD., 299 ITR 1 (SC). IN THIS JUDGM ENT IT HAS TAKEN A VIEW THAT RECOGNITION/IDENTIFICATION OF INCOME UNDER THE 1961 ACT IS ATTAINABLE BY SEVERAL METHODS OF ACCOUNTING. IT MAY BE NOTED THAT THE SAM E RESULT COULD BE ATTAINED BY ANY ONE OF THE ACCOUNTING METHODS. THE COMPLETION CONTR ACT METHOD IS ONE OF SUCH METHODS. UNDER THE COMPLETED CONTRACT METHOD, THE R EVENUE IS NOT RECOGNIZED UNTIL THE CONTRACT IS COMPLETED. UNDER THE SAID METHOD, C OSTS ARE ACCUMULATED DURING THE COURSE OF THE CONTRACT. THE PROFIT AND LOSS IS ESTA BLISHED IN THE LAST ACCOUNTING PERIOD AND TRANSFERRED TO THE PROFIT AND LOSS ACCOUNT. THE SAID METHOD DETERMINES RESULTS ONLY WHEN THE CONTRACT IS COMPLETED. THE METHOD LEADS TO OBJECTIVE ASSESSMENT OF THE RESULTS OF THE CONTRACT. ON THE OTHER HAND THE PERC ENTAGE OF COMPLETION METHOD TRIES TO ATTAIN PERIODIC RECOGNITION OF INCOME IN ORDER TO R EFLECT CURRENT PERFORMANCE. THE AMOUNT OF REVENUE RECOGNIZED UNDER THIS METHOD IS D ETERMINED BY REFERENCE TO THE STAGE OF COMPLETION AND CAN BE LOOKED AT UNDER THIS METHOD BY TAKING INTO 5 CONSIDERATION THE PROPORTION THAT COSTS INCURRED TO DATE BEARS TO THE ESTIMATED TOTAL COSTS OF CONTRACT. THE APEX COURT AGAIN IN THE CASE OF CIT VS. HYUNDAI HEAVY INDUSTRIES CO. LTD., 291 ITR 482 (SC) TOOK THE SIMI LAR VIEW AND HELD AT PAGE 495 AS UNDER:- LASTLY, THERE IS A CONCEPT IN ACCOUNTS WHICH CALLE D THE CONCEPT OF CONTRACT ACCOUNTS. UNDER THAT CONCEPT, TWO METHODS EXIST FOR ASCERTAIN ING PROFIT FOR CONTRACTS, NAMELY, COMPLETED CONTRACT METHOD AND PERCENTAGE OF COMP LETION 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 CR EDITED WITH REVENUE ASSOCIATED WITH A PARTICULAR CONTRACT. HOWEVER, THE RULES OF RECOGN ITION OF COST AND REVENUE DEPEND ON THE METHOD OF ACCOUNTING. TWO METHODS ARE PRESCRIBE D IN ACCOUNTING STANDARD NO. 7. THEY ARE COMPLETED CONTRACT METHOD AND PERCENTAG E OF COMPLETION METHOD. THUS, AS BOTH THE METHODS OF ACCOUNTING ARE RECOGNIZED ME THODS OF ACCOUNTING, THE ASSESSEE IS AT LIBERTY TO CHOOSE ANY OF THE ABOVE AND IF ANY ONE OF THE METHOD OF ACCOUNTING IS CONSISTENTLY FOLLOWED BY THE ASSESSEE, THE ASSESSIN G OFFICER CANNOT CHANGE THE METHOD OF ACCOUNTING TO THE PERCENTAGE OF COMPLETION METH OD. 12.16 THE HON'BLE DELHI HIGH COURT WHILE DEALING WITH THE SIMILAR SITUATION IN THE CASE OF CIT VS. MANISH BUILDWELL PVT. LTD. I N ITA NO. 928/2011 DATED 15/11/2011 HELD THAT AFTER THE ABOVE JUDGMENT OF SU PREME COURT IN CIT VS. BILAHARI INVESTMENT PVT. LTD., 299 ITR 1, IT CANNOT BE SAID THAT THE PROJECT COMPLETION METHOD FOLLOWED BY THE ASSESSEE WOULD RESULT IN DEFERMENT OF THE PAYMENT OF TAXES WHICH ARE TO BE ASSESSED ANNUALLY UNDER THE INCOME TAX ACT. A CCOUNTING STANDARD AS-7 ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA ALSO RECOGNIZE THE POSITION THAT IN THE CASE OF CONSTRUCTION CONTRACTS, THE ASSESSEE CA N FOLLOW EITHER THE PROJECT COMPLETION METHOD OR THE PERCENTAGE COMPLETION METH OD. IN VIEW OF THE JUDGMENTS OF THE SUPREME COURT (SUPRA), THE FINDINGS OF CIT(A), UPHELD BY THE TRIBUNAL DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. FURTH ER, THE TRIBUNAL HAS ALSO FOUND THAT THERE WAS NO JUSTIFICATION ON THE PART OF THE ASSES SING OFFICER TO ADOPT THE PERCENTAGE COMPLETION METHOD FOR ONE YEAR ON SELECTIVE BASIS. THIS WILL DISTORT THE TRUE PROFITS AND GAINS OF BUSINESS. 13. CONSIDERING ENTIRE CONSPECTUS OF THE CASE IN T HE LIGHT OF THE PECULIAR FACTS AND FINDINGS REACHED HEREIN BEFORE IN THIS CASE, IT IS NEITHER PROPER NOR JUSTIFIED TO HOLD THAT THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE DID NOT PRESENT TRUE AND COMPLETE 6 PICTURE OF ITS ACCOUNTS AND FINANCIAL TRANSACTIONS. IT IS A CASE WHERE ACCOUNTS OF THE ASSESSEE ARE CORRECT AND COMPLETE. METHOD OF ACCOUN TING AND ACCOUNTING STANDARD HAS BEEN REGULARLY FOLLOWED. TRUE AND CORRECT PROFITS OF THE BUSINESS OF THE ASSESSEE COULD BE DEDUCED FROM SUCH BOOKS OF ACCOUNTS. IN THIS VIE W OF THE MATTER THE ASSESSING AUTHORITY COULD NOT CHANGE THE METHOD REGULARLY ADO PTED BY THE ASSESSEE FROM PROJECT COMPLETION METHOD TO PERCENTAGE COMPLETION METHOD O N IRRELEVANT CONSIDERATIONS. WE ARE, THEREFORE, SATISFIED THAT PROVISIONS OF SEC TION 145(3) ARE NOT ATTRACTED IN THIS CASE. THE LD. CIT(A), IS FOUND TO HAVE ERRED IN UPH OLDING THE DECISION OF LD. ASSESSING AUTHORITY TO INVOKE SECTION 145(3) OF THE ACT AND MAKING ASSESSMENT IN THE MANNER PROVIDED UNDER SECTION 114 OF THE ACT. WE, T HEREFORE, SET ASIDE THE DECISION IN THIS REGARD AND ALLOW GROUNDS NOS. 2 AND 3 RAISED I N APPEAL BY THE ASSESSEE IN ASSESSMENT YEAR 2003-04. 14. IN THE LIGHT OF OUR DECISION IN ASSESSEES APP EAL, THE GROUNDS RAISED IN APPEAL BY REVENUE BECOME INFRUCTUOUS AND STAND REJECTED. 6. HE HAS ALSO APPENDED A NOTE ON APPLICABILITY OF AS-7, AS-9, GN 2006, RGN 2012 AS WERE HEAVILY RELIED UPON BY THE LD. COMMISSIONER OF INCOME TAX IN UPHOLDING REJECTION OF ACCOUNTS AND APPLICABILITY OF PERCENTAGE PROFIT RAT E AS UNDER:- 1. THE REAL ESTATE DEVELOPER IS NOT A PURE CONTRACT OR BUT IS A SELLER OF FLATS (GOODS). THE REVENUE RECOGNITION IN CASE OF SALE OF GOODS IS TRIGGERED ON COMPLETION OF PERFORMANCE AS PROVIDED IN PARA 11 OF AS-9 REVENUE RECOGNITION- 11. IN A TRANSACTION INVOLVING THE SALE OF GOODS, PERFORMANCE SHOULD BE REGARDED AS BEING ACHIEVED WHEN THE FOLLOWING CONDITIONS HAVE B EEN FULFILLED: (I) THE SELLER OF GOODS HAS TRANSFERRED TO THE BUYE R THE PROPERTY IN THE GOODS FOR A PRICE OR ALL SIGNIFICANT RISKS AND REWARDS OF OWNER SHIP HAVE BEEN TRANSFERRED TO THE BUYER AND THE SELLER RETAINS NO EFFECTIVE CONTR OL OF THE GOODS TRANSFERRED TO A DEGREE USUALLY ASSOCIATED WITH OWNERSHIP; AND (II) NO SIGNIFICATION UNCERTAINTY EXISTS REGARDING THE AMOUNT OF THE CONSIDERATION THAT WILL BE DERIVED FROM THE SALE OF THE GOODS. 2. GUIDANCE NOTE 2006 ON REVENUE RECOGNITION BY REA L ESTATE DEVELOPERS WAS INITIALLY ISSUED BY THE INSTITUTE OF CHARTERED ACCO UNTANTS OF INDIA IN THE YEAR 2006 WHEREIN PARA 3 PROVIDED THE GUIDANCE REGARDING TRANSFER OF SIGNIFICANT RISKS AND REWARDS OF OWNERSHIP. 7 3. THIS GUIDANCE WAS LACKING AND, THEREFORE, REVISE D GUIDANCE NOTE 2012 WAS ISSUED WITHIN A SHORT SPAN OF 6 YEARS. THE REVISED GUIDANCE NOTE PROVIDED FURTHER CONDITIONS FOR ASCERTAINING TRANSFER OF RIS KS AND REWARDS. THESE CONDITIONS WERE MORE STRINGENT AS COMPARED TO GUIDA NCE NOTE 2006. THE RELEVANT PARAS OF RGN 2012 WHICH WERE NOT PART OF G N 2006 ARE REPRODUCED BELOW:- 3.4 THE APPLICATION OF THE METHODS DESCRIBED IN PA RAGRAPH 3.3 ABOVE REQUIRES A CAREFUL ANALYSIS OF THE ELEMENTS OF THE TRANSACTI ON, AGREEMENT, UNDERSTANDING AND CONDUCT OF THE PARTIES TO THE TRANSACTION TO DE TERMINE THE ECONOMIC SUBSTANCE OF THE TRANSACTION. THE ECONOMIC SUBSTANC E OF THE TRANSACTION IS NOT INFLUENCED OR AFFECTED BY THE STRUCTURE AND/OR LEGA L FORM OF THE TRANSACTION OR AGREEMENT. 4.3 WHERE TRANSFER OF LEGAL TITLE IS A CONDITION PRECEDENT TO THE BUYER TAKING ON THE SIGNIFICANT RISKS AND REWARDS OR OWNERSHIP A ND ACCEPTING SIGNIFICANT COMPLETION OF THE SELLERS OBLIGATION, REVENUE SHOU LD NOT BE RECOGNIZED TILL SUCH TIME LEGAL TITLE IS VALIDLY TRANSFERRED TO THE BUYER. 4. THE RGN 2012 PROVIDED FOR FURTHER MINIMUM CONDIT IONS TO BE ELIGIBLE TO RECOGNIZE REVENUE EVEN IF RISKS AND REWARDS OF OWNE RSHIP ARE DEEMED TO HAVE BEEN TRANSFERRED. THE RELEVANT PARA 5.3 IS REPRODUC ED BELOW:- 5.3 FURTHER TO THE CONDITIONS IN PARAGRAPH 5.2 THE RE IS A REBUTTABLE PRESUMPTION THAT THE OUTCOME OF A REAL ESTATE PROJE CT CAN BE ESTIMATED RELIABLY AND THAT REVENUE SHOULD BE RECOGNIZED UNDER THE PER CENTAGE COMPLETION METHOD ONLY WHEN THE EVENTS IN (A) TO (D) BELOW ARE COMPLETED. (A) ALL CRITICAL APPROVALS NECESSARY FOR COMMENCEME NT OF THE PROJECT HAVE BEEN OBTAINED. THESE INCLUDE, WHEREVER APPLICABLE: (I) ENVIRONMENTAL AND OTHER CLEARANCES. (II) APPROVAL OF PLANS, DESIGNS, ETC. (III) TITLE TO LAND OR OTHER RIGHTS TO DEVELOPMEN T/CONSTRUCTION. (IV) CHANGE IN LAND USE. (B) WHEN THE STAGE OF COMPLETION OF THE PROJECT R EACHES A REASONABLE LEVEL OF DEVELOPMENT. A REASONABLE LEVEL OF DEVELOPMENT IS N OT ACHIEVED IF THE EXPENDITURE INCURRED ON CONSTRUCTION AND DEVELOPMEN T COST IS LESS THAN 25% OF 8 THE CONSTRUCTION AND DEVELOPMENT COSTS AS DEFINED I N PARAGRAPH 2.2(C) READ WITH PARAGRAPHS 2.3 TO 2.5. (C) AT LEAST 25% OF THE SALEABLE PROJECT AREA IS SECURED BY CONTRACTS OR AGREEMENTS WITH BUYERS. (D) AT LEAST 10% OF THE TOTAL REVENUE AS PER THE AGREEMENTS OF SALE OR ANY OTHER LEGALLY ENFORCEABLE DOCUMENTS ARE REALIZED AT THE REPORTING DATE IN RESPECT OF EACH OF THE CONTRACTS AND IT IS REASONABLE TO EX PECT THAT THE PARTIES OF SUCH CONTRACTS WILL COMPLY WITH THE PAYMENT TERMS AS DEF INED IN THE CONTRACTS. TO ILLUSTRATE- IF THERE ARE 10 AGREEMENTS OF SALE AND 10% OF GROSS AMOUNT IS REALIZED IN CASE OF 8 AGREEMENTS, REVENUE CAN BE RE COGNIZED WITH RESPECT TO THESE 8 AGREEMENTS. 5. IT MAY BE NOTED THAT THE ABOVE CONDITIONS ARE MI NIMUM THRESHOLD LIMITS TO BE ELIGIBLE TO RECOGNIZE REVENUE. THE ENTITY CAN DECID E ITS OWN HIGHER THRESHOLD LIMITS, AS PART OF ITS ACCOUNTING POLICY. THE HON'B LEBLE MUMBAI TRIBUNAL IN THE CASE OF CHAMPION CONSTRUCTION CO. 5 ITD (BOM) 4 95 HAS HELD A THRESHOLD LIMIT OF 80% TO BE REASONABLE FOR RECOGNIZING REVEN UE UNDER PERCENTAGE OF COMPLETION METHOD (PCM). 6. IT MAY NOT BE MISUNDERSTOOD THAT ABOVE PARA 5.3 MAKES IT MANDATORY TO RECOGNIZE REVENUE ONCE MINIMUM THRESHOLD LIMITS OF 25% COMPLETION, ETC. ARE CROSSED. IT IS RATHER THE OTHER WAY ROUND AND NO RE VENUE BELOW THE THRESHOLD LIMITS CAN BE RECOGNIZED. 7. RGN 2012 IS NOT A PIECE OF LEGISLATION BROUGHT O N ANY STATUTE BOOK WHICH MAY INVITE DEBATE ABOUT ITS PROSPECTIVE OR RETROSPECTIV E APPLICATION. RGN 1012 IS CODIFICATION OF EXISTING BEST ACCOUNTING PRACTICES IN THIS REGARD. 8. EVEN IF ANY REAL ESTATE DEVELOPER IS OBLIGED TO FOLLOW AS-7, HE IS NOT BOUND TO FOLLOW PERCENTAGE OF COMPLETION METHOD. AS-7 P ARA 21 PROVIDES THAT PERCENTAGE OF COMPLETION METHOD SHOULD BE FOLLOWE D WHEN THE OUTCOME OF A CONSTRUCTIONS CONTRACT CAN BE ESTIMATED RELIABLY. P ARA 21 IS REPRODUCED BELOW: 21. WHEN THE OUTCOME OF A CONSTRUCTION CONTRACT CA N BE ESTIMATED RELIABLY, CONTRACT REVENUE AND CONTRACT COSTS ASSOCIATED WITH THE CONSTRUCTION CONTRACT SHOULD BE RECOGNIZED AS REVENUE AND EXPENSES RESPEC TIVELY BY REFERENCE TO THE STAGE OF COMPLETION OF THE CONTRACT ACTIVITY AT THE REPORTING DATE. AN EXPECTED 9 LOSS ON THE CONSTRUCTION CONTRACT SHOULD BE RECOGN IZED AS AN EXPENSE IMMEDIATELY IN ACCORDANCE WITH PARAGRAPH 35. 9. THE OUTCOME OF A CONTRACT CAN BE RELIABLY ESTIMA TED WHEN THE CONDITIONS PRESCRIBED IN PARA 28 ARE MET. 28. AN ENTERPRISE IS GENERALLY ABLE TO MAKE RELIAB LE ESTIMATES AFTER IT HAS AGREED TO A CONTRACT WHICH ESTABLISHES: (A) EACH PARTYS ENFORCEABLE RIGHTS REGARDING THE ASSET TO THE CONTRUCTED; (B) THE CONSIDERATION TO BE EXCHANGED; AND (C) THE MANNER AND TERMS OF SETTLEMENT. IT IS ALSO USUALLY NECESSARY FOR THE ENTERPRISE TO HAVE AN EFFECTIVE INTERNAL FINANCIAL BUDGETING AND REPORTING SYSTEM. THE ENTER PRISE REVIEWS AND, WHEN NECESSARY, REVISES THE ESTIMATES OF CONTRACT REVENU E AND CONTRACT COSTS AS THE CONTRACT PROGRESSES. THE NEED FOR SUCH REVISIONS DO ES NOT NECESSARILY INDICATE THAT THE OUTCOME OF THE CONTRACT CANNOT BE ESTIMATE D RELIABLY. THUS, ANY ENTITY WHICH DOES NOT HAVE ANY ROBUST INT ERNAL FINANCIAL BUDGETING SYSTEM MAY NEVER BE ABLE TO ASCERTAIN THE OUTCOME OF THE CONTRACT RELIABLY AND IN THAT CASE IS NOT ELIGIBLE FOR OPTIN G PERCENTAGE OF COMPLETION METHOD. ANY ENTITY, WITHOUT SUPPORT OF SUCH A ROBU ST SYSTEM, IF OPTS FOR PERCENTAGE OF COMPLETION METHOD THE SAME WILL BE VIOLATIVE OF AS-7. AUDITOR OF SUCH ENTITY WILL HAVE TO QUALIFY HIS AUD IT REPORT IN THAT CASE. 10. RELIABLE ESTIMATE OF THE OUTCOME OF A CONTRACT IS INFLUENCED BY ALL THOSE FACTORS WHICH MAY ULTIMATELY AFFECT THE PROFITABILITY OF TH E CONTRACT. FOR EX-COST OF INPUTS LIKE STEEL, CEMENT, LABOUR COSTS, CLEARANCES COSTS, LITIGATION COSTS, ETC. 11. IT IS A MISCONCEPTION THAT AS-7 (REVISED) DOES NOT PROVIDE FOR COMPLETED CONTRACT METHOD (CCM). RATHER IT MAKES IT MANDATORY TO FOLLOW COMPLETED CONTRACT METHOD IF OUTCOME OF THE CONTRACT CANNOT B E ESTIMATED RELIABLY. THIS IS SO PROVIDED IN PARA 31 REPRODUCED BELOW:- 31. WHEN THE OUTCOME OF A CONSTRUCTION CONTRACT CANNOT BE ESTIMATED RELIABLY: (A) REVENUE SHOULD BE RECOGNIZED ONLY TO THE EXTEN T OF CONTRACT COSTS INCURRED OF WHICH RECOVERY IS PROBABLY; AND (B) CONTRACT COSTS SHOULD BE RECOGNIZED AS AN EXPEN SE IS THE PERIOD IN WHICH THEY ARE INCURRED. 10 AN EXPECTED LOSS ON THE CONSTRUCTION CONTRACT SHOUL D BE RECOGNIZED AS AN EXPENSE IMMEDIATELY IN ACCORDANCE WITH PARAGRAPH 35 . 12. FORCING COMPLIANCE OF AS-7 BY THE DEPARTMENT, W ILL MAKE THE ASSESSEE ELIGIBLE FOR CLAIM OF DEDUCTING OF EXPECTED LOSS AS PROVIDED IN PARA 35. 35. WHEN IT IS PROBABLE THAT TOTAL CONTRACT COSTS WILL EXCEED TOTAL CONTRACT REVENUE, THE EXPECTED LOSS SHOULD BE RECOGNIZED AS AN EXPENSE IMMEDIATELY. 7. THE APPELLANT HAS ALSO CLARIFIED BEFORE THE AUTH ORITIES BELOW THAT THERE IS NO BAR ON ALLOTEES OF FLATS TO CANCEL THE BOOKINGS. THE CANCE LLATION OF BOOKINGS HAD FACTUALLY BEEN DONE SUBSEQUENTLY. THE SO CALLED BINDING AGREEMENT DOES NOT PROVIDE FOR FORFEITURE OF MONEY AND THEREFORE, THE AMOUNTS HAVE BEEN REFUNDED IN FULL B ECAUSE OF THIS RIGHT OF ALLOTTEES TO CANCEL BOOKINGS AND ALSO IN THE LIGHT OF COMMERCIAL REALIT IES. THE PROFIT CANNOT BE SAID TO HAVE BEEN EARNED UNTIL THE RIGHT OF CANCELLATION REMAINS WITH THE ALLOTEES. THIS RIGHT REMAINING WITH THE ALLOTTEES RESTRICTS THE RISKS FROM DEVELOPER TO THE ALLOTEES. IN THE EVENT OF FALL IN PRICES OR PROJECT NOT COMING UN PROPERLY OR FOR ANY UNFORESEE N FEATURE, THE ALLOTTEES CAN CANCEL THE BOOKING HALF WAY. THE REWARD MAY BE SOUGHT TO BE TR ANSFERRED FROM THE DEVELOPER TO THE ALLOTTEES AND IN VIEW OF THE BIDING AGREEMENT THE R ISK CONTINUES TO BE REMAINED WITH THE DEVELOPER BECAUSE OF THE RIGHT OF ALLOTTEES TO CANC EL THE AGREEMENT. FOR RECOGNIZING REVENUE FROM THE POINT OF VIEW OF THE DEVELOPER, IT IS THE RISK WHICH MUST GET TRANSFERRED TO THE ALLOTTEE. THEN ONLY THE PROFIT CAN ONLY BE SAID TO HAVE BEEN EARNED. AS-9 REQUIRES TRANSFER OF BOTH RISK AND REWARDS OF OWNERSHIP. THE OBSERVATION S OF THE AUTHORITIES BELOW ARE NOT ON COMMERCIAL REALITIES AS HAS CLEARLY BEEN EXPLAINED IN THE WRITTEN SUBMISSIONS PLACED ON RECORD. IT, THEREFORE, HAS BEEN CONTENDED THAT THER E IS NO JUSTIFICATION IN REJECTING THE ACCOUNTS OF THE ASSESSEE WHEN RIGHT OF SELECTING ACCOUNTING POLICY RESTS WITH THE ASSESSEE AND THE ASSESSEE HAVING FOLLOWED CONSISTENTLY THE ACCOUNTIN G STANDARDS ON PROJECT COMPLETION METHOD, THE ASSESSMENT OF INCOME BY PERCENTAGE COMP LETING METHOD IS UNJUST AND UNCALLED FOR. 11 8. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE CONTENDS THAT THE ASSESSING OFFICER REJECTED THE ACCOUNTS AS THE ACCOUNTING STA NDARDS HAVE NOT CONSISTENTLY BEEN FOLLOWED BY THE APPELLANT. AFTER REJECTING THE ACCO UNTS, HE HAS ADOPTED PERCENTAGE COMPLETION METHOD AS AGAINST PROJECT COMPLETING MET HOD WHEREBY THE ASSESSEE DID NOT DISCLOSE INCOME BY FOLLOWING AS-7AND AS-9 AS PRESCR IBED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS SO AS TO PRESENT TRUE AND CORRECT PICTU RE OF THE ACCOUNTS AND WORKED OUT THE PROFITS IN CORRECT FORM. THE LD. CIT(A) VIDE PARA 4 TO 7 HAS GIVEN DETAILED REASONING AFTER ANALYZING FACTUAL AS WELL AS LEGAL POSITION ON THIS ASPECT. HE HAS FOUND THAT THE ASSESSEE WAS WORKING LIKE A CONTRACTOR. THE REVENUE SHOULD HAVE BEEN RECOGNIZED BY APPLYING PERCENTAGE OF COMPLETION METHOD IN THE MANNER AS EXPLAINED IN AS-7. EACH AND EVERY ARGUMENT ADVANCED BY THE ASSESSEE WAS DULY CONSIDERED. THE C ONTENTIONS RAISED BY APPELLANT WERE RESTED ON THE PERIOD PRIOR TO ISSUANCE OF GUIDANCE NOTES BY THE INSTITUTE OF CHARTERED ACCOUNTANTS. THE METHOD ADOPTED BY THE ASSESSING OF FICER WAS FOUND JUSTIFIED. IT, THEREFORE, NEEDS TO BE UPHELD BY REJECTING THE GROUNDS RAISED IN APPEAL BY THE ASSESSEE. 9. WE HAVE HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECORD AND CASE LAWS BROUGHT TO OUR NOTICE. THE ASSESSING OFFICER IN THIS CASE REJE CTED THE ACCOUNTS ON THE SOLE GROUND THAT THE ASSESSEE HAS NOT FOLLOWED ACCOUNTING STANDARD-7 AND AS-9 FOR RECOGNITION OF REVENUE WHICH REQUIRED HIM TO DEDUCE INCOME ON THE BASIS OF PERCE NTAGE COMPLETION METHOD BY WORKING OUT THE PROFITS AT THE END OF EACH FINANCIAL YEAR A S THE PROJECTS ARE SPREAD OVER IN THE SERIES OF FINANCIAL YEARS. THE ASSESSEE ADMITTEDLY IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AS A BUILDER/REAL ESTATE DEVELOPER. HE HAS ALSO MAINTAIN ED COMPLETE BOOKS OF ACCOUNT, WHICH ARE DULY AUDITED BY DULY QUALIFIED CHARTERED ACCOUNTANT S. THE ASSESSEE HAS ALSO MAINTAINED ITS ACCOUNT ON MERCANTILE BASIS BY REGULARLY APPLYING P ROJECT COMPLETION METHOD. THE ASSESSEE IN ASSESSMENT FOR ASSESSMENT YEAR 2009-10 HAS ALSO CONSISTENTLY FOLLOWED THE SAME METHOD AS WAS APPLIED FOR ASSESSMENT YEAR 2009-10. THE AUDITO RS HAVE REPORTED NO CHANGE IN METHOD OF 12 ACCOUNTING ADOPTED BY THE ASSESSEE. THE ASSESSEE HA S CLEARLY DEMONSTRATED THAT IT HAS REGULARLY EMPLOYED THE PROJECT COMPLETION METHOD OF ACCOUNTING. HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SMT. V. SIKKA & ANOTHER (198 4) 149 ITR 73 (DEL.) HAS ENTERTAINED A VIEW THAT EVEN FOR THE FIRST YEAR, THE METHOD OF AC COUNTING IS DEEMED TO HAVE BEEN EMPLOYED IF THE SAME IS SHOWN TO HAVE BEEN REGULARLY EMPLOYE D IN SUBSEQUENT YEARS AS IS ALSO THE CASE IN APPEAL BEFORE US. THE REAL ESTATE DEVELOPER IS N OT A PURE CONTRACTOR BUT IS A SELLER OF FLATS/GOODS. IT IS NOT MANDATORY FOR ALL REAL ESTAT E DEVELOPERS TO FOLLOW PERCENTAGE OF COMPLETION METHOD AS PRESCRIBED BY INSTITUTE OF CHA RTERED ACCOUNTANTS OF INDIA UNDER AS-7. HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. MAN ISH BUILDWELL PVT. LTD. BY ITS ORDER DATED 15/1/2011 IN ITA NO. 928/2011 HAS RULED THAT ACCOUNTING STANDARD-7 ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA RECOGNI ZES THE POSITION THAT IN THE CASE OF CONSTRUCTION CONTRACTS THE ASSESSEE CAN FOLLOW EITH ER THE PROJECT COMPLETION METHOD OR PERCENTAGE COMPLETION METHOD. WE ALSO FIND THAT NEI THER THE REVISED GUIDANCE NOTES 2012 ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA NOR THE EXPOSER DRAFT FOR GUIDANCE NOTE ON RECOGNITION OF REVENUE ISSUED BY THE INSTI TUTE OF CHARTERED ACCOUNTANTS OF INDIA IN 2011 ARE MANDATORY. IT IS THE OPTION OF THE ASSESSE E TO FOLLOW EITHER THE COMPLETED CONTRACT METHOD OR THE PERCENTAGE COMPLETED METHOD. THE COMP LETED CONTRACT METHOD IN THE PRESENT CASE IN APPEAL FOLLOWED BY THE APPELLANT, THEREFORE , COULD NOT BE FAULTED WITH BY THE REVENUE AUTHORITIES AND ON THAT BASIS IT IS NEITHER CORRECT NOR JUSTIFIED TO SAY THAT THE ACCOUNTS DID NOT PRESENT CORRECT AND COMPLETE PICTURE OF ITS PROFITS . THE ACCOUNTS REJECTED BY THE ASSESSING OFFICER ON THE BASIS ADOPTED BY HIM ARE THUS NOT FO UND TENABLE. WE, THEREFORE, SET ASIDE HIS ACTION AS NO OTHER GROUNDS HAVE BEEN TAKEN BY THE A SSESSING AUTHORITY FOR REJECTING THE ACCOUNT OF THE ASSESSEE. THE HON'BLE APEX COURT IN THE CASE OF CIT VS. BILAHARI INVESTMENT PVT. LTD. 299 ITR 01, HAS TAKEN A VIEW THAT RECOGNITION/IDEN TIFICATION OF INCOME UNDER THE 1961 ACT IS ATTAINABLE BY SEVERAL METHODS OF ACCOUNTING. IT MAY BE NOTED THAT THE SAME RESULT COULD BE 13 ATTAINED BY ANY ONE OF THE ACCOUNTING METHODS. THE COMPLETION CONTRACT METHOD IS ONE OF SUCH METHODS. UNDER THE COMPLETED CONTRACT METHOD, THE REVENUE IS NOT RECOGNIZED UNTIL THE CONTRACT IS COMPLETED. UNDER THE SAID METHOD, COSTS ARE ACCUMULATED DURING THE COURSE OF THE CONTRACT. THE PROFIT AND LOSS IS ESTABLISHED IN THE LAST ACCOUNTING PERIOD AND TRANSFERRED TO THE PROFIT AND LOSS ACCOUNT. THE SAID METHOD DETERMINES RESULTS ONLY WHEN THE CONTRACT IS COMPLETED. THE METHOD LEADS TO OBJECTIVE ASSESSMENT OF THE RESULTS OF THE CONTRACT. ON THE OTHER HAND THE PERCENTAGE OF COMPLETION METHOD TRIE S TO ATTAIN PERIODIC RECOGNITION OF INCOME IN ORDER TO REFLECT CURRENT PERFORMANCE. THE AMOUNT OF REVENUE RECOGNIZED UNDER THIS METHOD IS DETERMINED BY REFERENCE TO THE STAGE OF COMPLETI ON AND CAN BE LOOKED AT UNDER THIS METHOD BY TAKING INTO CONSIDERATION THE PROPORTION THAT CO STS INCURRED TO DATE BEARS TO THE ESTIMATED TOTAL COSTS OF CONTRACT. THE APEX COURT AGAIN IN T HE CASE OF CIT VS. HYUNDAI HEAVY INDUSTRIES CO. LTD., 291 ITR 482 (SC) TOOK THE SIMI LAR VIEW AND HELD AT PAGE 495 AS UNDER:- LASTLY, THERE IS A CONCEPT IN ACCOUNTS WHICH CAL LED THE CONCEPT OF CONTRACT ACCOUNTS. UNDER THAT CONCEPT, TWO METHODS EXIST FOR ASCERTAINING PROFIT FOR CONTRACTS, NAMELY, COMPLETED CONTRACT METHOD AND PERCENTAGE OF COMP LETION METHOD. TO KNOW THE RESULTS OF HIS OPERATIONS, THE CONTRACTOR PREPARERS WHAT IS CA LLED A CONTRACT ACCOUNT WHICH IS DEBITED WITH VARIOUS COSTS AND WHICH IS CREDITED WITH REVENUE AS SOCIATED WITH A PARTICULAR CONTRACT . HOWEVER, THE RULES OF RECOGNITION OF COST ARE REVEN UE DEPEND ON THE METHOD OF ACCOUNTING. TWO METHODS ARE PRESCRIBED IN ACCOUNTING STANDARD N O. 7. THEY ARE COMPLETED CONTRACT METHOD AND PERCENTAGE OF COMPLETION METHOD. THUS , AS BOTH THE METHODS OF ACCOUNTING ARE RECOGNIZED METHODS OF ACCOUNTING, THE ASSESSEE IS AT LIBERTY TO CHOOSE ANY OF THE ABOVE AND IF ANY ONE OF THE METHOD OF ACCOUNTING IS CONSI STENTLY FOLLOWED BY THE ASSESSEE, THE ASSESSING OFFICER CANNOT CHANGE THE METHOD OF ACCOU NTING TO THE PERCENTAGE OF COMPLETION METHOD. 10. THE AFORESAID VIEW HAS ALSO BEEN FOLLOWED BY TH IS TRIBUNAL IN THE CASE OF M/S UNIQUE BUILDERS AND DEVELOPERS, JAIPUR VS. DCIT, CENTRAL C IRCLE-2, JAIPUR IN ITA NOS. 73 TO77/JP/2012, 689 TO 690/JP/2012 AND ITA NOS. 78 TO 80/JP/2012 IN A RECENT ORDER DATED 14/3/2013 ON WHICH APPELLANT HAS PLACED STRONG RELI ANCE BEFORE US. THE ISSUE BEING SIMILAR AND ON THE FACTUAL FINDINGS AS ARE STATED HEREINBEF ORE, WE FIND NO JUSTIFICATION IN REJECTION OF ACCOUNTS BY APPLICATION OF PROVISIONS OF SECTION 14 5(3) OF THE ACT AND CHANGING THE METHOD 14 FROM PROJECT COMPLETION TO PERCENTAGE COMPLETION ME THOD BY THE ASSESSING OFFICER. SUCH AN EXERCISE BEING BEYOND THE SCOPE OF HIS POWER AND AS THE DECISION AS SUCH TAKEN BY HIM IS UNJUST AND UNCALLED FOR, THE LD. CIT(A) HAS ERRED I N CONFIRMING HIS DECISION, WE THEREFORE, SET ASIDE HIS ORDER AND ALLOW THE GROUND NO. 1 RAISED I N BOTH THE APPEALS BY THE ASSESSEE IN THAT REGARD. 11. HAVING ALLOWED THE GROUND NO. 1 IN BOTH THE APP EALS, IN THIS REGARD, WE DO NOT CONSIDER NECESSARY TO RENDER OUR DECISION ON THE LE GIBILITY AND ALLOWABILITY OF DEDUCTION U/S 80 IB OF THE ACT AS THE SAME HAS TO BE CONSIDERED IN T HE YEAR OF COMPLETION OF THE PROJECT ONLY. 12. THE LAST GROUND IN APPEAL IS TREATED AS INFRUCT UOUS IN THESE PROCEEDINGS AND STANDS DISMISSED. 13. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE STAND ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/04/2013 SD/- SD/- (V. DURGA RAO) (B.R. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR, DATED : 25 TH APRIL, 2013 * RANJAN COPY FORWARDED TO :- 1. M/S KRISH INFRASTRUCTURE (P) LTD., BHIWADI 2. THE ACIT, CENTRAL CIRCLE, ALWAR 3. THE CIT (A) 4. THE CIT 5. THE D/R GUARD FILE (I.T.A. NOS. 1096 AND 1097/JP/2011) BY ORDER, AR ITAT JAIPUR.