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ITA 2778/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3912 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 20-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Assessee Lawyers: RUPINDER K UMAR AGGARWAL
• Keywords: Revision of order; Question of law; Set aside
• Section: 143(3); 133A; 264; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI B BENCH: NEW DELHI (THROUGH VIDEO CONFERENCING ) BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.2778/DEL/2018 ASSESSMENT YEAR : 2014-15 M/S FRIENDS LAND DEVELOPERS RUPINDER KUMAR AGGARWAL, ADVOCATE, B-1 A/22 (1 ST FLOOR) SECTOR-51, NOIDA-201301 VS DCIT, CIRCLE-01, ROOM NO.201, INCOME TAX OFFICER, CGO COMPLEX-1 HAPUR CHUNGI, GHAZIABAD, U.P. PAN-AABFF1343A APPELLANT RESPONDENT APPELLANT BY SH. RUPINDER K UMAR AGGARWAL ADVOCATE RESPONDENT BY MS. NIDHI SRIVASTAVA, CIT - DR DATE OF HEARING 04 .10.2021 DATE OF PRONOUNCEMENT 07 . 10 .2021 ORDER PER SANJAY GARG, JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 03.01.2018 OF THE LD. COMMI SSIONER OF INCOME TAX (APPEALS)-, GHAZIABAD, (HEREINAFTER REFE RRED TO ITA NO. 2278/DEL/2018 2 | P A GE CIT(A)) FOR THE ASSESSMENT YEAR 2014-15. THE ASS ESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS AGAINST LAW AND FACTS OF THE CASE. 2. THAT THE LD. CIT(A) HAS ERRED IN NOT GIVING ITS FIN DINGS THAT APPELLANTS INCOME WAS TO BE COMPUTED BY ADOPTING THE METHOD EMPLOYED BY IT AND COULD NOT BE COMPUTED BY APPLYING AS-7, IGNORING THE FINDINGS OF HON'BLE JUR ISDICTIONAL HIGH COURT OF ALLAHABAD IN APPELLANT'S OWN CASE IN THE IMMEDIATELY PRECEDING YEAR, I.E. A.Y. 2013-14. 3. THAT THE CIT(A) HAS GROSSLY ERRED IN NOT APPRECIATI NG THAT THE APPEAL WAS AGAINST AN ORDER U/S 143(3) PASSED I N COMPLIANCE TO DIRECTIONS U/S 144A, AND ORDER U/S 264 WAS SIMPLY TO AMEND DIRECTION U/S 144A TO THE EFFECT THA T ESTIMATED COST OF PROJECT SHOULD BE ADOPTED AT A FIGUR E OF RS.434,51,74,472/- [599185397 (+) 178380432 (+) 3567608643] WHILE COMPUTING INCOME AS PER AS-7. 4. THAT THE LD. CIT(A) HAS MISDIRECTED ITSELF AND ERRED IN HOLDING THAT THE ISSUE HAS ALREADY BEEN CONSIDERED BY THE PR. CIT, GHAZIABAD WHILE PASSING ORDER U/S 264, IGNOR ING THE FACT THAT PR. CIT IN ITS ORDER U/S 264 HAS STRON GLY REFRAINED TO GIVE ANY DIRECTION AGAINST THE ORDER OF ADDL. CIT, SINCE THE MATTER WAS BEING TAKEN TO HONBLE HI GH COURT, STATING I REFRAINED TO GIVE ANY DIRECTION I N THIS REGARD AGAINST THE ORDER OF ADD. CIT. 5. THAT IN VIEW OF THE ABOVE ORDER OF CIT(A) BE QUASHE D AND IT BE HELD THAT AS-7 COULD NOT BE APPLIED TO COMPUTE ASSESSEES INCOME, AS HELD BY HONBLE HIGH COURT IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING YE AR. 2. A PERUSAL OF THE ABOVE GROUNDS OF APPEAL REVEAL S THAT THE SHORT ISSUE TO BE DECIDED IN APPEAL IS AS TO WHE THER THE ASSESSEE, WHO IS A REAL ESTATE DEVELOPER, WAS JUSTIF IED IN ITA NO. 2278/DEL/2018 3 | P A GE COMPUTING HIS INCOME BY ADOPTING PROJECT COMPLETION METHOD AS AGAINST THE ACTION OF THE LOWER AUTHORITIES IN ESTI MATING THE INCOME OF THE ASSESSEE ON THE BASIS OF PERCENTAGE C OMPLETION METHOD OF ACCOUNTING. AT THE OUTSET, LD. COUNSEL F OR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE OF THE PRESEN T APPEAL IS SQUARELY COVED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN EARLIER ASSESSMENT YEAR IN ITA NO1517/DEL/2 016, ORDER DATED 27.10.2016. HE IN THIS RESPECT, THE RELEVANT PART OF THE ORDER OF THE TRIBUNAL FOR THE SAKE OF COMPLETENESS IS REPRODUCED AS UNDER:- 5.4 IT IS A MATTER OF RECORD AND UNDISPUTED THAT THE ASSESSEE IS MAINTAINING COMPLETE BOOKS OF ACCOUNT A ND VOUCHERS AND NO DEFECTS WHATSOEVER OF ANY OMISSION O R COMMISSION , HAVE BEEN FOUND IN THE BOOKS OF ACCOUNT OR THE METHOD OF ACCOUNTING IN ANY OF THE ASSESSMENT PROCEEDINGS. THE ASSESSMENTS WERE MADE UNDER SECTIO N 143(3) OF THE ACT FOR EACH OF. THE'ASSESSMENT YEAR. NO ADVERSE FINDING HAS BEEN RECORDED IN RESPECT OF ASSESSMENTS EVEN MADE U/S .153A OF THE ACT WHICH ASSESSMENTS WERE COMPLETED AFTER SEARCH CONDUCTED IN OCTOBER, 2008 AND RELATED TO THE ASSESSMENT YEARS 200 3- 04 TO 2008-09. FURTHER, THOUGH A SURVEY U/S 133A HA D BEEN CONDUCTED ON 11.09.2014, NO INCRIMINATING EVIDEN CE HAD BEEN FOUND OR HAS BEEN REFERRED TO IN THE IMPUGN ED ORDER OF ASSESSMENT FOR THE AY 2013- 14. A COPY OF PANCHANAMA PREPARED AT THE TIME OF SURVEY HAS BEEN PLACED AT PAGES 1264-1275 (VOLUME-4 OF THE PAPER BOO K). THE ASSESSEE HAS COMPUTERISED ACCOUNTING SYSTEM. IT IS ALSO A MATTER OF RECORD AND UNDISPUTED THAT AT THE TIM E OF ITA NO. 2278/DEL/2018 4 | P A GE SURVEY ON 11.09.2014: I. NO DIFFERENCE IN CASH IN HAND WAS FOUND; II. NO DIFFERENCE IN STOCK IN HAND WAS FOUND III. NO UNRECORDED TRANSACTION WAS FOUND; IV. NO VOUCHER OR BILL WAS FOUND WHICH' HAD NOT BEEN LEDGERISED OR WAS NOT ENTERED IN THE CASH BOOK. 5.5. IT IS ALSO UNDISPUTED THAT THE ASSESSEE HAD BEEN FURNISHING ITS RETURN OF INCOME REGULARLY FROM THE ASSESSMENT YEAR 2003-04 AND RECOGNIZING REVENUE FOR THE PURPOSE OF COMPUTING THE INCOME ON THE BASIS OF SALES MADE OF THE AREA/SPACE BOOKED. THE AFORESAID METHOD OF RECOGNIZING REVENUE WAS NEVER DISPUTED BY THE REVENU E IN ANY OF THE PRECEDING ASSESSMENT YEARS AS ON THE BASIS OF THE RETURNS OF INCOME FILED, ASSESSMENT'S WERE AL SO MADE U/S 153A/143(3) AND THE INCOME RECOGNIZED ON THE BASIS OF THE AFORESAID METHOD WAS ACCEPTED THROUGH O UT IN THE PAST. THE ASSESSEE HAS BEEN REGULARLY FOLLOW ING PROJECT COMPLETION METHOD OF ACCOUNTING AND THE REVEN UE WAS RECOGNIZED AT THE TIME OF REGISTRATION OF THE RESIDENTIAL UNIT IN THE NAME OF THE CUSTOMER: TILL THE TIME OF REGISTRATION OF THE RESIDENTIAL UNITS THE AMOUNT S RECEIVED FROM THE CUSTOMERS WERE BEING TREATED AS ADVANCES AND WERE REFLECTED IN THE BALANCE SHEET AS LIABILITIES. THE COST ASSOCIATED WITH THE DEVELOPMENT AND CONSTRUCTION OF THE RESIDENTIAL UNITS WAS BEING SH OWN UNDER THE HEAD WORK-IN- PROGRESS. IN THIS REGARD IT IS SEEN THAT PROJECT COMPLETION METHOD FOLLOWED BY THE ASSESSEE IS A RECOGNIZED METHOD OF ACCOUNTING PRESCRI BED BY THE INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA. BEFORE ITS REVISION IN 2002, > AS-7 WAS APPLICABLE IN THE CASE OF BOTH THE CONSTRUCTION CONTRACTORS AND REAL ESTATES BUILDERS AND DEVELOPERS. AS-7 PRESCRIBED BOTH THE PERCENTAGE COMPLETION METHOD AND THE PROJECT COMPLETION METHOD AND IT WAS THE CHOICE, OF THE ASSE SSEE TO FOLLOW EITHER ONE OF THE METHODS. THE ICAI HAS CL ARIFIED THAT THE REVISED AS-7 IS APPLICABLE ONLY IN THE CAS E OF CONSTRUCTION CONTRACTORS AND IN THE CASE OF REAL EST ATES ITA NO. 2278/DEL/2018 5 | P A GE BUILDERS AND DEVELOPERS AS-9 IS APPLICABLE WHICH PRESCRIBES PROJECT COMPLETION METHOD OF ACCOUNTING. IT IS ESTABLISHED LEGAL POSITION THAT AN ASSESSEE CAN FOL LOW ANY RECOGNISED METHOD OF ACCOUNTING AND THE CONDITION IS THAT THE SAME METHOD HAS TO BE FOLLOWED CONSISTENTLY . IN CASE OF A BUILDING PROJECT, THE INSTITUTE OF CHARTE RED ACCOUNTANTS OF INDIA WHICH IS AN AUTHORITY ON PRESC RIBING ACCOUNTING STANDARDS HAD PRESCRIBED ACCOUNTING STANDARD AS-7 IN 1983 FOR ACCOUNTING OF INCOME IN RE SPECT OF REAL ESTATE PROJECTS AND IN TERMS OF AS-7 WHICH W AS APPLICABLE TO BOTH CONTRACTOR AND REAL ESTATE DEVELO PER, A PERSON IS FREE TO FOLLOW EITHER OF PROJECT COMPLETI ON METHOD OR PERCENTAGE COMPLETION METHOD DEPENDING -UPON THE NATURE OF PROJECT. THE ASSESSEE, IN THIS CASE, HAS FOLLOWED PROJECT COMPLETION METHOD WHICH IS. ONE OF THE PRESC RIBED METHODS BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. EVEN IN TERMS OF THE REVISED ACCOUNTING STAND ARD WHICH WAS APPLICABLE FOR MOST PART OF THE WORK DONE BY THE ASSESSEE THE INCOME HAD BEEN CORRECTLY DECLARED AS PER PROJECT COMPLETION METHOD IN THE YEAR OF COMPLE TION. THE ASSESSEE HAS FOLLOWED PROJECT COMPLETION METHOD ' WHICH . WAS ONE OF THE PRESCRIBED METHODS AND THE SAM E METHOD HAS BEEN ACCEPTED BY THE DEPARTMENT IN THE EARLIER YEARS. DEPARTMENT, THEREFORE, CANNOT REJECT THE METHOD AND APPLY PERCENTAGE COMPLETION METHOD IN A SUBSEQUENT YEAR. 5.6. IN VIEW OF THE METHOD FOLLOWED BY THE ASSSESSEE BEING A RECOGNIZED METHOD OF ACCOUNTING PRESCRIBED, DISCUSSION OF THE FACTS OF THE CASE AND T HE LEGAL POSITION AS ABOVE IT IS HELD THAT THE PROJECT COMPLETION BY THE ICAI WHICH HAS BEEN REGULARLY FOLLOWED BY THE ASSESSEE. THE ASSESSEE BEING A REAL ESTATE DEVELOPER AND J NOT A CONSTRUCTION CONTRACTOR , PROJECT COMPLETION METHOD IS THE 'RIGHT METHOD FOR DETERMINING THE PROFITS. THE PROJECT COMPLETION METH OD BEING FOLLOWED SHOULD NOT HAVE BEEN DISTURBED BY THE AO. 5.7. WE ALSO FIND THAT THE JUDGMENT OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF PARAS BUILDTECH (SUPRA) COVERS THE ISSUE IN FAVOUR OF THE ASSESSEE WHEREIN THEIR ITA NO. 2278/DEL/2018 6 | P A GE LORDSHIPS HAVE HELD AS UNDER: 21. IN THE PRESENT CASE, THERE WAS THEREFORE-NO GOOD REASON FOR THE ITAT TO HAVE REVERSED THE FINDING OF THE CIT (A). THE ONLY REASON GIVEN IN THE IMPUGNED ORDER OF THE ITAT IS THAT RISKS AND REWARDS' OF OWNERSHIP WERE TRANSFEIRED TO THE BUYERS WHO HAD PAID THE BOOKING ADVANCE AMOUNTS AND IN SOME CASES THESE RIGHTS WERE TRANSFERRED TO THIRD PARTIES. HOWEVER, THIS DOES NOT IN ANY MANNER AFFECT THE TREATMENT OF THE SAID AMOUNTS IN THE BOOKS OF THE ASSESSEE. AS NOTED HEREINBEFORE, THE EXPENSES OF CONSTRUCTION WERE NOT DEBITED TO THE P & L ACCOUNT OF THE ASSESSEE. IT WAS SHOWN AS COST OF CONSTRUCTION OR BLOCK OF BUILDING. IT IS ONLY AS AND WHEN A. CONVEYANCE DEED WAS EXECUTED OR POSSESSION DELIVERED THAT THE RECEIPT WAS SHOWN AS INCOME. THE EXPLANATION ADDED BY WAY OF NOTES TO THE ACCOUNTS WAS NOT TAKEN NOTE OF BY THE ITAT WHEN IT CAME TO THE CONCLUSION THAT THE PERCENTAGE COMPLETION METHOD SHOULD APPLY TO THE ASSESSEE. 5.8. WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THE ISSUE AND DIRECT THE ASSESSING OFFICER TO DELETE THE ENTIRE ADDITIONS ON THIS ACCOUNT. GROUND NOS.1 TO 3 OF THE ASSESSEES ARE ACCORDINGLY ALLOWED. 3. THE LD. AR HAS FURTHER INVITED OUR ATTENTION TO THE ORDER DATED 20.04.2017 OF THE HONBLE ALLAHABAD HIG H COURT, IN ITA NO.119 OF 2017, STATING THAT THE DEPARTMENTAL A PPEAL, AGAINST THE ORDER OF THE TRIBUNAL DATED 27.10.2016 (SUPRA), HAS ITA NO. 2278/DEL/2018 7 | P A GE BEEN DISMISSED BY THE HONBLE HIGH COURT. THE RELEV ANT PART OF THE ORDER OF THE HONBLE HIGH COURT IS REPRODUCED H EREUNDER:- THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 27.10.2016 IN RESPECT OF THE ASSESSMENT YEAR 2013-14. THE RESPONDENT-ASSESSEE IS A REAL ESTATE DEVELOPER AND MAINTAINS ITS ACCOUNTS ON THE BASIS OF PROJECT COMPLETION METHOD I.E. AS-9. THE TRIBUNAL HAS ACCEPTED THE AS-9 AS ONE OF THE RECOGNIZED METHODS OF ACCOUNTING AND HAS REVERSED THE ORDER OF THE ASSESSING AUTHORITY REJECTING THE ACCO UNTS BOOKS AS THEY ARE NOT MAINTAINED ACCORDING TO PERCEN TAGE COMPLETION METHOD I.E. AS-7 AS CONFIRMED BY THE COMMISSIONER (APPEALS). SRI PRAVEEN KUMAR HAS ARGUED THAT NO DOUBT THE RESPONDENT- ASSESSEE IS A REAL ESTATE DEVELOPER BUT AS SOON AS IT ENTERED INTO AN AGREEMENT WITH THE PROSPE CTIVE PURCHASER FOR SALE, ITS STATUS WAS CONVERTED INTO TH AT OF A CONTRACTOR AND IT NO LONGER REMAINED TO BE A REAL EST ATE DEVELOPER. THEREFORE, HE WAS SUPPOSED TO FOLLOW THE PERCENTAGE COMPLETION SYSTEM I.E. AS-7 FOR ACCOUNTI NG AND AS SUCH, THE TRIBUNAL HAS WENT WRONG IN PASSING THE IMPUGNED ORDER. THERE IS NO DISPUTE THAT THE NATURE OF BUSINESS OF THE RESPONDENT- ASSESSEE FROM THE INCEPTION IS SAME AND THAT IT HAD BEEN FILING ITS RETURNS AS A REAL ESTATE DEVE LOPER SINCE 2003 BY ADOPTING AS-9 SYSTEM OF ACCOUNTING, W HICH WERE ALL THROUGH ACCEPTED BY THE DEPARTMENT WITHOUT ANY RESERVATION. IN VIEW OF THE FACT THAT THE DEPARTMENT ITSELF IN T HE PAST HAD ACCEPTED THE RESPONDENT-ASSESSEE AS A REAL ESTATE DEVELOPER, IT CANNOT BE PERMITTED TO SHIFT TH E STAND AT THIS STAGE SO AS TO CONTEND THAT THE RESPONDENT- ASSESSEE IS ACTUALLY NOT A REA! ESTATE DEVELOPER BU T A ITA NO. 2278/DEL/2018 8 | P A GE CONTRACTOR. IN VIEW OF THE ABOVE POSITION, THE DECISION OF THE A PEX COURT IN THE CASE OF M/S LARSEN AND TOUBRO LIMITED AND ANOTHER VS. STATE OF KARNATAKA AND ANOTHER, 2013 UPTC 1277 IS OF NO ASSISTANCE TO THE APPELLANT RATHER IN VIEW OF THE DECISION OF THE SUPREME COURT I N COMMISSIONER OF INCOME TAX VS. EXCEL INDUSTRIES LIMITED (2013) 38 TAXMANN.COM 100 (SC) IT IS NOT PRUDENT FOR US TO TAKE A DIFFERENT VIEW WITH REGARD TO THE NATURE AND STATUS OF THE BUSINESS OF THE RESPONDENT- ASSESSEE INASMUCH AS A CONSISTENT VIEW TAKEN BY THE AUTHORITIES REGARDING IT IN FAVOUR OF THE RESPONDEN T- ASSESSEE IS NOT LIABLE TO BE DISTURBED IN THE ABSENC E OF ANY CONVINCING AND COMPELLING REASONS. THE SECOND QUESTION, WHICH FALLS FOR OUR CONSIDERATI ON, IS WHETHER THE RESPONDENT-ASSESSEE IS OBLIGED TO MAI NTAIN ITS ACCOUNTS ACCORDING TO AS-7 OR AS-9. IN THIS CONNECTION, THE TRIBUNAL HAS RECORDED A FIND ING THAT THE RESPONDENT-ASSESSEE HAD BEEN REGULARLY FOLL OWING THE PROJECT COMPLETION METHOD OF ACCOUNTING (AS-9) A ND THAT NO DEFECTS WERE EVER FOUND IN ITS BOOKS OF ACCO UNTS OR THE METHOD OF ACCOUNTING AND THE SAID METHOD OF ACCOUNTING WAS ACCEPTED AND RECOGNIZED BY THE DEPARTMENT. THE PROJECT COMPLETION METHOD I.E. AS-9 FOLLOWED BY THE RESPONDENT-ASSESSEE IS ALSO A RECOGNIZED METHOD OF ACCOUNTING, PRESCRIBED BY THE INSTITUTE OF CHARTED ACCOUNTANTS OF INDIA AND THE REVISED AS-7 IS APPLICAB LE IN THE CASE OF CONTRACTOR. A DIVISION BENCH OF THIS COURT IN COMMISSIONER OF INCOME TAX VS. KISHORE BANDHU (P.) LTD., 2008 (11) MTC 22 (ALLAHABAD) RELYING UPON A DECISION OF THE MADRAS HIGH COURT IN COMMISSIONER OF INCOME TAX VS. S.L. PROPERTY DEVELOPMENT LIMITED, (2002) 256 ITR 601 OPINED THAT WHERE THE ASSESSEE HAD ADOPTED AND FOLLOWED ONE OF THE RECOGNIZED METHODS OF ACCOUNTING CONSISTENTLY AND THE DEPARTMENT HAD ACCEPTED IT IN THE ITA NO. 2278/DEL/2018 9 | P A GE EARLIER YEARS, IT WOULD NOT BE FAIR TO COMPEL THE AS SESSEE TO CHANGE THE METHOD IN THE CURRENT YEAR OR TO DRAW ANY ADVERSE INTERFERENCE THEREFROM. IN COMMISSIONER OF INCOME TAX 1/S. PRINCIPAL OFFICER, HILL VIEW INFRASTRUCTURE (P.) LTD., (2016) 3 84 ITR 451 (P&H), IT HAS BEEN HELD THAT THE ACCOUNT BOOKS OF THE ASSESSEE ARE NOT LIABLE TO BE REJECTED, WHEN HE HAD BEEN CONSISTENTLY FOLLOWING THE PROJECT COMPLETION METHOD (AS-9), WHICH IS ONE OF THE ACCEPTED METHODS OF THE ACCOUNTING. IT WAS ACCEPTED THAT BOTH THE ACCOUNTING STANDARDS AS-9 AND AS-7 ARE ACCEPTED STANDARDS OF ACCOUNTING AND THE ASSESSEE IS FREE TO ADOPT ANY ONE OF THEM. THE AFORESAID DECISION WAS RENDERED RELYING UPON A DECISION OF THE SUPREME COURT IN CIT VS. BILAHARI INVESTMENT (P.) LTD., (2008) 299 ITR 1 (SC), WHICH LAID DOWN THAT EVERY ASSESSEE IS ENTITLE TO ARRANGE ITS A FFAIRS AND FOLLOW THE METHOD OF ACCOUNTING, WHICH THE DEPARTMENT HAD EARLIER ACCEPTED. IT IS ONLY IN THOSE CASES, WHERE THE DEPARTMENT FINDS THAT THE METHOD ADOPTED BY THE ASSESSEE RESULTS IN DISTORTION OF PROFITS THAT IT CAN INSIST FOR FOLLOWING A DIFFERENT RECOGNIZED METHOD. IN THE CASE AT HAND, THERE IS NO FINDING OR EVEN AN AVERMENT THAT THE SYSTEM OF ACCOUNTING FOLLOWED BY T HE ASSESSEE IS UNABLE TO SHOW THE TRUE AND CORRECT PRO FITS OR THAT IT RESULTS IN DISTORTION OF THE PROFITS. AT THE SAME TIME, WE DO NOT FIND ANY STATUTORY PROVISION OR A RULE, WHICH MAY COMPEL THE RESPONDENT - ASSESSEE TO FOLLOW THE AS-7 SYSTEM OF ACCOUNTING AL ONE. IN VIEW OF THE ABOVE, AS THE RESPONDENT-ASSESSEE IS A REAL ESTATE DEVELOPER AND NOT A CONTRACTOR SIMPLICIT OR, THE SYSTEM OF ACCOUNTING FOLLOWED BY IT FOR THE LAST MAN Y YEARS IS IN ACCORDANCE WITH RECOGNIZED PROCEDURE, THE DEPARTMENT CANNOT REJECT THE SAID SYSTEM FOLLOWED B Y IT FOR THE REASON THAT IT OUGHT TO HAVE FOLLOWED THE OTHER RECOGNIZED SYSTEM AS-7 SYSTEM I.E. PERCENTAGE COMPLE TION SYSTEM. ITA NO. 2278/DEL/2018 10 | P A GE THE ACT OR THE RULES NOWHERE MANDATES FOR FOLLOWING A PARTICULAR ACCOUNTING SYSTEM BY THE RESPONDENT-ASSE SSEE, THEREFORE, IF ANY OF THE RECOGNIZED MODE OF ACCOUNTI NG HAS BEEN FOLLOWED, WE FIND THAT NO ILLEGALITY HAS BEEN COMMITTED BY THE RESPONDENT-ASSESSEE. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES AS WELL AS FINDINGS AS RETURNED BY THE INCOME TAX APPEL LATE TRIBUNAL, THERE IS HARDLY ANY QUESTION OF LAW, WHICH ARISES FOR OUR CONSIDERATION. THIS APPEAL LACKS MERIT AND IS DISMISSED. 3. THE LD. DR HAS FAIRLY AGREED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE HONBLE HIGH COURT. 4. RESPECTFULLY FOLLOWING THE DECISION OF THE HONB LE HIGH COURT, IT IS HELD THAT THE ASSESSEE WAS JUSTIFIED IN ADOPTING THE RECOGNIZED METHOD OF ACCOUNTING I.E. PROJECT COMPLE TION METHOD. THE IMPUGNED ADDITION MADE BY THE LOWER AUTHORITIES BY APPLYING PERCENTAGE COMPLETION METHOD IS HEREBY ORD ERED TO BE DELETED. 5. THE ALTERNATIVE PLEA TAKEN BY THE ASSESSEE REGA RDING THE DISPUTE RELATING TO FIGURES OF AMOUNT IN CASE O F PERCENTAGE COMPLETION METHOD, HAS BECOME INFRUCTUOUS AND NO ITA NO. 2278/DEL/2018 11 | P A GE ADJUDICATION IS REQUIRED IN THAT RESPECT. IN VIEW OF THE ABOVE DISCUSSION, THE APPEAL OF THE ASSESSEE STANDS ALLOW ED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 07/ 10/2021. SD/- SD/- (ANIL CHATURVEDI) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI; DATED: 07 / 10/2021 . F{X~{T F{X~{T F{X~{T F{X~{T COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI