DCIT CEN CIR 10, MUMBAI V. RUSTOMJEE EVERSHINE JOINT VENTURE P.LTD, THANE

ITA 5613/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7967 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 05-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Search and seizure; Revenue expenditure
• Section: 143(3); 153A; 145; 144

Judgement Text

ITA NO.5613/M/2014 & CO 111/M/2017 RUSTOMJEE EVERSHINE JOINT VENTURE PRIVATE LIMITED ASSESSMENT YEAR 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 5613/MUM/2014 ( / ASSESSMENT YEAR: 2010-11) DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 10 ROOM NO.802,8 TH FLOOR OLD CGO ANNEXE, M.K.ROAD MUMBAI 400 020 / VS. RUSTOMJEE EVERSHINE JOINT VENTURE PRIVATE LIMITED GLOBAL CITY, NARANGI BYPASS ROAD CLOSE TO VIVA COLLEGE VIRAR(WEST),THANE THANE-401 303 ( ! /APPELLANT ) : ( '# ! / RESPONDENT ) & CROSS OBJECTION NO.111/MUM/2017 ( / ASSESSMENT YEAR: 2010-11) RUSTOMJEE EVERSHINE JOINT VENTURE PRIVATE LIMITED GLOBAL CITY, NARANGI BYPASS ROAD CLOSE TO VIVA COLLEGE VIRAR(WEST),THANE THANE-401 303 / VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 10 ROOM NO.802,8 TH FLOOR OLD CGO ANNEXE, M.K.ROAD MUMBAI 400 020 $ ./ ./PAN/GIR NO. AAAAR-7687-M ( ! /APPELLANT ) : ( '# ! / RESPONDENT ) A SSESSEE BY : NARESH KUMAR, LD.AR RE VENUE BY : M.DAYA SAGAR, LD. DR (CIT) / DATE OF HEARING : 17/10/2017 / DATE OF PRONOUNCEMENT : 08/12 /2017 ITA NO.5613/M/2014 & CO 111/M/2017 RUSTOMJEE EVERSHINE JOINT VENTURE PRIVATE LIMITED ASSESSMENT YEAR 2010-11 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT Y EAR [AY] 2010- 11 CONTEST THE ORDER OF THE LD. COMMISSIONER OF INC OME-TAX (APPEALS)- 37 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-37/IT-311/DCCC-10/13-14 DATED 17/06/2014 BY RAISING FOLLOWING SOLITARY GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.2,94,02 ,417/- MADE ON ACCOUNT OF SELLING AND ADMINISTRATIVE EXPENSES, WITHOUT APPRECIATING T HE FACT THAT THE SELLING AND ADMINISTRATIVE EXPENSES INCLUDE ADVERTISEMENT AND P UBLICITY, SELLING AND MARKETING COST, COMMISSION AND BROKERAGE, PROFESSIONAL & LEGA L CHARGES, WHICH ARE EXPENSES RELATED TO THE PROJECT AND SHOULD HAVE BEEN CAPITAL IZED. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSE BEING RESIDENT ASSOCIATION OF PERSON [AOP] WAS ASSESSED FOR IMPUGNED AY ON 30/03/2013 U/S 143(3) READ WITH SECTION 153C OF THE INCOME TAX ACT, 1961. THE RETURN OF INCOME WAS FIELD BY THE ASSESSE E ON 15/10/2010 DECLARING LOSS OF RS.11,46,68,151/-. THE ASSESSEE B ELONGED TO RUSTOMJEE GROUP (M/S KEYSTONE REALTORS PRIVATE LIMI TED & OTHER COMPANIES). 2.2 PURSUANT TO SEARCH AND SEIZURE ACTION U/S 132(1 ) ON 21/10/2010 ON RUSTOMJEE GROUP & EVERSHINE GROUP , THEIR GROUP CONCERNS, DIRECTORS AND RELATED PERSONS, CERTAIN DOCUMENTS RELATING TO ASSESSEE WERE FOUND AND CONSEQUENTLY, A NOTICE U/S 153A READ WITH SECTION 153C WAS ISSUED TO THE ASSESSEE ON 04/01/2013. PURSUANT TO SAID NOT ICE, THE ORIGINAL RETURN OF INCOME, AS FILED EARLIER, WAS OFFERED BY THE ASSESSEE. 2.3 DURING ASSESSMENT PROCEEDINGS, IT WAS NOTICED T HAT THE ONLY PROJECT DEVELOPED BY THE ASSESSEE DURING IMPUGNED AY WAS A PROJECT CALLED ITA NO.5613/M/2014 & CO 111/M/2017 RUSTOMJEE EVERSHINE JOINT VENTURE PRIVATE LIMITED ASSESSMENT YEAR 2010-11 3 GLOBAL CITY SITUATED AT VIRAR, THANE. THE ASSESSEE HAD CAPITALIZED ENTIRE COST OF CONSTRUCTION SINCE THE PROJECT HAD N OT GENERATED ANY TAXABLE INCOME UP TO 31/03/2010. HOWEVER, THE ASSES SEE CLAIMED SELLING & ADMINISTRATIVE COST, PERSONNEL COST & FINANCE COS T IN THE PROFIT & LOSS ACCOUNT AS REVENUE EXPENDITURE. THE SOLE SUBJECT MA TTER OF THE APPEAL IS CLAIM OF THE ASSESSEE UNDER THE HEAD ADMINISTRATIVE COST . 2.4 THE LD. AO NOTED THAT THE ASSESSEE CLAIMED SELLING & ADMINISTRATIVE EXPENDITURE OF RS.4,52,07,328/-, OUT OF WHICH THE FOLLOWING ITE MS, IN THE OPINION OF LD. AO, WERE DIRECTLY RELATED TO THE PRO JECT CARRIED OUT BY THE ASSESSEE AND HENCE WERE REQUIRED TO BE CAPITALIZED: - SL.NO. ITEMS AMOUNT (RS.) 1. ADVERTISEMENT AND PUBLICITY 1,22,36,393 2. SELLING AND MARKETING COSTS 1,10,18,860 3. COMMISSION AND BROKERAGE 21,35,663 4. PROFESSIONAL AND LEGAL CHARGES 40,11,501 TOTAL 2,94,02,417 THE ASSESSE CONTENDED THAT THE SAID EXPENSES WERE N OT RELATED WITH THE PROJECT AND ALLOWABLE AS REVENUE EXPENDITURE IN TER MS OF ACCOUNTING STANDARD-7 ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. [ICAI] . HOWEVER, NOT CONVINCED, LD. AO DISALLOWED THE SAM E AND ADDED THE SAME TO CLOSING CAPITAL WORK-IN-PROGRESS [WIP]. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 17/06/2014 WHE RE THE ASSESSEES GROUND WAS ALLOWED BY MAKING FOLLOWING OBSERVATIONS :- 4.3.4 NOW COMING TO THE ITEMS OF SELLING AND DISTRI BUTION EXPENSES TREATED BY THE AO AS ITEMS TO BE CAPITALIZED, IT IS NOTED THAT THESE ARE NOT DIRECT OR INDIRECT COSTS OF CONSTRUCTION. FURTHER, ACCOUNTING STANDARDS AS-7, C LEARLY MENTIONS THAT SELLING EXPENSES AND GENERAL ADMINISTRATION COSTS SHOULD NO T BE CONSIDERED AS PART OF CONSTRUCTION COSTS AND DEVELOPMENT COSTS. THE ACTIO N OF THE ASSESSING OFFICER IS NOT SUPPORTED BY THE ACCOUNTING STANDARDS AND ALSO WILL RESULT IN COMPLICATED AND CUMBERSOME ACCOUNTING TO KEEP TRACK OF EACH YEARS WIP, WITHOUT ANY GAIN TO ITA NO.5613/M/2014 & CO 111/M/2017 RUSTOMJEE EVERSHINE JOINT VENTURE PRIVATE LIMITED ASSESSMENT YEAR 2010-11 4 REVENUE. NONE OF THE EXPENSES IS HELD TO BE NON-GEN UINE. NO REVENUE IS RECOGNIZED SO THERE IS NO IMPLICATION OF SHIFTING OF PROFITS. THERE IS AT BEST A MERE POSTPONEMENT OF COSTS. THE DISALLOWANCE MADE BY ASSESSING OFFICER IS DELET ED AND GROUND OF APPEAL 1 IS ALLOWED. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] PLACED RELIANCE ON THE STAND OF LD. AO AND CONTENDED THAT THE ASSESSEE DID NOT OFFER ANY INCOME FROM THE PROJECT DURING IMPUGNED AY AND THER EFORE, ALL EXPENDITURE INCURRED BY ASSESSEE DURING THE SAME PE RIOD WAS REQUIRED TO BE CAPITALIZED. FURTHER, THE INCOME OF THE ASSES SEE WAS TO BE ARRIVED AT INDEPENDENT OF ACCOUNTING STANDARDS ISSUED BY ICAI . 5. PER CONTRA, LD. COUNSEL FOR ASSESSEE [AR] CONTENDED THAT THE ASSESSEE WAS MANDATORILY REQUIRED TO FOLLOWS ACCOUNTING STANDARD-7 ISSUED BY ICAI AND IT WAS CONSISTENTLY FOLLOWING THE SAME METHOD OF ACCOUNTING IN SUBSEQUENT YEARS. RELIANCE WAS PLACED ON THE JUDGMENT OF HONBLE GUWAHATI HIGH COURT RENDERED IN MKB (ASIA) PRIVATE LIMITED VS CIT [2006 167 TAXMAN 256] AND SUPREME INDIA IN CIT VS. WOODWARD GOVERNOR INDIA PRIVATE LIMITED [2009 179 T AXMAN 326] FOR VARIOUS CONTENTIONS. OUR ATTENTION IS FURTHER DRAWN TO THE FACT THAT THE ASSESSEE FOLLOWED CONSISTENT METHOD OF ACCOUNTING I N SUBSEQUENT YEAR, WHICH HAS BEEN ACCEPTED BY THE REVENUE IN AN ASSESS MENT U/S 143(3). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSAL THE RELEVANT MATERIAL ON RECORD. THE MAIN CONTENTION OF THE ASSESSEE IS T HAT IT IS FOLLOWING THE METHOD OF ACCOUNTING AS PRESCRIBED BY ACCOUNTING STANDARD-7 [AS-7] ISSUED BY ICAI WHEREAS THE STAND OF THE REVENUE IS THAT SINCE NO INCOME FROM THE PROJECT HAS BEEN OFFERED TO TAX, ALL EXPEN DITURE WAS REQUIRED TO BE CAPITALIZED WITH THE PROJECT COST. ITA NO.5613/M/2014 & CO 111/M/2017 RUSTOMJEE EVERSHINE JOINT VENTURE PRIVATE LIMITED ASSESSMENT YEAR 2010-11 5 7. FIRST OF ALL, AT THE OUTSET, IT WOULD BE PRUDENT TO EXTRACT RELEVANT PORTION OF AS-7 TITLED AS CONSTRUCTION COST ISSUED BY ICAI, WHICH READ AS FOLLOWS:- CONTRACT COSTS 15. CONTRACT COSTS SHOULD COMPRISE: (A) COSTS THAT RELATE DIRECTLY TO THE SPECIFIC CONT RACT; (B) COSTS THAT ARE ATTRIBUTABLE TO CONTRACT ACTIVIT Y IN GENERAL AND CAN BE ALLOCATED TO THE CONTRACT; AND (C) SUCH OTHER COSTS AS ARE SPECIFICALLY CHARGEABLE TO THE CUSTOMER UNDER THE TERMS OF THE CONTRACT. 16. COSTS THAT RELATE DIRECTLY TO A SPECIFIC CONTRA CT INCLUDE: (A) SITE LABOUR COSTS, INCLUDING SITE SUPERVISION; (B) COSTS OF MATERIALS USED IN CONSTRUCTION; (C) DEPRECIATION OF PLANT AND EQUIPMENT USED ON THE CONTRACT; (D) COSTS OF MOVING PLANT, EQUIPMENT AND MATERIALS TO AND FROM THE CONTRACT SITE; (E) COSTS OF HIRING PLANT AND EQUIPMENT; (F) COSTS OF DESIGN AND TECHNICAL ASSISTANCE THAT I S DIRECTLY RELATED TO THE CONTRACT; (G) THE ESTIMATED COSTS OF RECTIFICATION AND GUARAN TEE WORK, INCLUDING EXPECTED WARRANTY COSTS; AND (H) CLAIMS FROM THIRD PARTIES. THESE COSTS MAY BE REDUCED BY ANY INCIDENTAL INCOME THAT IS NOT INCLUDED IN CONTRACT REVENUE, FOR EXAMPLE INCOME FROM THE SALE OF SURPLUS MATERIALS AND THE DISPOSAL OF PLANT AND EQUIPMENT AT THE END OF THE C ONTRACT. 17. COSTS THAT MAY BE ATTRIBUTABLE TO CONTRACT ACTI VITY IN GENERAL AND CAN BE ALLOCATED TO SPECIFIC CONTRACTS INCLUDE: (A) INSURANCE; (B) COSTS OF DESIGN AND TECHNICAL ASSISTANCE THAT I S NOT DIRECTLY RELATED TO A SPECIFIC CONTRACT; AND (C) CONSTRUCTION OVERHEADS. SUCH COSTS ARE ALLOCATED USING METHODS THAT ARE SYS TEMATIC AND RATIONAL AND ARE APPLIED CONSISTENTLY TO ALL COSTS HAVING SIMILAR CH ARACTERISTICS. THE ALLOCATION IS BASED ON THE NORMAL LEVEL OF CONSTRUCTION ACTIVITY. CONSTRUCTION OVERHEADS INCLUDE COSTS SUCH AS THE PREPARATION AND PROCESSING OF CON STRUCTION PERSONNEL PAYROLL. COSTS THAT MAY BE ATTRIBUTABLE TO CONTRACT ACTIVITY IN GENERAL AND CAN BE ALLOCATED TO SPECIFIC CONTRACTS ALSO INCLUDE BORROWING COSTS AS PER ACCOUNTING STANDARD (AS) 16, BORROWING COSTS. 18. COSTS THAT ARE SPECIFICALLY CHARGEABLE TO THE C USTOMER UNDER THE TERMS OF THE CONTRACT MAY INCLUDE SOME GENERAL ADMINISTRATION CO STS AND DEVELOPMENT COSTS FOR WHICH REIMBURSEMENT IS SPECIFIED IN THE TERMS OF TH E CONTRACT. 19. COSTS THAT CANNOT BE ATTRIBUTED TO CONTRACT ACT IVITY OR CANNOT BE ALLOCATED TO A CONTRACT ARE EXCLUDED FROM THE COSTS OF A CONSTRUCT ION CONTRACT. SUCH COSTS INCLUDE: (A) GENERAL ADMINISTRATION COSTS FOR WHICH REIMBURS EMENT IS NOT SPECIFIED IN THE CONTRACT; (B) SELLING COSTS; ITA NO.5613/M/2014 & CO 111/M/2017 RUSTOMJEE EVERSHINE JOINT VENTURE PRIVATE LIMITED ASSESSMENT YEAR 2010-11 6 (C) RESEARCH AND DEVELOPMENT COSTS FOR WHICH REIMBU RSEMENT IS NOT SPECIFIED IN THE CONTRACT; AND (D) DEPRECIATION OF IDLE PLANT AND EQUIPMENT THAT I S NOT USED ON A PARTICULAR CONTRACT. 20. CONTRACT COSTS INCLUDE THE COSTS ATTRIBUTABLE T O A CONTRACT FOR THE PERIOD FROM THE DATE OF SECURING THE CONTRACT TO THE FINAL COMPLETI ON OF THE CONTRACT. HOWEVER, COSTS THAT RELATE DIRECTLY TO A CONTRACT AND WHICH ARE IN CURRED IN SECURING THE CONTRACT ARE ALSO INCLUDED AS PART OF THE CONTRACT COSTS IF THEY CAN BE SEPARATELY IDENTIFIED AND MEASURED RELIABLY AND IT IS PROBABLE THAT THE CONTR ACT WILL BE OBTAINED. WHEN COSTS INCURRED IN SECURING A CONTRACT ARE RECOGNISED AS A N EXPENSE IN THE PERIOD IN WHICH THEY ARE INCURRED, THEY ARE NOT INCLUDED IN CONTRAC T COSTS WHEN THE CONTRACT IS OBTAINED IN A SUBSEQUENT PERIOD. UPON PERUSAL OF CLAUSE-19, WE FIND THAT GENERAL ADMINISTRATION COSTS AND SELLING COSTS ARE GENERALLY NOT CONSIDERED A PART OF CONTRACT CO ST UNLESS THEY ARE CONTRACT SPECIFIC. 8. PROCEEDING FURTHER, WE FIND IT PRUDENT TO EXTRAC T RELEVANT PORTION OF JUDGMENT OF HONBLE GUWAHATI HIGH COURT QUA METHOD OF ACCOUNTING RENDERED IN MKB (ASIA) PRIVATE LIMITED VS CIT [SUPRA] IN THE FOLLOWING MANNER :- 7. LEARNED COUNSEL FOR THE APPELLANT HAS PRODUCED B EFORE US THE TEXT OF ACCOUNTING STANDARDS AS-7 ISSUED BY THE ICAI. IT SHOWS THAT TH IS SYSTEM WAS INTRODUCED IN THE YEAR 1983 AND IT WAS MADE MANDATORY IN THE YEAR 199 0. THERE IS NO DISPUTE AT THE BAR THAT THIS ACCOUNTING SYSTEM IS AN APPROVED SYST EM OF MAINTENANCE OF ACCOUNTS APPLICABLE TO CONSTRUCTION WORKS CONTRACT. SRI BHUY AN, LEARNED COUNSEL FOR THE RESPONDENTS, HAS SUBMITTED THAT THE QUESTION RAISED IS MORE OR LESS ACADEMIC AS IN THE LONG RUN, THE ASSESSEE IS NOT AFFECTED AS THE L IABILITY OF TAX ON THE INCOME OF THE TOTAL WORKS CONTRACT REMAINS THE SAME AND THE QUEST ION IS AT WHAT STAGE THE TAX IS TO BE PAID. MR. JOSHI WAS FAIR ENOUGH TO SUBMIT THAT I T IS NOT A QUESTION OF ADDITIONAL LIABILITY OF TAX, BUT THE QUESTION IS WHETHER THE I T DEPARTMENT CAN FORCE THE ASSESSEE TO ADOPT A PARTICULAR SYSTEM OF ACCOUNTING, OR WHET HER THE ASSESSEE HAS THE OPTION. WHILE GOING THROUGH AS-7, WE FIND THE EXECUTOR OF T HE WORKS CONTRACT IS REQUIRED TO PAY INCOME-TAX EVEN ON THE PART COMPLETION OF THE W ORK ALSO, BUT A FORMULA HAS BEEN PROVIDED FOR THE PURPOSE REGARDING VALUATION, ETC., KEEPING IN MIND THE ULTIMATE PAYMENT TO BE RECEIVED AGAINST THE ENTIRE WORK. 8. IN THE PRESENT CASE, THE FACTUAL PART IS NOT UND ER DISPUTE AND HENCE WE WOULD CONFINE TO THE QUESTION RAISED. 9. A SIMILAR QUESTION HAD ARISEN IN THE CASE OF CIT VS. DOOM DOOMA INDIA LTD. (1994) 117 CTR (GAU) 156 : (1993) 200 ITR 496 (GAU), WHERE IN THE QUESTION OF VALUATION OF STOCK AROSE AS A RESULT OF THE ACCOUNTING SYSTEM. R EFERRING TO THE PROVISION OF S. 145 OF THE ACT, THIS COURT HELD: IT IS FOR THE ASSESSEE TO ADOPT ANY RECOGNIZED MET HOD OF ACCOUNTING FOR HIS BUSINESS. THE INCOME SHALL BE COMPUTED IN ACCORDANC E WITH THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE. IN O THER WORDS, IT IS OPEN TO THE ASSESSEE TO OPT FOR SUCH METHOD OF ACCOUNTING AS HE DEEMS REASONABLE AND ITA NO.5613/M/2014 & CO 111/M/2017 RUSTOMJEE EVERSHINE JOINT VENTURE PRIVATE LIMITED ASSESSMENT YEAR 2010-11 7 APPROPRIATE. HE MAY OPT TO ADOPT THE MANUFACTURING COST PRICE METHOD OR THE MARKET PRICE METHOD PROVIDED THE METHOD IS FOLLOWED IN REG ARD TO BOTH THE OPENING STOCK AND THE CLOSING STOCK. IT IS NOT OPEN TO HIM TO ADO PT ONE METHOD FOR VALUING THE OPENING STOCK AND A DIFFERENT METHOD OF VALUING THE CLOSING STOCK SO AS TO INTENTIONALLY SUPPRESS THE INCOME DERIVED OR DERIVA BLE IN THE PARTICULAR PREVIOUS YEAR. EVEN WHERE AN ASSESSEE HAS ADOPTED A PARTICULAR MET HOD FOR A PERIOD OF YEARS, THERE IS NO PROVISION OF LAW WHICH PREVENTS HIM FRO M CHANGING TO ANY OTHER METHOD, PROVIDED THE CHANGEOVER IS NOT MADE IN THE SAME ASS ESSMENT YEAR. THE PROVISO TO SUB-S.(1) EMPOWERS THE AO TO COMPUTE THE INCOME ON SUCH BASIS AND IN SUCH MANNER AS HE DETERMINES IF THE ACCOUNTS ARE CORRECT AND COMPLETE BUT THE METHOD ADOPTED IS SUCH THAT, IN HIS OPINION, THE IN COME CANNOT PROPERLY BE DEDUCED THEREFROM. THE JURISDICTION CAN BE INVOKED WHERE HE IS OF THE OPINION THAT THE INCOME CANNOT PROPERLY BE DEDUCED THEREFROM. HE CANNOT EXE RCISE THE JURISDICTION MERELY ON THE GROUND THAT THE METHOD ADOPTED, WHICH IS OTHERW ISE REGULAR OR FAIR, IS DETRIMENTAL TO THE REVENUE OR ADVANTAGEOUS TO THE ASSESSEE. IF THE AO IS NOT SATISFIED ABOUT THE CORRECTNESS OR THE COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, OR WHERE NO METHOD OF ACCOUNTING HAS BEEN REGULARLY EMPLOYED BY THE ASSESSEE, THE AO MAY MAKE AN ASSESSMENT IN THE MANNER PROVIDED IN S. 144 . 10. IN SUPPORT OF THE ABOVE FINDINGS, THIS COURT H AD PLACED RELIANCE ON THE FOLLOWING DECISIONS OF THE APEX COURT: (1) CHAINRUP SAMPATRAM VS. CIT (1953) 24 ITR 481 (S C); (2) INVESTMENT LTD. VS. CIT (1970) 77 ITR 533 (SC); AND (3) A.L.A. FIRM VS. CIT (1991) 93 CTR (SC) 133 : (1 991) 189 ITR 285 (SC). 11. WE MAY RECAPITULATE THE FOLLOWING OBSERVATIONS OF THE HONBLE SUPREME COURT IN INVESTMENT LTD. VS. CIT(SUPRA) : A TAXPAYER IS FREE TO EMPLOY, FOR THE PURPOSE OF HIS TRADE, HIS OWN METHOD OF KEEPING ACCOUNTS, AND FOR THAT PURPOSE TO VALUE HIS STOCK-IN-TRADE EITHER AT COST OR AT MARKET PRICE. A METHOD OF ACCOUNTING ADOPTED BY THE TRADER CONSISTENTLY AND REGULARLY CANNOT BE DISCARDED BY THE DEPARTMENTAL A UTHORITIES ON THE VIEW THAT HE SHOULD HAVE ADOPTED A DIFFERENT METHOD OF KEEPING A CCOUNT OR OF VALUATION. THE METHOD OF ACCOUNTING REGULARLY EMPLOYED MAY BE DISC ARDED ONLY IF IN THE OPINION OF THE TAXING AUTHORITIES INCOME OF THE TRADE CANNOT BE PROPERLY DEDUCED THEREFROM. VALUATION OF STOCK AT COST IS ONE OF THE RECOGNIZED METHODS. NO INFERENCE MAY, THEREFORE, ARISE FROM THE EMPLOYMENT BY THE COMPANY OF THE METHOD OF VALUING STOCK AT COST, THAT THE STOCK VALUED WAS NOT STOCK-IN-TRA DE. 12. AS STATED ABOVE, THE ACCOUNTING SYSTEM AS-7 IS AN APPROVED SYSTEM OF ACCOUNTING BY THE ICAI AND AS SUCH THE AUTHENTICITY OF THE SAID ACCOUNTING SYSTEM IS NOT UNDER CHALLENGE. THE ASSESSEE FIRM/APPELLANT BE ING A PRIVATE LIMITED COMPANY WAS MAINTAINING ITS ACCOUNTS FOLLOWING THE SAID SYS TEM AND THE ACCOUNTS WERE DULY AUDITED BY A QUALIFIED CHARTERED ACCOUNTANT, MAINTE NANCE OF THE ACCOUNTS AS WELL AS THE VALUATION OF WORK-IN-PROGRESS WILL NOT PREJUDIC E EITHER SIDE. ADMITTEDLY, THE PARTICULAR WORK CONTRACT WAS NOT COMPLETED AND IT C OMES UNDER THE CATEGORY OF WORK- IN-PROGRESS. THERE IS ALSO NO DISPUTE THAT THE ULTI MATE LIABILITY OF THE ASSESSEE AS REGARDS TAX WILL BE DEPENDENT UPON THE TOTAL (FIXED ) AMOUNT RECEIVED BY THE ASSESSEE AGAINST THE PARTICULAR WORK CONTRACT. 13. WE, THEREFORE, HOLD THAT THE IT AUTHORITY HAS N O OPTION/JURISDICTION TO MEDDLE IN THE MATTER EITHER BY DIRECTING THE ASSESSEE TO MAIN TAIN ITS ACCOUNTS IN A PARTICULAR MANNER OR ADOPT A DIFFERENT METHOD FOR VALUING THE WORK-IN-PROGRESS. WE REITERATE THE DECISION IN DOOM DOOMA INDIA LTD.(SUPRA) AND HOLD T HAT AN ASSESSEE HAS AS THE OPTION/LIBERTY TO ADOPT ANY RECOGNIZED METHOD OF AC COUNTING FOR HIS BUSINESS AND THE INCOME SHALL BE COMPUTED IN ACCORDANCE WITH SUCH RE GULARLY MAINTAINED ACCOUNTING SYSTEM. ITA NO.5613/M/2014 & CO 111/M/2017 RUSTOMJEE EVERSHINE JOINT VENTURE PRIVATE LIMITED ASSESSMENT YEAR 2010-11 8 9. THE LD. AR HAS CONTENDED THAT THE ASSESSEE IS CO NSISTENTLY FOLLOWING THE SAME METHOD OF ACCOUNTING OVER SEVERA L YEARS, WHICH IS NOWHERE CONTROVERTED BY THE REVENUE. FURTHER, A PER USAL OF QUANTUM ASSESSMENT ORDER FOR AY 2011-12 AS PLACED ON RECORD REVEAL THAT THE ASSESSEE HAS CLAIMED SIMILAR EXPENDITURE IN THAT YE AR ALSO WHICH HAS BEEN ALLOWED BY THE REVENUE IN AN ASSESSMENT U/S 14 3(3) DESPITE THE FACT THAT UNSOLD INVENTORY HAS REMAINED WITH THE AS SESSEE IN THE BALANCE SHEET. 10. ON THE BASIS OF ABOVE DISCUSSION, IT CAN BE OBS ERVED THAT THE ASSESSEE WAS CONSISTENTLY FOLLOWING A PARTICULAR ME THOD OF ACCOUNTING WHICH WAS IN ACCORDANCE WITH ACCOUNTING STANDARD ISSUED BY ICAI WHICH IS WELL ACCEPTED BY HIGHER COURTS . FURTHER, THE REVENUE HAS ACCEPTED THE METHOD ADOPTED BY ASSESSEE IN SUBSEQUENT YEAR AND T HEREFORE, PRECLUDED FROM CHANGING STAND PARTICULARLY WHEN BOT H THE ASSESSMENT ORDERS WERE FRAMED BY SAME ASSESSING OFFICER AND ON SAME DATE. 11. THEREFORE, ON THE FACTS OF THE CASE, WE FIND NO REASON TO INTERFERE THE WITH THE ORDER OF LD. CIT(A) SINCE THE SAME WAS IN ACCORDANCE WITH SETTLED JUDICIAL PRONOUNCEMENTS. HENCE, WE ARE INCL INED TO DISMISS REVENUES APPEAL AND CONSEQUENTLY, ASSESSEES CROSS OBJECTIONS BECOMES INFRUCTUOUS . 12. FINALLY, REVENUES APPEAL AS WELL AS ASSESSEES CROSS OBJECTIONS STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH DECEMBER, 2017. ITA NO.5613/M/2014 & CO 111/M/2017 RUSTOMJEE EVERSHINE JOINT VENTURE PRIVATE LIMITED ASSESSMENT YEAR 2010-11 9 SD/- SD/- (JOGINDER SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 08.12.2017 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT 3. - ( ) / THE CIT(A) 4. - / CIT CONCERNED 5. ''/ , / , / DR, ITAT, MUMBAI 6. 0 / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI