Pr. Commissionerof Incometax (Central)-3 v. Indrapuramhabitatcentrepvt. Ltd.respondentthroughnone

$~12& 13 *IN THE HIGH COURT OF DELHI AT NEW DELHI+ITA 476/2017+ .ITA 479/2017+ITA 476/2017+ .ITA 479/2017 , PR. COMMISSIONEROF INCOMETAX (CENTRAL)-3 Appellant ThroughMr. Rahul Chaudhary,Advocate. versus INDRAPURAMHABITATCENTREPVT. LTD.RespondentThroughNone. CORAM:HON'BLE MR. JUSTICE S. RAVINDRA BHATHON'BLE MR. JUSTICE SANJEEV SACHDEVAORDER%06.11.2017 1.The question,whichthe Revenueurges in these two appeals,iswhetherthe ITAT fell into errorin acceptingthe method,oftreatmentof revenue and income by the assessee, who is a developer andundertakes construction projects including those of commercialbuildings. The AO sought to bring additionalamount to tax on thegroundthat even whilethe assesseeclaimedto have followedthe AS-9method,he neitherfollowedthe ProjectCompletionMethodi.e. theRevenue recognitionon transferof goods, he also did not apply theother more recognisedmethod approved under Section 145 of theIncomeTax Act, i.e, the PercentageCompletionMethod. 2.Learnedcounselfor the appellanturged that the ITAT fell intoerror in acceptingthe assessee'ssubmissionsin the presentinstance.He relied thenote issued the InstituteofCharteredupon guidanceby Signature Not VerifiedDigitally SignedITA 476/2017&By:AMULYAITA 479/2017 \^ Accountants,with respectto the applicabilityof AS-7, to the effectthat if the activitywas close to constructioncontracts,AS-7 wouldapply. It was, therefore,urged that, in the presentcase, the assesseewas clearlycoveredby AS-7. The ITATerredin holdingotherwise. 3.The ITAT'sfindingsare extractedbelow:- "TheAO, duringthe asst. yr. 2006-07has also accepted the projectcompletionmethodfollowedby the assesseeand has not disturbed the income by making anyestimatedincomeon the work-in-progress.There is alsomerit in the submissionof the counselfor the assesseethat the assessee has Declared huge income in the afterofthe saidassubsequentyear completionprojectagainstmeagerincomeestimatedby the AO. Theprojectcompletionmethodis an acceptedmethodofaccountingfor builders. The assessee is regularlyfollowing thismethod- ofaccountingwhich has been acceptedby theAO in the preceding as well as in the subsequentassessment Further the AS-7 as discussed theyear.byAO and the CIT(A) is applicableonlyfor contractorsengagedin the civilconstructionbusinessand the samedoes notapplyto builders/developers.It is an establishedlegal proposition that an assessee can follow anyrecognized.method of accountingand the condition isthat the same method has to be followed consistently.Since the assessee in the instant case was regularlyfollowingtheprojectcompletionmethodand has offeredthe income in theyear ofcompletionofproject, there isno soundreason as to why the same shouldbe rejectedandpercentagecompletionmethodbefollowed." 4.This Court is of the opinionthat the instancespointedout by-the ITAT, in the presentcase, are significant both in the previousassessmentyear as well as in the subsequentassessmentyears,the AO to havetheof There isappears accepted systemaccounting. nothingon record to suggest that the assessee was undertakinglarge scaleactivity. 5.In the circumstances,the findings rendered by the ITAT arepeculiarto the circumstancesofthe case and, cannotbe said to haveuniversalor wide applicabilityso as to requireaquestionoflaw. \ 6.No substantialquestionoflaw, therefore,arises. 7.Theappealis, therefore,dismissed. S. RAVINDRA BHAT, J NOVEMBER 06, 2017 st rSANjEteVSACHDEVA,J