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TAXAP/1163/2010 3/ 3 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 1163 of 2010
With
TAX
APPEAL No. 1164 of
2010
=========================================================
INCOME
TAX OFFICER, WARD - 5(4), BARODA - Appellant(s)
Versus
M/S
MAHALAXMI BUILDERS - Opponent(s)
=========================================================
Appearance
:
MR
KM PARIKH for
Appellant(s) : 1,
None for Opponent(s) :
1,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE AKIL KURESHI
and
HONOURABLE
MS JUSTICE SONIA GOKANI
Date
: 05/09/2011
ORAL
ORDER
(Per
: HONOURABLE MR.JUSTICE AKIL KURESHI)
1.0 The
revenue has filed this appeal challenging the judgment of the
Tribunal dated 20.11.2009 raising following question for
consideration.
“Whether,
on the facts and in the circumstances of the case, the appellate
tribunal was right in law in directing the A.O. to tax the income of
Rs.28,96,530/- on project completion method instead of percentage
completion method as adopted by the Assessing Officer?”
2.0 The
assessee is engaged in the business of developing and building a
township Housing Project. The assessee claimed deduction under
section 80IB(10) of the Act. During the course of the assessment
proceedings, the Assessing Officer held that the assessee must claim
the profit during the year under consideration on the percentage
completion method. The Assessing Officer was of the opinion that
since the assessee had not maintained separate books of account for
commercial portion of project and housing project, the assessee had
to follow such method.
3.0 CIT
(Appeals) allowed the appeal of the assessee in part and out of a
total claim of the assessee for deduction under Section 80IA of the
Act, the CIT (Appeals) directed the Assessing Officer to discard the
sum of Rs.28,96,530/- being profit from non-eligible project under
consideration.
4.0 Both
the sides thereupon approached the Tribunal by way of filing separate
appeals. The Tribunal allowed the assessee’s appeal and rejected
revenue’s appeal. Central question was whether the assessee’s claim
should have been rejected which was based on project completion
method. The Tribunal referred to and relied upon several decisions of
other Tribunals mainly of the Bombay Bench and observed that, the
project completion method is approved in such cases. The Tribunal
also noted that the assessee company is engaged in construction and
sale of multi-storied buildings/flats and office complexes and the
Assessing Officer should therefore ascertain the tax liability on the
assessee for the project in question under project completion method
and recalculated the tax after hearing the assessee.
5.0 Apart
from other issues, in the present case, the Tribunal recorded that, ”
it is pertinent to note that the Assessing Officer completed the
assessment for the assessment for the assessment Year 2003-04 in
assessee’s own case wherein the assessee has accepted the income of
entire project declared by the asseessee on project completion
method. Again taxation which is not permissible under the law.”
6.0 When
we have gone through the record, we find that it is the very project
in the earlier assessment year the Assessing Officer had accepted the
asseessee’s method of accounting on the basis of the project
completion, with respect to the same project for the future years to
discard such methodology would lead to anomalous situation. The
Tribunal was justified therefore in not permitting the revenue to do
so in the present case only. Therefore, the revenue’s challenge is
not required to be accepted.
7.0 We
also noticed that the CIT (Appeals) had found no reason to reject the
assessee’s method of accounting particularly when the rate of tax is
same in both the assessment years. It was observed that the profit of
business should be fair and method of accounting has been regularly
improved by the assessee.
8.0 Since
the Tribunal accepted the assessee’s version, as a natural
consequence, the revenue appeal was dismissed. Both these appeals
arise out of a common judgment call for no interference. Both these
appeals are dismissed.
[AKIL
KURESHI, J.]
[Ms.SONIA
GOKANI, J.]
Amit
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