SHETH DEVELOPERS P.LTD, MUMBAI v. ACIT CEN CIR 24, MUMBAI

CO 53/MUM/2011 | 2007-2008
Pronouncement Date: 16-12-2011 | Result: Dismissed

Appeal Details

RSA Number 5319923 RSA 2011
Assessee PAN AAACS9943H
Bench Mumbai
Appeal Number CO 53/MUM/2011
Duration Of Justice 7 month(s) 20 day(s)
Appellant SHETH DEVELOPERS P.LTD, MUMBAI
Respondent ACIT CEN CIR 24, MUMBAI
Appeal Type Cross Objection
Pronouncement Date 16-12-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted J
Tribunal Order Date 16-12-2011
Date Of Final Hearing 30-11-2011
Next Hearing Date 30-11-2011
Assessment Year 2007-2008
Appeal Filed On 26-04-2011
Judgment Text
ITA NO.3777 OF 2010 & CO.53 OF 2011 SHETH DEVELOPERS P LTD MUMBAI PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL 'J' BENCH MUMBAI BEFORE SHRI D.K.AGARWAL JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 3777/MUM/2010 (ASSESSMENT YEAR: 2007-08) ASSTT. COMMISSIONER OF M/S SHETH DEVELOPERS P LTD INCOME TAX CENTRAL CIR. 11 VORA PALACE NEXT TO 24 ROOM NO.404 4 TH DENA BANK MG ROAD FLOOR AAYAKAR BHAVAN VS KANDIVALI(W) MK ROAD MUMBAI 400020 MUMBAI 400067 PAN NO:AAACS 9943 H APPELLANT RESPONDENT C.O. NO.53/MUM/2011 (IN ITA NO.3777/MUM/2010) ( ASSESSMENT YEAR 2007-08 ) M/S SHETH DEVELOPERS P LTD ASSTT. COMMISSIONER OF 11 VORA PALACE NEXT TO INCOME TAX CENTRAL CIR. DENA BANK MG ROAD 24 ROOM NO.404 4 TH KANDIVALI(W) VS FLOOR AAYAKAR BHAVAN MUMBAI 400067 PAN NO:AAACS 9943 H MK ROAD MUMBAI 400020 APPELLANT RESPONDENT REVENUE BY: MS.REENA JHA TRIPATHI CIT(DR) ASSESSEE BY: SHRI CHETAN KARIA. DATE OF HEARING: 30/11/2011 DATE OF PRONOUNCEMENT: 16/12/2011 O R D E R PER B. RAMAKOTAIAH A.M. THE REVENUE PREFERRED THE APPEAL AGAINST THE ORDERS OF THE CIT (A)-39 MUMBAI DATED 24.12.2010. CO BY ASSESSEE IS IN SUPPORT OF ORDER OF CIT(A). THE ISSUE IN THIS APPEAL IS WHETHE R THE ASSESSING OFFICER IS CORRECT IN MAKING THE ADDITION OF VARIOU S AMOUNTS TO THE PROFITS DECLARED BY THE ASSESSEE BY CHANGING THE PR OJECT COMPLETION METHOD OF ACCOUNTING TO PERCENTAGE COMPLETION METHO D. ITA NO.3777 OF 2010 & CO.53 OF 2011 SHETH DEVELOPERS P LTD MUMBAI PAGE 2 OF 9 2. BRIEFLY STATED THE ASSESSEE IS A DEVELOPER AND HA S VARIOUS ONGOING PROJECTS IN THE BUSINESS OF REAL ESTATE DEV ELOPMENT. THE ASSESSEE FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 DECLARING TOTAL INCOME OF ` 11 79 81 345/-. IN THE SCRUTINY ASSESSMENT THE ASSESSING OFFICER CONSIDERED THAT TH E ASSESSEE HAS NOT DECLARED THE INCOME FROM SARASWATI RAKHI GOLD EN WILLOWS BEAU MONDE PROJECTS AND HAVING NOTICED THAT THE ASS ESSEE HAS COMPLETED 57% OF THE PROJECT BROUGHT THE FOLLOWING AMOUNTS AS AN ADDITION TO THE PROFITS: I) ` 15 67 33 801/- AS INCOME FROM SARASWATI AND RAKHI P ROJECT. II) ` 12 81 15 367/- AS INCOME FROM GOLDEN WILLOWS PROJE CT III) ` 33 21 57 324/- AS INCOME FROM BEAU MONDE PROJECT. 3. THE REASONS FOR THE ASSESSING OFFICER FOR BRINGING THE AMOUNTS IS RELIANCE ON THE ACCOUNTING STANDARD AS 7 AND 9 AND THE QUANTUM OF ADVANCES RECEIVED BY THE ASSESSEE AG AINST THESE PROJECTS. THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT (A) WHO AFTER ANALYZING THE FACTS OF THE CASE AND ALSO THE LEGAL PRINCIPLES DELETED THE ADDITIONS BY HIS 69 PAGE ORDER. THE REVENUE ACC ORDINGLY RAISED 3 GROUNDS IN RESPECT OF VARIOUS ADDITIONS MADE IN DIF FERENT PROJECTS. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE REITERATED THE FACTS AND RELIED ON THE ORDERS OF THE ASSESSING OFFICER T O SUBMIT THAT SINCE SUBSTANTIAL ADVANCES HAVE BEEN RECEIVED AND P ROJECT WAS SUBSTANTIALLY COMPLETED THE ASSESSING OFFICER WAS CORRECT IN INVOKING THE PERCENTAGE COMPLETION METHOD IN BRINGI NG THE AMOUNTS TO TAX. THE LEARNED DEPARTMENTAL REPRESENTA TIVE RELIED ON THE ORDERS OF THE ITAT IN THE CASES OF PRESTIGE EST ATE PROJECTS LTD VS. DCIT 129 ITD 342 (BANG.) DESAI REAL ESTATE DEVELOP ERS VS. INCOME TAX OFFICER 44 SOT 7 (PANAJI) (URO) AND RAMNIKLAL J . NATHWANI VS. INCOME TAX OFFICER 28 SOT 276 (MUM) FOR VARIOUS PRO POSITIONS THAT PROJECT COMPLETION METHOD IS AN APPROVED METHOD OF ACCOUNTING AND THE ASSESSING OFFICER HAS CORRECTLY INVOKED THE ABOVE METHOD TO BRING IT TO TAX VARIOUS SUMS AS DETAILED IN THE ASS ESSMENT ORDER. ITA NO.3777 OF 2010 & CO.53 OF 2011 SHETH DEVELOPERS P LTD MUMBAI PAGE 3 OF 9 5. THE LEARNED COUNSEL IN REPLY PLACED A CHART OF INCO MES DECLARED BY THE ASSESSEE IN VARIOUS PROJECTS TO SUB MIT THAT ASSESSEE WAS OFFERING INCOMES ON PROJECT COMPLETION METHOD F ROM VARIOUS YEARS STARTING FROM ASSESSMENT YEAR 2000-01 TILL NO W AND IN ALL THE ASSESSMENT YEARS INVOLVED THEREIN IN SCRUTINY ASS ESSING OFFICER HAS ACCEPTED THE METHOD OF ACCOUNTING AS PROJECT CO MPLETION METHOD. FURTHER IT WAS ALSO SUBMITTED THAT IN SUBSE QUENT ASSESSMENT YEARS ALSO THE ASSESSING OFFICER DID NOT DISTURB THE METHOD OF ACCOUNTING AND ACCEPTED THE INCOMES OFFER ED BY THE ASSESSEE IN RESPECT OF THE ABOVE PROJECTS. 6. REFERRING TO THE THREE PROJECTS WHICH THE ASSESSING OFFICER HAS CONSIDERED IT WAS SUBMITTED THAT IN CASE OF SARASW ATI & RAKHI THE DATE OF COMMENCEMENT WAS IN SEPTEMBER 2000 WHEREA S DUE TO DELAY IN CERTAIN LEGAL PROCEEDINGS THE PROJECT COU LD BE COMPLETED ONLY BY MARCH 2010 AND OCCUPATION CERTIFICATE WAS GRANTED ON MARCH 2011. HOWEVER AS PER THE ACCOUNTING POLICY OF THE ASSESSEE INCOME OF ` 8 63 05 242/- WAS DECLARED IN ASSESSMENT YEAR 2010- 11 THE ASSESSMENT OF WHICH IS PENDING. WITH REFERE NCE TO PROJECT GOLDEN WILLOWS THE PROJECT STARTED IN JANUARY 2005 AND WAS COMPLETED IN MARCH 2009 IN A PERIOD OF 4 YEARS TIME AND THE INCOME OF ` 16 15 45 219/- WAS DECLARED IN ASSESSMENT YEAR 2008 -09 I.E. IMMEDIATELY NEXT ASSESSMENT YEAR AND THE SAME WAS A LSO ACCEPTED UNDER SECTION 143(3). WITH REFERENCE TO BEAU MONDE PROJECT THIS PROJECT WAS STARTED IN JANUARY 2004 BUT DUE TO CERT AIN PUBLIC INTEREST LITIGATION THE PROJECT GOT DELAYED AND WAS COMPLETED IN MARCH 2009 AND INCOME OF ` 58 27 32 149/- WAS DECLARED IN ASSESSMENT YEAR 2009-10 THE ASSESSMENT OF WHICH IS PENDING BEFORE THE ASSESSING OFFICER AS OF NOW. 7. REFERRING TO THE METHOD OF ACCOUNTING IT WAS SUBMI TTED THAT THE ASSESSEE IS FOLLOWING BUILDING COMPLETION METHO D OF ACCOUNTING IN RESPECT OF EACH PROJECT UNDERTAKEN BY THE COMPAN Y AND COMPLETION OF EACH BUILDING (NOT PROJECT) WAS BASED ON EITHER ITA NO.3777 OF 2010 & CO.53 OF 2011 SHETH DEVELOPERS P LTD MUMBAI PAGE 4 OF 9 COMPLETION CERTIFICATE ISSUED BY THE CHIEF ENGINEER /THE ARCHITECT OF THE ASSESSEE OR ON RECEIPT OF OCCUPATION CERTIFICAT E FROM MUNICIPAL CORPORATION. IT WAS FURTHER SUBMITTED THAT REVENUE WAS RECOGNIZED IN RESPECT OF THE BUILDING COMPLETED BY WAY OF RECE IPTS OF UNITS SOLD. THE UNSOLD PORTION IS VALUED AT LOWER OF COST OR MA RKET RATE PREVAILING AS AT THE DATE OF BALANCE SHEET. THE AMO UNTS COLLECTED TILL THE DATE OF REVENUE RECOGNITION WAS DISCLOSED AS AD VANCE FROM CUSTOMERS. PROJECT EXPENSES ARE BOOKED ON ACCRUAL B ASIS AND INCOME AND EXPENSES PERTAINING TO BUILDING COMPLETE D DURING THE YEAR WERE TRANSFERRED TO P&L ACCOUNT. ACCORDINGLY THE ASSESSEE WAS OFFERING THE INCOMES ON THE BASIS OF BUILDING C OMPLETION METHOD AND THIS METHOD OF ACCOUNTING WAS CONSISTENT LY BEING FOLLOWED BY THE ASSESSEE WHICH THE REVENUE HAS NOT DISTURBED IN ANY YEAR EXCEPT IN THIS YEAR. 8. THE LEARNED COUNSEL DISTINGUISHED THE CASES RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE AND REFERRE D TO THE FINDINGS OF THE ORDER OF THE CIT (A) WHILE DELETING THE ADDITIONS SO MADE. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE RECORD AND REASONS RECORDED BY THE ASSESSING OFFICE R AND CIT(A). IT IS A FACT THAT THE ASSESSEE IS CONSISTENTLY FOLLOWI NG THE BUILDING COMPLETION METHOD AND THIS WAS STATED BY THE ASSESS ING OFFICER IN PAGE 10 OF THE ASSESSMENT ORDER. IT IS ALSO A FACT THAT DURING THE YEAR THE ASSESSEE HAS RECOGNIZED INCOME ON THE SAME METHOD ON PROJECTS (BUILDINGS) COMPLETED DURING THE YEAR AND OFFERED INCOME TO AN EXTENT OF ` 12.34 CRORES. ASSESSING OFFICER EXAMINED 3 PENDING PROJECTS AND NOTICED THAT SUBSTANTIAL PERCENTAGE OF PROJECT WAS COMPLETED IN RESPECT OF THE 3 PROJECTS ON WHICH SUB STANTIAL ADVANCES WERE RECEIVED. THEREFORE HE TOOK 57% OF ` .58 27 32 149/- I.E. AMOUNT OF `. 33 21 57 324/- AS INCOME OF THE ASSESSEE FROM THE PROJECT OF BEAU MODE. LIKE-WISE THE ENTIRE AMOUNT O F `15 67 33 801 /- RECEIVED FROM BUYERS AND SHOWN AS ADVANCE WAS ITA NO.3777 OF 2010 & CO.53 OF 2011 SHETH DEVELOPERS P LTD MUMBAI PAGE 5 OF 9 TREATED AS INCOME FROM SARASWATI & RAKHI PROJECT. W ITH REFERENCE TO GOLDEN WILLOWS HE NOTICED THAT PROJECT AT 87% WAS COMPLETED AND ACCORDINGLY THE ASSESSING OFFICER TOOK THE NET AMOU NT BETWEEN THE GROSS RECEIPTS AND 87% OF THE COST OF THE BUILDING AND ARRIVED AT ` 12 81 15 367/- AS INCOME. WHAT WE NOTICE FROM THE A BOVE WORKING OF THE ASSESSING OFFICER IS THAT THE ASSESSING OFFI CER EVEN THOUGH STATED TO HAVE ARRIVED AT PERCENTAGE COMPLETION MET HOD HAS NOT ADOPTED UNIFORM WORKING WITH REFERENCE TO THESE PRO JECTS. WITH REFERENCE TO SARASWATI AND RAKHI PROJECT THE ENTIR E ADVANCES RECEIVED WITHOUT ADJUSTING THE COST OF THE PROJECT WAS TREATED AS INCOME. WITH REFERENCE TO GOLDEN WILLOWS ENTIRE AD VANCES WERE TAKEN AS GROSS RECEIPTS AND SET OFF A PERCENTAGE OF COST AND ARRIVED AT THE PROFIT. AS FAR AS BEAU MONDE IS CONCERNED 5 7% OF THE GROSS RECEIPTS WERE TREATED AS INCOME AGAIN WITHOUT CONSI DERING THE PROJECT COST INCURRED THEREON. THIS METHOD OF BRING ING TO TAX VARIOUS AMOUNTS ITSELF IS NOT CORRECT AS PERCENTAGE COMPLETION METHOD WORKS IN A DIFFERENT MANNER ALTOGETHER AND O NLY WHEN THE ASSESSEE RECOVERS THE COST OF PROJECT THERE CAN BE ASCERTAINMENT OF PROFITS. AS CONSIDERED BY THE CIT(A) AND AS SUBMITT ED BY THE ASSESSEE IN A CHART THE ASSESSEE DECLARED PROFIT O F ` 8.63 CRORES ON PROJECT SARASWATI &RAKHI IN ASSESSMENT YEAR 2001-11 . AS FAR AS THE GOLDEN WILLOWS PROJECT IS CONCERNED A PROFIT O F `16 15 45 219/- WAS OFFERED IN THE NEXT ASSESSMENT YEAR WHICH WAS A LSO ACCEPTED AS SUCH. AS FAR AS THE BEAU MONDE IS CONCERNED IT DEC LARED AN AMOUNT OF ` .58 27 32 149 AS INCOME IN ASSESSMENT YEAR 2009-10 AFTER COMPLETION OF THE PROJECT. SINCE THE ASSESSEE IS CONSISTENTLY FOLLOWING THE PROJECT COMPLETION METHOD CONSISTENT LY OFFERING INCOMES FROM SUCH METHOD AND THE METHOD OF ACCOUNTI NG BEING FOLLOWED REGULARLY WAS ALSO ACCEPTED UNDER SECTION 143(3) BY THE REVENUE THERE IS NO QUESTION OF CONSIDERING PERCEN TAGE COMPLETION METHOD. THE REVENUE HAS NOT MADE OUT ANY CASE THAT THE ASSESSEE ITA NO.3777 OF 2010 & CO.53 OF 2011 SHETH DEVELOPERS P LTD MUMBAI PAGE 6 OF 9 IS INTENTIONALLY POSTPONING THE INCOME ON THIS METH OD OF ACCOUNTING. 10. THE ACCOUNTING PRINCIPLES DO PERMIT THE ASSESSEE TO FOLLOW PERCENTAGE COMPLETION METHOD OR PROJECT COMPLETION METHOD AND BOTH METHODS ARE HAVING ITS OWN ADVANTAGE AND DISAD VANTAGE IN ITS WORKING. SINCE THE ASSESSEE IS CONSISTENTLY FOLLOWI NG THE PROJECT COMPLETION METHOD WITH CERTAIN MODIFICATIONS (AS ST ATED THE ASSESSEE IS RECOGNIZING INCOME ON COMPLETION OF THE BUILDING ITSELF AND NOT COMPLETION OF PROJECT AS SUCH) IN OUR VIEW THERE IS NO POSTPONEMENT OF INCOME IN THIS METHOD OF ACCOUNTING . MOREOVER AS RIGHTLY POINTED OUT BY THE CIT (A) THE ASSESSING O FFICER HAS TAKEN ENTIRE ADVANCES RECEIVED FROM THE CUSTOMERS IN THE PROJECT SARASWATI & RAKHI WHICH WAS DELAYED DUE TO LEGAL PR OCEEDINGS AS INCOME. THERE IS NO JUSTIFICATION FOR ASSESSING OFF ICERS ACTION IN IGNORING EXPENDITURE OF ` 17 64 96 740/- AS ON 31.3.2007 AGAINST THE TOTAL ADVANCES RECEIVED OF ` 15 33 68 950/-. HOW PERCENTAGE COMPLETION METHOD COMES TO THE RESCUE OF ASSESSING OFFICER IS NOT EXPLAINED WHEN THE ASSESSEE HAS NOT EVEN RECOVERED THE AMOUNT INCURRED IN THE PROJECT. SIMILAR WAY IN THE CASE OF BEAU MONDE PROJECT ALSO THE TOTAL COST INCURRED ON THE PROJECT WAS TO THE TUNE OF ` 574.00 CRORES AND TOTAL AGREEMENT VALUE OF 57% OF T HE FLATS RECEIVED WAS TO THE TUNE OF 261.00 CRORES. THEREFOR E CORRECT WORKING OF PROFIT AS PER PERCENTAGE COMPLETION METH OD SHOULD RESULT IN LOSS BUT NOT INCOME AS WORKED BY AO. LOOKING AT EITHER WAY THERE IS NO JUSTIFICATION FOR METHOD OF ACCOUNTING ADOPTED BY AO. 11. NOW COMING TO THE LEGAL PRINCIPLES IT IS ESTABLISH ED LEGAL POSITION THAT AN ASSESSEE CAN FOLLOW ANY RECOGNIZED METHOD OF ACCOUNTING ON THE CONDITION THAT THE SAME METHOD IS TO BE FOLLOWED CONSISTENTLY. THE ASSESSEE IN THIS CASE HAS FOLLOWE D PROJECT COMPLETION METHOD WHICH IS ONE OF THE PRESCRIBED ME THODS. THE ASSESSEE WAS OFFERING INCOMES ON THE COMPLETION OF BUILDING ITSELF WHETHER THE FLATS ARE SOLD OR NOT COMPLETELY. WE DO NOT FIND ANY ITA NO.3777 OF 2010 & CO.53 OF 2011 SHETH DEVELOPERS P LTD MUMBAI PAGE 7 OF 9 REASON TO DISTURB THE ASSESSEES METHOD OF ACCOUNTI NG WHICH WAS BEING CONSISTENTLY FOLLOWED FROM ASSESSMENT YEAR 20 00-01 ONWARDS AND WAS ALSO ACCEPTED IN OTHER YEARS. 12. IN THE CASE OF PRESTIGE ESTATE PROJECTS LTD 129 ITD 242 BANG. THE FACTS INDICATE THAT THE ASSESSEE WAS TRANSFERRI NG UNDIVIDED SHARE OF PROPERTY TO THE BUYERS AND THEN ENTERING I NTO DEVELOPMENT AGREEMENT SEPARATELY IN WHICH SIGNIFICANT RISK WAS TRANSFERRED TO THE BUYERS. IN THOSE CIRCUMSTANCES THE ASSESSING O FFICER WAS HELD TO BE JUSTIFIED IN HOLDING THE REVENUE FROM PROJECT S ON THE JOINT DEVELOPMENT AGREEMENT WAS TO BE ASSESSED ON THE BAS IS OF PERCENTAGE COMPLETION METHOD. HOWEVER IN THIS CASE THE ASSESSEE WAS NOT TRANSFERRING EITHER PROPERTY OR THE RISK TO THE BUYERS. THE BUYER HAS AN OPTION TO WITHDRAW FROM THE AGREEMENT ALSO TILL APARTMENT IS HANDED OVER. IN VIEW OF THIS RATIO OF THE ABOVE DECISION DO NOT APPLY AS FACTS ARE ENTIRELY DIFFERENT. 13. WITH REFERENCE TO THE DECISION OF ITAT IN THE CASE OF DESAI REAL ESTATE DEVELOPERS VS. INCOME TAX OFFICER 44 SO T 7 THE DECISION IN FACT SUPPORT ASSESSEES CASE. IN THAT C ASE THE ASSESSEE EVEN THOUGH COMPLETED THE PROJECT HAVE NOT OFFERED INCOMES ON THE REASON THAT THE PROJECT WAS NOT COMPLETED PENDING E XECUTION OF FINAL SALE. THE ASSESSING OFFICER DID NOT ACCEPT THE STAN D AS THE PROJECT WAS SUBSTANTIALLY COMPLETED AND EVEN THE POSSESSION OF FLATS AND SHOPS WERE HANDED OVER TO THE PURCHASER AFTER OBTA INING OCCUPANCY CERTIFICATE. ON THOSE FACTS THE ITAT AC CEPTED THE ASSESSING OFFICERS STAND THAT INCOME HAS ACCRUED W HEN PROJECT WAS COMPLETED. 14. IN THE CASE OF RAMNIKLAL NATHWANI 28 SOT 276 ALSO T HE FACTS ARE SIMILAR TO THE EARLIER CASE WHEREIN THE ASSESSE E HAVING COMPLETED THE PROJECT AND NOT INCURRING ANY OTHER E XPENDITURE IN RESPECT OF COMPLETED PROJECT DURING THE PERIOD DID NOT OFFER ANY INCOME. THE ASSESSING OFFICER HELD THAT THE PROJECT WAS COMPLETED AND INCOME WAS ESTIMATED BY ADOPTING PERCENTAGE COM PLETION ITA NO.3777 OF 2010 & CO.53 OF 2011 SHETH DEVELOPERS P LTD MUMBAI PAGE 8 OF 9 METHOD. HOWEVER THE FACT WAS THAT THE PROJECT WAS COMPLETED IN ALL RESPECTS AND NO FURTHER EXPENDITURE WAS INCURRED IN SUBSEQUENT YEARS. THEREFORE ON GIVEN FACTS THE ITAT ACCEPTED THAT THE ASSESSING OFFICER WAS JUSTIFIED IN TAXING THE AMOUN T IN THE YEAR UNDER CONSIDERATION. THEREFORE THIS DECISION ALSO DOES NOT SUPPORT THE CASE OF THE REVENUE. 15. IN THE CASE OF CIT VS. BILAHARI INVESTMENT (P) LTD 299 ITR 1 THE HON'BLE SUPREME COURT HAS HELD AS UNDER:- EVERY ASSESSEE IS ENTITLED TO ARRANGE ITS AFFAIRS AND FOLLOW THE METHOD OF ACCOUNTING WHICH THE DEPARTME NT HAS EARLIER ACCEPTED. IT IS ONLY IN THOSE CASES WHE RE THE DEPARTMENT RECORDS A FINDING THAT THE METHOD ADOPTE D BY THE ASSESSEE RESULTS IN DISTORTION OF PROFITS TH AT THE DEPARTMENT CAN INSIST ON SUBSTITUTION OF THE EXISTI NG METHOD . FURTHER VIDE PARA 20 OF THE ABOVE JUDGMENT THE HON' BLE SUPREME COURT ALSO OBSERVED AS UNDER: AS STATED ABOVE WE ARE CONCERNED WITH THE ASSESSMENT YEARS 1991-92 TO 1997-98. IN THE PAST T HE DEPARTMENT HAD ACCEPTED THE COMPLETED CONTRACT METH OD AND BECAUSE OF SUCH ACCEPTANCE THE ASSESSEE IN TH E CASES HAVE FOLLOWED THE SAME METHOD OF ACCOUNTING PARTICULARLY IN THE CONTEXT OF CHIT DISCOUNT. EVERY ASSESSEE IS ENTITLED TO ARRANGE ITS AFFAIRS AND FOL LOW THE METHOD OF ACCOUNTING WHICH THE DEPARTMENT HAS EARL IER ACCEPTED. IT IS ONLY IN THOSE CASES WHERE THE DEPAR TMENT RECORDS A FINDING THAT THE METHOD ADOPTED BY THE ASSESSEE RESULTS IN DISTORTION OF PROFITS THE DEPA RTMENT CAN INSIST ON SUBSTITUTION OF THE EXISTING METHOD. FURTHER IN THE PRESENT CASES WE FIND FROM THE VARIOUS STATEMENTS PRODUCED BEFORE US THAT THE ENTIRE EXER CISE ARISING OUT OF CHANGE OF METHOD FROM THE COMPLETED CONTRACT METHOD TO DEFERRED REVENUE EXPENDITURE IS REVENUE NEUTRAL. THEREFORE WE DO NOT WISH TO INTER FERE WITH THE IMPUGNED JUDGMENT OF THE HIGH COURT. THE ABOVE PROVISIONS EQUALLY APPLY TO THE FACTS OF THE ASSESSEE. THE DEPARTMENT HAS ACCEPTED THE PROJECT COMPLETION METH OD IN THE PAST AND ALSO IN THE LATER YEARS AND ONLY IN THIS YEAR T HE METHOD WAS DISTURBED. EVEN OTHERWISE THE ASSESSING OFFICER HAS NOT JUSTIFIED HOW THE ENTIRE ADVANCES RECEIVED CAN BE TREATED AS INCOME WITHOUT ITA NO.3777 OF 2010 & CO.53 OF 2011 SHETH DEVELOPERS P LTD MUMBAI PAGE 9 OF 9 SETTING OFF THE COST OF THE PROJECT. IT IS ALSO DEM ONSTRATED THAT THE ASSESSEE HAS OFFERED THE INCOMES IN THE LATER YEARS ON THE METHOD OF ACCOUNTING CONSISTENTLY BEING FOLLOWED AND THE REVE NUE HAS ALSO ACCEPTED THE INCOME FROM GOLDEN WILLOWS PROJECT IN THE IMMEDIATELY NEXT ASSESSMENT YEAR 2008-09. FOR THESE REASONS WE DO NOT FIND ANY REASON TO CONSIDER THE GROUNDS RAIS ED BY THE REVENUE. THE ORDER OF THE CIT (A) IS UPHELD AND THE GROUNDS ARE ACCORDINGLY REJECTED. 16. THE CROSS OBJECTION IS IN SUPPORT OF CIT (A) ORDER WHICH DOES NOT REQUIRE ANY ADJUDICATION AS THE ORDER OF CIT(A) WAS SUSTAINED. ACCORDINGLY THE CROSS OBJECTION FILED BY THE ASSES SEE IS TREATED AS ACADEMIC IN NATURE AND DISMISSED. 17. IN THE RESULT REVENUES APPEAL AND C.O ARE DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH DECEMBER 2011. SD/- SD/- (D.K.AGARWAL) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED 16 TH DECEMBER 2011. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR J BENCH ITAT MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES MUMBAI