The ACIT, Circle-2(2),, Baroda v. Vraj Developers, Baroda

ITA 19/AHD/2008 | 2004-2005
Pronouncement Date: 14-05-2010 | Result: Dismissed

Appeal Details

RSA Number 1920514 RSA 2008
Assessee PAN AABFV2560P
Bench Ahmedabad
Appeal Number ITA 19/AHD/2008
Duration Of Justice 2 year(s) 4 month(s) 11 day(s)
Appellant The ACIT, Circle-2(2),, Baroda
Respondent Vraj Developers, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 14-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 14-05-2010
Date Of Final Hearing 12-05-2010
Next Hearing Date 12-05-2010
Assessment Year 2004-2005
Appeal Filed On 02-01-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI N.S. SAINI ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH JUDICIAL MEMBER DATE OF HEARING: 12.5.10 DRAFTED ON:12.05.2010 ITA NO.19/AHD/2008 WITH CROSS OBJECTION NO.59/AHD/2008 ASSESSMENT YEAR : 2004-2005 THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-2(2) 4 TH FLOOR AAYAKAR BHAVAN RACE COURSE CIRCLE BARODA. VS. M/S. VRAJ DEVELOPERS 32. PARSHOTTAM NAGAR BPC ROAD NEAR URMI CROSS ROAD BARODA. PAN/GIR NO. : AABFV2560P (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI DR. JAYANT JAVERI SR. D.R. RESPONDENT BY: SHRI VARTIK CHOKSI C.A. O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS O BJECTION FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD.CIT(APPEAL S)-II BARODA DATED 25.10.2007. 2. GROUND OF THE APPEAL READS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS .36 77 819/- MADE ON THE BASIS OF PERCENTAGE OF COMPLETION METHOD AS PER REVISED ACCOUNTING STANDARD-7 (AS-7) WITH THE OBSERVATION THAT AS-7 DOES NOT APPLY TO THE ASSESSEE'S CASE WHO IS A BUILDER A ND NOT A CONSTRUCTION CONTRACTOR WITHOUT TAKING NOTE OF PAR A.1 OF AS-7 CLEARLY ENJOINING THAT THIS ACCOUNTING STATEMENT AL SO APPLIES TO ENTERPRISES UNDERTAKING CONSTRUCTION ACTIVITIES 'NO T AS CONTRACTORS - 2 - BUT ON THEIR OWN AS A VENTURE OF COMMERCIAL NATURE WHERE THE ENTERPRISE HAS ENTERED INTO AGREEMENT FOR SALE' AS WAS THE CASE HERE. 2. THE LD. CIT(A) ERRED IN HOLDING THAT IT IS A S-9 THAT IS APPLICABLE TO THE CASE OF THE ASSESSEE WITHOUT APP RECIATING THAT AS- 9 DEALS WITH REVENUE RECOGNITION IN GENERAL AND PAR A 2 OF AS-9 SPECIFICALLY EXCLUDES CONSTRUCTION CONTRACTORS (INC LUDING BUILDERS SELLING THE UNITS BY AGREEMENT FOR SALE) AND THAT IN VIEW OF PECULIAR NATURE OF THE PRODUCT IN THE CASE OF BUILDERS INVOL VING CONSIDERABLE GESTATION PERIOD GENERAL RULES REGARDING SALE OF G OODS CANNOT APPLY. 3. THE LD CIT(A) FAILED TO APPRECIATE THAT IN THE CASE OF BUILDERS EACH FRACTION OF WORK COMPLETED IS EMBEDD ED WITH PROFITS AND HENCE THE REVENUE IS RECOGNIZED WITH REFERENCE TO THE STAGE OF COMPLETION REACHED AT THE END OF THE ACCOUNTING YEA R DETERMINED AS THE PROPORTION OF COSTS INCURRED TO THE ESTIMATED T OTAL COSTS AS PER PARA 9.2 OF AS-7 WHICH IS IN CONFORMITY WITH THE P RINCIPLES OF LAW REGARDING ACCRUAL WHEN APPLIED TO THE SPECIFIC FACT S OF BUILDERS. 4. THE LD. CIT(A) FAILED TO APPRECIATE THAT CHA RGING SECTION 4 OF THE INCOME-TAX ACT TREATS PREVIOUS YEAR AS THE UNIT OF CHARGE AND HENCE PROFIT FROM ANY BUSINESS VENTURE HAS TO BE TA XED IN EACH PREVIOUS YEAR IRRESPECTIVE OF THE SPAN OF ACTIVITY SPREADING BEYOND THE PREVIOUS YEAR AND THE PROFIT OF ONE YEAR CANNOT BE POSTPONED TO THE SUBSEQUENT YEAR(S) AS SETTLED IN THE CASE OF CI T VS. BRITISH PAINTS INDIA LTD. 168 ITR 44 (SC)AND AS LAID DOWN I N THE SPECIFIC CONTEXT OF BUILDERS IN THE FOLLOWING DECISIONS: (I) SUKHDEVJALAN VS. CIT 26 ITR 617(PAL) (II) TIRATHRAM AHUJA PVT. LTD. VS. CIT 103 ITR 15( DEL) CONFIRMED IN 186 ITR 428 (SC) (III) CIT VS. NANDRAM HUNTRAM 103 ITR 433 (ORISSA) (IV) UTTAM SINGH DUGGAL & CO. PVT. LTD. VS CIT 127 ITR 21 (DEL). 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS OBSERVED AS UNDER:- 3. THE SECOND GROUND OF APPEAL IS AGAINST ADDITION OF RS.36 77 819/- ON ACCOUNT OF WORK-IN-PROGRESS. - 3 - 3.1. THE ISSUE IS DISCUSSED IN DETAIL AT PARA-3 OF THE ASSESSMENT WHICH IS REPRODUCED HERE BELOW ; '3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND BY THE ASSESSING OFFICER THAT THE APPELLANT HAS FOL LOWED WORK COMPLETION METHOD. HOWEVER AS PER AS-7 ACCOUNTING PRINCIPALS REFERS ONLY PERCENTAGE COMPLETION METHOD TO BE FOLL OWED IN SUCH TYPE OF CONSTRUCTION CONTRACT ACTIVITIES. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS VIDE QUESTIONNAIRE DATED 14 .08.2006 THE ASSESSEE WAS ASKED TO FURNISH THE COMPLETE DETAILS OF WORK-IN- PROGRESS. IN RESPONSE VIDE LETTER DATED 12.9.2006 THE ASSESSEE HAS SUBMITTED ONLY THAT CLOSING WORK-IN-PROGRESS IS RS. 2 04 41 717/-. THE ASSESSEE HAS NOT SUBMITTED ANY REPLY IN RESPECT OF THE FACT THAT WHETHER IT IS FOLLOWING THE PERCENTAGE COMPLETION M ETHOD OR NOT. THE ASSESSEE HAS SHOWN WORK-IN-PROGRESS AMOUNT TO RS.2 04 41 717/- AND IN BALANCE SHEET THE ASSES SEE HAS SHOWN ADVANCES FROM CUSTOMERS OF RS.23 25 223/-. IN THIS CASE THE ASSESSEE HAS ENTERED INTO AGREEMENT W ITH VARIOUS BUYERS AND ALSO COLLECTED PROPORTIONATE SALE CONSIDERATION AS ADVANCE AMOUNTING TO RS.23 25 223/- WHICH CORRESPONDS TO TH E WORK DONE DURING THE YEAR UNDER CONSIDERATION AMOUNTING TO RS .2 04 41 717/- SHOWN AS WORK-IN-PROGRESS. 3.1. INSTITUTES OF CHARTERED ACCOUNTANTS OF INDIA H AVE ALSO WITHDRAWN THE PROJECT COMPLETION METHOD FROM THE AC COUNTING STANDARDS LAID DOWN BY IT. THIS ALSO PROVES THAT TH E PROJECT COMPLETION METHOD WAS NOT CORRECT METHOD FOR RECOGN ITION OF THE REVENUE. IT IS SETTLED LEGAL POSITION THAT THE INCO ME ACCRUED ON DAY TO DAY BASIS SIMULTANEOUSLY WHICH THE PROGRESS IN T HE WORK DONE. THIS VIEW GETS SUPPORT FROM THE RATIO LAID DOWN BY THE HON'BLE COURT IN THE CASE OF TIRATHRAM AHUJA PVT. LTD. VS C IT 103 ITR 15. THUS IT IS CLEAR THAT WHAT THE ASSESSEE HAS SHOWN BOOKING ADVANCES ARE IN FACT THE PART PAYMENTS FOR THE UNITS PROPOSE D TO BE SOLD TO THE UNIT BUYERS. IN VIEW OF THE ABOVE FACTS AND CIRCUMS TANCES INCOME IS BEING ASSESSED ON THE BASIS OF PERCENTAGE COMPLE TION METHOD. THE OPENING STOCK OF WORK-IN-PROGRESS IS AT RS.22 4 3 700/- AND THE CLOSING STOCK OF WORK-IN-PROGRESS IS RS.2 04 41 717 /-. THE VALUE OF WORK-IN-PROGRESS COMES TO RS.L 81 98 017/- AFTER RE DUCING THE OPENING STOCK OF WORK-IN-PROGRESS FROM CLOSING OF W ORK-IN- PROGRESS.' 3.2. IT IS CONTENDED BY THE LD.COUNSEL THAT THE APP ELLANT IS ENGAGED IN THE CONSTRUCTION CONTRACT AND THEREFORE THE ASSE SSING OFFICER REACHED A CONCLUSION THAT THE INCOME SHOULD BE ASSE SSED ON THE - 4 - BASIS OF PERCENTAGE COMPLETION METHOD. IT IS ALSO C ONTENDED THAT THE ASSESSING OFFICER HAS NEITHER ISSUED ANY SHOW CAUSE NOTICE NOR EVEN ASKED ANY QUESTION REGARDING THE VALUATION OF WORK-IN- PROGRESS AND MADE ADDITION WITHOUT GIVING ANY OPPOR TUNITY BEING HEARD. THE APPELLANT FOLLOWS MERCANTILE METHOD OF A CCOUNTING AND FAIR REVENUE RECOGNITION. APPELLANT HAS BEEN CONSEN TINGLY RECOGNIZING REVENUE FROM VARIOUS PROJECTS UNDERTAKE N BY IT IN THE YEAR OF SALE OR WHEN POSSESSION OF UNIT HAS BEEN TR ANSFERRED IN FAVOUR OF BUYER OF PROPERTY AND THE ASSESSING OFFIC ER HAS WRONGLY ASSUMED THAT APPELLANT HAS BEEN FOLLOWING PROJECT C OMPLETION METHOD. IT IS STATED THAT UNDER SUCH PROJECT COMPLE TION ENTIRE COST IS CARRIED FORWARD AS CLOSING STOCK TILL THE DATE O F COMPLETION OF ENTIRE PROJECT AND REVENUE IS RECOGNIZED WHEN THE P ROJECT IS COMPLETED WHEREAS IN CASE OF APPELLANT IT IS NOT SO AS IT HAS NOT BEEN RECOGNIZING REVENUE ON COMPLETION OF ENTIRE PROJECT BUT SHOWING INCOME IN THE YEAR IN WHICH POSSESSION OF ANY UNIT IS GIVEN TO BUYER IRRESPECTIVE OF THE FACT WHETHER ENTIRE PROJECT HAS BEEN COMPLETED OR NOT. IT IS FURTHER STATED THAT IT HAS UNDERTAKEN TWO PRO JECTS VIZ SAKAR II AND SPRING VIEW DURING THE YEAR UNDER CONSIDERATION . AS SAKAR II WAS COMPLETED DURING THE YEAR IT HAS RECOGNIZED EN TIRE INCOME DURING THE YEAR UNDER CONSIDERATION IN PROFIT & LOS S ACCOUNT FILED ALONG WITH RETURN OF INCOME. AS PROJECT BEING SPRIN G VIEW HAS JUST COMMENCED IN A.Y.2004-2005 AND INITIAL WORK HAS BEE N COMPLETED ENTIRE COST RELATING TO SAID PROJECT HAS BEEN SHOWN AS PART OF WORK IN PROGRESS AND REVENUE HAS BEEN RECOG NIZED IN SUBSEQUENT ASSESSMENT YEARS IN THE YEAR OF SALE OR WHEN POSSESSION HAS BEEN GIVEN TO BUYER. THE APPELLANT FURTHER SUBMITTED THAT THE APPELLANT IS BUILDER AND IS ENGAGED IN THE CONSTRUCTION AND SALE OF IMMOVABLE P ROPERTIES AND THEREFORE FOR RECOGNITION OF REVENUE THE PROVISIO NS OF AS-9 ON 'REVENUE RECOGNITION' ISSUED BY ICAI SHALL BE APPLI CABLE. IT HAS RELIED ON PARA-11 OF THE SAID AS. THE APPELLANT ALS O STATED THAT IT HAS BEEN FOLLOWING AFORESAID METHOD OF ACCOUNTING O N YEAR TO YEAR BASIS AND SAME HAS NOT BEEN DISPUTED BY DEPARTMENT IN EARLIER YEAR. WITHOUT PREJUDICE TO ABOVE APPELLANT FURTHER STATE D THAT IT IS SETTLED LAW THAT THE ASSESSES HAS A RIGHT TO VALUE THE CLOSING STOCK OF WORK IN PROGRESS AT COST PRICE OR MARKET PRICE WHIC HEVER IS LOWER. FURTHER THE APPELLANT HAS BEEN CONSISTENTLY FOLLOW ING THE SAME METHOD OF ACCOUNTING AND METHOD OF VALUATION. THE A SSESSING - 5 - OFFICER HAS THEREFORE AN ERRONEOUS CONCEPTION OR A MISTAKEN NOTION IN ESTIMATING THE VALUE OF CLOSING STOCK OF WORK IN PROGRESS AND APPLYING GROSS PROFIT RATIO. APPELLANT'S FACTUA L SUBMISSIONS IS QUOTED BELOW : '1.6 THE APPELLANT FURTHER STATES THAT WHILE MAKIN G AFORESAID ADDITION THE ASSESSING OFFICER HAS HEAVI LY RELIED ON REVISED ACCOUNTING STANDARD 7 ISSUED BY ICAI AND ASSUMED THAT AS ASSESSEE IS ENGAGED IN THE CONSTRUCTION CONTRACT AND THEREFORE REACHED A CONCLUSION THAT THE INCOME SHOULD BE ASSESSED ON TH E BASIS OF PERCENTAGE COMPLETION METHOD. IN THIS CONNED ION APPELLANT STATE THAT IT IS NOT ENGAGED IN THE WORK OF CARRYING OUT CONSTRUCTION CONTRACTS. IN FACT IT IS A BUILDER AND IS ENGAGED IN CONSTRUCTIO N AND SALE OF IMMOVABLE PROPERTIES HENCE REVISED ACCOUNTING STANDARD 7 IS NOT APPLICABLE IN CASE OF IT. IN THIS BACKGROUND IT MAY BE IMPORTANT TO CONSIDER THE AS-7 ON WHICH THE ASSESSING OFFICER HAS HEAVILY RELIED ON FOR MAKING THE ADDITION. THE OBJECTIVE OF THE SAID AS-7 IS AS UNDER : 'THE OBJECTIVE OF THIS STATEMENT IS TO PRESCRIBE THE ACCOUNTING TREATMENT OF REVENUE AND COSTS ASSOCIATED WITH CONSTRUCTION CONTRACTS. ...............................' FURTHER PARAGRAPH-2 OF THE SAID AS- 7 DEFINES THE CONSTRUCTION CONTRACTS AS UNDER: 'A CONSTRUCTION CONTRACT IS A CONTRACT SPECIFICALLY NEGOTIATED FAR THE CONSTRUCTION OF AN ASSET OR A COMBINATION OF ASSETS THAT ARE CLOSELY INTERRELATED OR INTERDEPENDENT IN TERMS OF THEIR DESIGN TECHNOLOGY AND FUNCTION OR THEIR ULTIMATE PURPOSE OR USE.' THUS IN CASE OF CONSTRUCTION CONTRACT THE CONTRAC TOR CARRY OUT THE CONSTRUCTION WORK ON BEHALF OF THE OT HER PERSON WHO HAS AWARDED THE SAID CONTRACT TO HIM. HOWEVER IN CASE OF BUILDERS THEY BUILD THE IMMOVABLE PROPERTIES FOR SALE TO CUSTOMERS. THEREFO RE IN SUCH CASES THERE IS NO CONSTRUCTION CONTRACT. SI NCE THE APPELLANT IS A BUILDER THE AS-7 IS NOT APPLICA BLE IN THE CASE OF THE ASSESSEE AND IT IS NOT BOUND TO FOL LOW PERCENTAGE COMPLETION METHOD OF ACCOUNTING. THE ADDITION MADE BY ASSESSING OFFICER FOLLOWING - 6 - PERCENTAGE COMPLETION METHOD OF ACCOUNTING IS WITHOUT ANY HAS AND REQUIRES TO BE DELETED. 1.7 THE APPELLANT STATES THAT WHILE MAKING AFORESAI D ADDITION THE ASSESSING OFFICER HAS RELIED UPON THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF TIR ATH RAM AHUJA PVT. LTD V. CIT [1976] 103-ITR-J5 (DEL). HOWEVER IT MAY BE POINTED OUT THAT THE SAID DECISI ON THE COURT HAS HELD AS UNDER: 'IN THE CASE OF CONTRACT PROFITS CAN HE ESTIMATED ON THE BASIS OF RECEIPTS IN EACH YEAR AND ONE NEED NOT WAIF TILL THE COMPLETION OF CONTRACT' THUS THE ABOVE DECISION IS ALSO GIVEN IN RESPECT O F PROFIT FROM A CONTRACT. AS THE APPELLANT IS NOT ENGAGED IN THE CONTRACT WORK BUT IN BUSINESS OF CONSTRUCTION THE SAID DECISION IS NOT APPLICABLE IN THE CASE OF THE ASSES SEE. IT IS STATED THAT THE FACTS IN THAT CASE WERE THAT THE AS SESSES HAD ENTERED INTO A CONTRACT FOR CONSTRUCTION OF THE BRI DGE AND IT HAD SPENT RS.13 43 131 ON THE SAID WORK WHICH HAD T O HE ABANDONED DUE TO OUTBREAK OF WAR BETWEEN INDIA AND PAKISTAN AND IT RECEIVED ONLY RS.11 11 1000 FROM TH E STATE OF JAMMU & KASHMIR. THE TRIBUNAL IN THE AFORESAID CASE FOUND THAT THE SAID SUM WAS THE INCOME OF THE ASSESSEE AS THE SAME WAS NOT REPAYABLE. FURTHER THE COMPANY WAS NOT IN A POSITION AT THE END OF THE ACCOUNTING PERIOD TO ARR IVE AT THE WORK-IN-PROGRESS ALSO IN VIEW OF THE PECULIAR FACTS . IN WAS IN THIS CONTEXT THAT THE HONORABLE HIGH COURT MADE THE OBSERVATIONS AUTHORIZING THE ESTIMATION OF PROFITS OF EACH YEAR EVEN THOUGH THE CONTRACT WAS NOT COMPLETED. WH EREAS IN THE CASE BEFORE US THE AMOUNTS RECEIVED BY THE ASS ESSEE ARE AS ADVANCE AND SAME WERE REPAYABLE IF SALE DEED IS NOT EXECUTED. IT IS FURTHER REITERATED THAT APPELLANT H AS NOT BEEN FOLLOWING PROJECT COMPLETION METHOD OF ACCOUNTING. EVEN IN CASE OF APPELLANT VALUE OF WORK IN PROGRESS IS CLE ARLY DETERMINABLE WHICH /WAS NOT IN CASE OF DELHI HIGH C OURT HENCE DECISION RELIED UPON BY AO IS NOT APPLICABLE TO PRESENT CASE. 1.8 THE APPELLANT STATES THAT AO HAS APPLIED % OF GROSS PROFIT ON WORK IN PROGRESS AS ASSESSEE HAS RECEIVED ADVANCE SALES CONSIDERATION FOR RS.23 25 223 DURING THE YEAR. - 7 - IN THIS CONNECTION APPELLANT STATES PROJECT ' SPRI NG VIEW' HAS SCHEME OF 25 DUPLEX AND CLOSING WORK IN PROGRESS OF RS.2 04 41 717 COMPRISING OF LAND COST AT RS.1 72 07 671 AND MATERIAL & OTHER ALLIED COST FOR RS.32 34 036. IT IS STATED THAT AFORESAID PROJECT I S AT INITIAL STAGE NO MAJOR WORK HAS BEEN CARRIED OUT A ND MAJORITY PORTION OF CLOSING WORK IN PROGRESS BEING 84.18% IS OF LAND COST THEREFORE AO HAS ERRED IN APPLYING GROSS PROFIT RATIO ON ENTIRE AMOUNT OF WOR K IN PROGRESS AS SIGNIFICANT CONSTRUCTION WORK IS NOT INCURRED DURING THE YEAR. IT IS STATED THAT NO HYPOTHETICAL PROFIT CAN BE EARNED BY APPELLANT ONLY ON PURCHASE OF LAND OF PROJECT AS COMPLETION OF ENTIRE PROJECT COMES ON CONSTRUCTION OF HOUSING UNITS AND NOT ON PURCHASE OF LAND ONLY. APART FROM ABOVE APPELLANT STATES THAT IT CAN BE S EEN FROM FOLLOWING CHART THAT MAJOR COST RELATING TO PR OJECT BEING PURCHASE OF BUILDING MATERIAL LABOUR COST ET C. EXCLUDING LAND HAS BEEN INCURRED IN SUBSEQUENT ASSESSMENT YEARS AND NOT IN CURRENT ASSESSMENT YEAR AND WHICH WILL FURTHER PROVE THAT NO SUBSTANTIAL CONSTRUCTION HAS BEEN CARRIED OUT DURING THE YEAR H ENCE NO ESTIMATION OF PROFIT CAN BE MADE BY APPLYING GRO SS PROFIT ON CLOSING WORK IN PROGRESS AS SUBSTANTIAL W ORK RELATING TO CONSTRUCTION HAS BEEN CARRIED OUT IN A. Y. 2005-2006 AND 2006-2007. PARTICULARS OF MAJOR COST COST INCURRED IN A.Y. 2004- 2005 % OF TOTAL COST COST INCURRED IN A.Y. 2005- 2006 % OF TOTAL COST COST INCURRED IN A.Y.. 2006- 2007 % OF TOTAL COST TOTAL BUILDING MATERIALS INCLUDING CEMENT IRON. KAPACHI ELECTRIC GOODS ETC. 14.10 074 12.00 85.96 719 73.20 17 37 530 14.80 1 17.44.323 LABOUR EXPENSES 4.29 540 4.58 57 52.553 61.30 32 02.517 34.12 93 84 610 SITE EXPNESES 11.473 4.33 1.57.153 50.41 95.893 36.26 2 64 519 TOTAL OF ABOVE 18 51 087 8.65 1 45 06 425 67.81 50 35 940 23.54 2 13 93 452 IT CAN BE SEEN FROM ABOVE DETAILS THAT ONLY 12% OF TOTAL MATERIAL COST. NEARLY 4.5% TO 5% OF TOTAL LABOUR & SITE EXPE NSES AND ONLY 8.65% OF TOTAL COST HAS BEEN INCURRED DURING THE YE AR AND BALANCE - 8 - EXPENDITURE HAS BEEN INCURRED IN SUBSEQUENT ASSESSM ENT YEARS WHICH CORRESPONDS TO INCOME SHOWN IN SUCH ASSESSMEN T YEAR AND PROVE (HAT ENTIRE PROJECT IS AT INITIAL STAGE IN CU RRENT YEAR. HENCE IT CANNOT BE CONCLUDED THAT PROJECT IS PARTIALLY COMPL ETED AND PROFIT HAS ACCRUED TO ASSESSEE. THE APPELLANT STATES THAT AS PER ACCOUNTING STANDARD 7 'CONSTRUCTION CONTRACTS' ISSU ED BY ICAI EVEN IN PERCENTAGE COMPLETION METHOD OF ACCOUNTING IT IS STATED THAT OUTCOME OF THE CONTRACT CANNOT BE ESTIMATED IN THE EARLY STAGE OF CONTRACT WHERE ONLY 20 TO 25% OF WORK IS COMPLET ED. SINCE MAJOR PORTION OF THE CONSTRUCTION WORK IS YET TO BE COMPLETED AND KEEPING IN VIEW THE CONTINGENCIES THAT MAY ARISE IN FUTURE IT IS CONSIDERED PRUDENT NOT TO RECOGNIZE ANY PROFIT AT S UCH EARLY STAGE. THE SAID ACCOUNTING STANDARD STATES THAT AT THE END OF THE FINANCIAL YEAR THE COST OF SUCH WORK COMPLETED WHICH IS LESS THAN 20% TO 25% IS CARRIED OVER AS WORK IN PROGRESS. THIS IS SO BECAUSE THAT THE ENTERPRISE WILL ATLEAST RECOVER THE CONTRACT COST I NCURRED. IT CAN BE SEEN FROM ABOVE FACTS THAT AS IN THE CASE OF APPELL ANT LESS THAT 10% OF TOTAL WORK HAS BEEN COMPLETED DURING THE YEAR E VEN AS 7 ISSUED BY ICAI DOES NOT REQUIRE ASSESSEE TO RECOGNIZE REVE NUE IN PERCENTAGE COMPLETION METHOD. IN VIEW OF SUCH FACTS THERE IS NO JUSTIFICATION IN ESTIMATING GROSS PROFIT ON CLOSING WORK IN PROGRESS NOR ESTIMATING P ROFIT ON ADVANCES AS ENTIRE PROJECT UNDERTAKEN BY APPELLANT IS AT EAR LY STAGE. APART FROM ABOVE APPELLANT SUBMITS (HE BREAK UP OF ADVANCES RECEIVED DURING THE YEAR FOR 9 DUPLEXES FOR RS.23 2 5 223 ITS SUBSEQUENT REALIZATIONS AND WHEN INCOME HAS BEEN OF FERED IN RETURN OF INCOME AS UNDER: DUPLEX NO AMOUNT RECEIVED IN A. Y. 2004- 2005 AS ADVANCE % OF TOTAL AGREED SALES VALUE AMOUNT RECEIVED IN A.Y. 2005-06 TOWARDS SALES VALUE AMOUNT RECEIVED IN A. Y. 2006- 07 TOWARDS SALES VALUE SALES VALUE 2 & 3 3 22.222 10.19 27 43.259 96 717 31 62.198 4 2 00 000 11.43 13.50 000 2 00 000 17 50 000 5 4 00 000 23.51 13 01 000 -- 17 01 000 15 1 50 001 7.24 16 22 000 3 00.000 20 72 000 21 & 22 4 00 000 13.92 17 62 379 35 000 28 76 000 23 3 53 000 20.17 13 96.999 --- 17 49 999 24 1.00 000 6.06 15 50 000 --- 16 50 000 25 4 00 000 16.80 19 80 650 - 23 80 650 TOTAL 23 25 223 13.95 1 37 06 287 6 31 717 1 66 63 227 - 9 - TOTAL SALE VALUE OF PROJECT 3 83 24 879 (OFFERED AS INCOME IN A.Y.05-06) 74 01 000 (OFFERED AS INCOME IN A. K 06-07) 4 57 25 354 WITH REGARDS TO OBSERVATION OF AO THAT ASSESSES HAS SHOWN HOOKING ADVANCES ARE PART PAYMENTS FOR THE UNITS PROPOSED T O BE SOLD IN UNIT BUYERS HENCE INCOME IS REQUIRED TO BE ASSESSED ON P ERCENTAGE COMPLETION METHOD OF ACCOUNT THE APPELLANT STATES THAT IT CAN BE SEEN FROM ABOVE FACT THAT BOOKING ADVANCES RECEIVED DURING THE YEAR ARE ONLY 13.95% OF TOTAL SALES CONSIDERATION O F SUCH DUPLEXES AND 5.09% OF TOTAL SALES CONSIDERATION OF PROJECT R EFERRED HEREIN ABOVE HENCE IT CANNOT BE SAID THAT ASSESSEE HAS REC EIVED MAJOR CONSIDERATION DURING THE YEAR AGAINST SALE OF AFORE SAID DUPLEXES LEADING TO ESTIMATION OF PROFIT ON CLOSING WORK IN PROGRESS. IT IS STATED THAT MAJORITY PORTION OF AMOUNT AGAINS T SALES OF AFORESAID 9 DUPLEXES HAD BEEN RECEIVED IN A. Y. 2005-2006 AND ASSESSEE COMPANY HAS RECOGNIZED ENTIRE AGREED SALES CONSIDER ATION AS INCOME IN THAT ASSESSMENT YEAR. IT IS FURTHER STATE D THAT THOUGH IT HAS NOT RECEIVED RS.6 31 717 DURING THE YEAR OUT OF TOT AL SALES CONSIDERATION OF RS.7 66 63 227 SAME HAS BEEN RECO GNIZED AS INCOME IN A.Y. 2005-2006 AS SALES DEEDS HAVE BEEN E XECUTED / SIGNIFICANT RISKS AND REWARDS OF OWNERSHIP OF SUCH UNITS HAVE BEEN TRANSFERRED TO BUYER IN THAT YEAR. APART FROM ABOVE THE APPELLANT STATES THAT AS IT I S ENGAGED IN THE BUSINESS OF CONSTRUCTION OF HOUSING PROJECT OR SALE OF LAND ANY ADVANCE MONEY RECEIVED TOWARDS SALE CANNOT BE CONSI DERED AS INCOME OR THE SAME CANNOT BE BASE FOR RECOGNIZING T HE INCOME UNLESS THE TITLE WAS EXTINGUISHED PROFIT ONLY ARIS ES ON TRANSFER OF TITLE AND ANY AMOUNT TOWARDS EARNEST MONEY OR ADVAN CE IN INSTALLMENTS COULD NEVER HE TAXED AS TAXABLE INCOM E IN THE YEAR OF RECEIPT AS DECIDED IN GUJARAT HIGH COURT). IT IS A LSO SETTLED POSITION IN LAW THAT AGREEMENT OF SALE AND SOME AMOUNT RECEI VED IN ADVANCE PROFIT WOULD ARISE ONLY ON COMPLETION OF S ALE SO IT IS ASSESSABLE IN THE YEAR OF SALE TOOK PLACE. THE ASSE SSEE DERIVES SUPPORT FROM THE HONOURABLE JURISDICTIONAL HIGH COU RT DECISION IN THE CASE OF CIT VS. MOTILAL C. PATEL (1988) 173 ITR 666 WHEREBY COURT HAS HELD AS UNDER: 'INCOME TAX INCOME -- ACCRUAL -- SALE TRANSACTION O F IMMOVABLE PROPERTY UNLESS COMPLETED BY MEANS OF - 10 - REGISTERED SALE DEED THERE CANNOT BE EARNING OF AN Y PROFIT ' IN VIEW OF AFORESAID FACTS APPELLANT STALES THAT E STIMATION OF GROSS PROFIT ON WORK IN PROGRESS IS NOT JUSTIFIED AND ADD ITION MADE BY AO REQUIRES TO BE DELETED. ' THE APPELLANT HAS ALSO RELIED ON THE FOLLOWING CASE LAWS ON THE ISSUE OF VALUATION OF CLOSING STOCK : 1 NANDI HOUSING (P) LTD. VS. DY. CIT (2003) 80 TTJ (BANG) 750 2 CHAINRUP SAMPATRAM VS CIT 24 ITR 481 3 ALA FIRM VS. CIT 4 CIT VS. DYNAVISIONS LIMITED 267 ITR 600 5 CIT V. ENGLISH ELECTRIC CO. OF INDIA LTD. [2000] 243 ITR 512 (MAD) 3.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE LD.CO UNSEL AND FACTS OF THE CASE. IT IS NOT IN DISPUTE THAT APPELLANT IS A DEVELOPER AND NOT A CONTRACTOR. ASSESSING OFFICER APPLIED ACCOUNTING ST ANDARD-7 IN THE CASE OF THE APPELLANT WHICH IS APPLICABLE FOR CONST RUCTION CONTRACTS. ASSESSING OFFICER NOTICED FROM THE BALANCE-SHEET TH AT THE WORK-IN- PROGRESS SHOWN IN BALANCE-SHEET IS RS.2 04 41 717/- AND ADVANCES RECEIVED FROM CUSTOMERS RS.23 25 223/-. HE CONCLUDE D THAT APPELLANT HAD FOLLOWED PROJECT COMPLETION METHOD WH ICH WAS NOT CORRECT FOR REVENUE. HE REFERRED THE DECISION OF TI RATHRAM AHUJA THAT INCOME ACCRUED ALONG WITH THE PROGRESS OF WORK DONE. HE APPLIED THE GROSS PROFIT RATE OF 20.21% TO THE WORK -IN-PROGRESS AND ADDITION WAS MADE. I HAVE GONE THROUGH THE REVISED ACCOUNTING STANDARD -7 AS-7 IS APPLICABLE FOR CONSTRUCTION CONTRACTS FOR CONSTR UCTION OF ASSETS SUCH AS BRIDGES BUILDINGS DAM PIPE-LINE ETC. IT IS CLEARLY MENTIONED THAT AS-7 APPLIES TO CONTRACTORS AND NOT TO ENTERPRISES THAT ARE CONSTRUCTING PROPERTIES ON THEIR OWN ACCOU NT I.E. BUILDERS AND DEVELOPERS. IT IS MENTIONED IN RESPONSE TO A QU ERY BY ICAI THAT IN THE CASE OF BUILDERS AND DEVELOPERS REVENUE RECO GNITION AND VALUATION OF INVENTORIES SHOULD BE IN ACCORDANCE WI TH AS-9 AND AS-2 RESPECTIVELY. THE ENTERPRISE SHOULD VALUE THE COMPLETED PROJECT AS INVENTORIES HELD FOR SALE IN THE ORDINAR Y COURSE OF BUSINESS. THE REVENUE SHOULD BE RECOGNITION IN ACCO RDANCE WITH AS-9 WHEN EACH FLAT WAS SOLD. IT IS FURTHER CLARIFI ED THAT AS-7 WOULD APPLY WHEN THEY ARE BEING CONSTRUCTED UNDER A CONTRACT ON BEHALF OF A THIRD PARTY. FROM THIS DISCUSSION IT I S CLEAR THAT AS-7 IS NOT APPLICABLE TO THE CASE OF APPELLANT AND THEREFO RE THE PERCENTAGE - 11 - OF GROSS PROFIT APPLIED BY THE ASSESSING OFFICER TO WORK-IN-PROGRESS IS NOT JUSTIFIED. WHAT METHOD THE APPELLANT IS FOLLOWING IS THAT SALE OF FLATS IS CONSIDERED AS REVENUE THE MOMENT THE POSSESSION OF FLAT IS GIVEN OR THE DOCUMENT IS EXECUTED. APPELLANT IS NOT FOLLOWIN G PROJECT COMPLETION METHOD. IN FACT OUT OF THE TOTAL WORK-I N-PROGRESS OF RS.2 04 41 717/- THE LAND COST IS RS.1 72 07 671/- AND MATERIAL AND OTHER COST ONLY RS.32 34 036/-. THIS CLEARLY SHOWS THAT THE ABOVE PROJECT IS AT AN EARLY STAGE. SUBSTANTIAL WORK HAS BEEN CARRIED OUT IN SUBSEQUENT YEARS AS MENTIONED BY THE APPELLANT ON T HE BASIS OF FINANCIAL STATEMENTS. IT IS FURTHER SUBMITTED BY TH E APPELLANT THAT DURING THE YEAR NOT EVEN 9% OF THE TOTAL WORK HAS B EEN COMPLETED. IN A.Y.2005-06 AND 2006-07 (ON THE BASIS OF P & L A CCOUNT AND BALANCE-SHEET SUBMITTED AS PER THE RECORDS OF ASSES SING OFFICER) APPELLANT HAS OFFERED SALES OF RS.3.83 CRORES AND R S.74 LACS RESPECTIVELY. EVEN WHEN THE SALE VALUE RECEIVED IN TOTAL WERE RS.1 66 63 227/-. FROM THIS IT IS CLEAR THAT APPEL LANT HAS OFFERED THE ENTIRE SALES CONSIDERATION THOUGH NOT RECEIVED AS REVENUE SINCE THE WORK HAS BEEN SUBSTANTIALLY DONE IN SUBSEQUENT YEAR S. FROM THE FACTS DISCUSSED ABOVE IT IS CLEAR THAT IN THE CASE OF THE APPELLANT AS-7 DOES NOT APPLY AND APPELLANT IS NOT FOLLOWING PROJECT COMPLETION METHOD. APPELLANT IS RECOGNISING THE REVENUE AS AND WHEN SALE DEEDS WERE EXECUTED OR POSSESSION OF THE FLATS WERE GIVEN. THE REVENUES WERE RECOGNISED IN SUBSEQUENT Y EAR EVEN WHEN THE SALE CONSIDERATION WAS NOT RECEIVED TO THE LARG E EXTENT. CONSIDERING ALL THESE FACTS I AM OF THE VIEW THAT THERE IS NO BASIS FOR ASSESSING OFFICER TO CONCLUDE THAT THE APPELLAN T IS FOLLOWING PROJECT COMPLETION METHOD AND AS-7 APPLIES IN ITS C ASE. SINCE CLOSING STOCK HAS TO BE VALUED AT COST AND CANNOT B E VALUED AT MARKET VALUE PROFIT ESTIMATED BY THE ASSESSING OFF ICER ON WORK-IN- PROGRESS IS WITHOUT ANY LEGAL BASIS. ON THE O THER HAND THE DECISION RELIED UPON BY THE APPELLANT SUPPOR TS THE VIEW THAT STOCK HAS TO BE VALUED AT COST. SINCE THE METHOD O F ACCOUNTING FOLLOWING BY APPELLANT IS AS PER PROPER ACCOUNTING STANDARD AND SUBSTANTIAL REVENUE HAS BEEN RECOGNISED IN SUBSEQUE NT YEAR FROM THIS PROJECT I DO NOT SEE ANY BASIS FOR ESTIMATING GROSS PROFIT ON THE WORK-IN-PROGRESS. ADDITION MADE BY THE ASSESSING OF FICER IS THEREFORE DELETED. - 12 - 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE UNDISPUTED FACTS OF THE C ASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BUILDER AND DEVELOPER . DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS SHOWN CLOSING WORK- IN-PROGRESS OF RS.2 04 41 717/- WHICH INCLUDED LAND VALUE OF RS.1 72 07 671/- AND CONSTRUCTION EXPENSES OF RS.32 34 036/-. ACCORDING TO THE LEARNED ASSESSING OFFICER AS PER ACCOUNTING STANDARD ISSUE D BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA (IN SHORT ICAI) AS -7 THE ASSESSEE SHOULD HAVE SHOWN INCOME ON THE BASIS OF PERCENTAGE COMPLE TION METHOD AND THUS THE ASSESSEE SHOULD HAVE OFFERED INCOME IN RE SPECT OF CLOSING WORK- IN-PROGRESS FOR TAXATION DURING THE YEAR UNDER CONS IDERATION. THUS THE LEARNED ASSESSING OFFICER ESTIMATED GROSS PROFIT ON THE CLOSING WORK-IN- PROGRESS @ 20.21% AND THEREBY ADDED RS.36 77 819/- TO THE INCOME OF THE ASSESSEE. THE LEARNED COMMISSIONER OF INCOME T AX(APPEALS) WAS OF THE VIEW THAT AS-7 WAS NOT APPLICABLE IN THE CASE O F THE ASSESSEE AS THE ASSESSEE WAS NOT A CONTRACTOR. FURTHER THE ASSESS EE FOLLOWED AS-2 ISSUED BY ICAI FOR VALUING CLOSING INVENTORY AND HAS FOLLO WED AS-9 FOR REVENUE RECOGNITION AND THEREFORE THERE WAS NO DEFECT IN T HE SYSTEM OF ACCOUNTING FOLLOWED BY THE ASSESSEE. HE THEREFORE DELETED THE ENTIRE ADDITION OF RS.36 77 819/- MADE BY THE LEARNED ASSESSING OFFICE R. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTE D THE ORDER OF THE LEARNED ASSESSING OFFICER AND THE LEARNED AUTHO RISED REPRESENTATIVE OF THE ASSESSEE SUPPORTED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND ALSO PLACED RELIANCE ON THE DECISION OF BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF NAND I HOUSING (P) LTD. VS. DCIT (2003) 80 TTJ 750 (BANG) WHEREIN TRIBUNAL FOLLOWED DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF KHODAY D ISTILLERS LTD. IN ITRC NOS. 19 TO 21 OF 1993. THUS IT IS OBSERVED THAT T HE ISSUE WHICH REQUIRES - 13 - OUR ADJUDICATION IS THAT THE INCOME IN THE INSTANT CASE IS TO BE COMPUTED AS PER SYSTEM OF ACCOUNTING FOLLOWED BY THE ASSESSEE O R AS PER ACCOUNTING STANDARD AS-7 FOR THE PURPOSE OF CHARGING OF INCOME TAX. WE FIND THAT THE ISSUE IS TO BE DECIDED IN ACCORDANCE WITH THE P ROVISIONS OF SECTION 145 OF THE INCOME TAX ACT 1961. A READING OF SECTION 1 45 OF THE ACT SHOWS THAT THE BUSINESS INCOME WHICH IS ASSESSABLE UNDER THE INCOME TAX ACT IS TO BE COMPUTED IN ACCORDANCE WITH THE CONSISTENT SY STEM OF ACCOUNTING FOLLOWED BY THE ASSESSEE UNLESS SUCH SYSTEM OF ACCO UNTING IS DEFECTIVE AND /OR FROM SUCH SYSTEM OF ACCOUNTING PROFIT CANN OT BE DEDUCED. THUS IN OUR CONSIDERED OPINION THE OPTION FOR CHOOSING THE SYSTEM OF ACCOUNT IS WITH THE ASSESSEE AND NOT WITH THE LEARNED ASSES SING OFFICER PROVIDED THE SYSTEM CHOSEN BY THE ASSESSEE IS CONSISTENTLY F OLLOWED BY HIM AND SUCH SYSTEM IS NOT A DEFECTIVE SYSTEM. IN OUR CONSI DERED VIEW PROVISIONS OF ACCOUNTING STANDARD-7 CANNOT OVERRIDE THE PROVI SIONS OF SECTION 145 IN SO FAR AS THE COMPUTATION OF BUSINESS INCOME UND ER THE INCOME TAX ACT FOR THE PURPOSE OF DETERMINING ASSESSABLE INCOM E IS CONCERNED. IN THE INSTANT CASE WE FIND THAT THE LEARNED ASSESSING OF FICER HAS BROUGHT NO MATERIAL ON RECORD TO SHOW THAT THE SYSTEM OF ACCOU NTING ADOPTED BY THE ASSESSEE FOR THE YEAR UNDER APPEAL WAS NOT CONSISTE NTLY FOLLOWED BY THE ASSESSEE OR THE SYSTEM ADOPTED WAS A DEFECTIVE SYST EM. IN OUR CONSIDERED VIEW EVEN A PROJECT COMPLETION METHOD IS ALSO A RE COGNISED SYSTEM OF ACCOUNTING. SIMPLY THE INSTITUTE OF CHARTERED ACCOU NTANTS OF INDIA HAS RECOMMENDED PERCENTAGE COMPLETION METHOD DOES NOT M EAN THAT PROJECT COMPLETION METHOD IF CONSISTENTLY FOLLOWED BY THE A SSESSEE THE SAME IS NOT A BONAFIDE SYSTEM OF ACCOUNTING OR THE SAME IS A DEFECTIVE SYSTEM OF ACCOUNTING. THE LEARNED COMMISSIONER OF INCOME TAX( APPEALS) HAS RECORDED A FINDING AFTER PERUSING THE ASSESSMENT RE CORDS OF THE SUBSEQUENT YEARS THAT THE ASSESSEE HAS OFFERED FOR TAXATION IT S INCOME IN THE SUBSEQUENT YEAR AS PER THE CONSISTENT SYSTEM OF ACC OUNTING FOLLOWED BY - 14 - THE ASSESSEE. THE LEARNED DEPARTMENTAL REPRESENTAT IVE COULD NOT POINT OUT ANY ERROR IN THE ABOVE FINDING OF THE LEARNED C OMMISSIONER OF INCOME TAX(APPEALS). IN VIEW OF THE ABOVE DISCUSSIO N WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND THEREFORE THE SAME IS UPHELD AND THE APPEAL OF THE REVENUE IS DISMISSED. 5. GROUNDS OF CROSS OBJECTION READS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE RES PONDENT'S CASE THE CIT(A) HAS ERRED IN UPHOLDING THE DISALLO WANCE OF RS.25 000 OUT OF LABOUR EXPENSES CARTING EXPENSES SITE EXPENSES AND FREIGHT AND OCTROI EXPENSES WHEN NO SU CH EXPENSES IS CALLED FOR. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE RES PONDENT'S CASE THE CIT(A) ERRED IN REJECTING THE ASSESSEE'S CLAIM THAT IT WAS NOT AT ALL A FIT CASE FOR LEVY OF INTEREST U/S. 234A 234B AND 234C OF THE IT. ACT. 6. AT THE TIME OF THE HEARING THE LEARNED AUTHORIS ED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSING T HE ABOVE GROUNDS OF CROSS OBJECTION TAKEN IN CROSS OBJECTION FILED BY T HE ASSESSEE . HENCE THEY ARE DISMISSED FOR WANT OF PROSECUTION. 7. IN THE RESULT THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE BOTH ARE DISMISSED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON THIS 14 TH DAY OF MAY 2010 SD/- SD/- ( MAHAVIR SINGH) ( N.S. SAINI ) JUDICIAL MEMBER ACCO UNTANT MEMBER AHMEDABAD; ON THIS 14 TH DAY OF MAY 2010 PARAS - 15 - COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-XIX AHMEDABAD. 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 12.05.2010 -------------- ----- 2. DRAFT PLACED BEFORE AUTHORITY 13.05.2010 ---- --------------- 3. DRAFT PROPOSED & PLACED 13.05.2010 ----------- -------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 13.05.2010 ---------- --------- JM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 13.05.2010 -------- ------------ 6. KEPT FOR PRONOUNCEMENT ON 14.05.2010 --------- ----------- 7. FILE SENT TO THE BENCH CLERK 14.05.2010 ------ -------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- --- ------------------