IN INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER ITA No.1217/PUN/2013 Assessment Year : 2009-10 Asst. Commissioner of Income Tax, Central Circle 1(3), Pune Appellant V/s. CPI Gera Realty India Pvt. Ltd., 200, Gera Plaza, Boat Club Road, Pune 411001 PAN : AACCG6818R Respondent Assessee by : Shri S.K. Tyagi & Shri Soniminde Revenue by : Ms. Nandita Kanchan / Date of Hearing : 18-09-2019 Date of Pronouncement : 24-09-2019 / ORDER PER S.S. VISWANETHRA RAVI, JM : This appeal by Revenue against order dated 08-03-2013 passed by Commissioner of Income Tax (Appeals)-1, Pune [ CIT(A) ] for assessment year 2009-10. 2. appellant revenue raised as many grounds of appeal, amongst which, only issue remains for our consideration, whether CIT(A) is justified in holding that method of accounting i.e. project completion 2 ITA No.1217/PUN/2013, A.Y. 2009-10 method to recognize followed by assessee is correct in facts and circumstances. 3. brief facts relating to issue in hand are that assessee is private limited company engaged in business of real estate development. During year under consideration, assessee has undertaken project consisting of nine buildings having 185 units and following mercantile system of accounting and accordingly profit and loss account is prepared. 4. During scrutiny proceedings, Assessing Officer issued show-cause notice to assessee seeking explanation why amount of Rs.13,47,24,228/- shown as sales should not be taxed. Assessing Officer by referring to Para 2 of Schedule 10 of Audit Report held that assessee is following percentage completion method and above said amount is to be recognized as income in year under consideration. assessee vide its submissions dated 28-12-2011 contended that assessee changed its method of revenue recognition from percentage completion to project completion from 31-03-2010. Assessing Officer did not find submissions of assessee acceptable and brought Rs.17,51,41,496/- to tax vide its order dated 30-12-2011 passed u/s. 143(3) of Act and determined income of assessee at Rs.16,61,41,815/- as against claim of loss of Rs.88,99,681/- in return of income. 5. Aggrieved by order of Assessing Officer, assessee preferred appeal before CIT(A). It is noticed before CIT(A) detailed submissions were made by assessee including by placing reliance on case laws. Considering same, CIT(A) particularly audited 3 ITA No.1217/PUN/2013, A.Y. 2009-10 accounts for A.Y. 2008-09 (immediate previous year to that of audited accounts of year under consideration) held that assessee is following consistently project completion method and said method should not be disturbed and deleted additions made by Assessing Officer. 6. Aggrieved by order of CIT((A), Revenue is before us. Ms. Nandita Kanchan, ld. CIT-DR vehemently opposed findings of CIT((A). She referred to para 3.2 and submitted that CIT(A) held assessee is following project completion method and in para 3.8 held assessee follows percentage completion method. She argued that there is contradiction between findings of CIT(A) in respect of method being followed by assessee to recognize revenue. Assessing Officer clearly held by examination of audited accounts that assessee is following percentage completion method. She placed on record Accounting Standard-7 (revised 2002) and submitted by referring to para 24 that recognition of revenue and expenses by reference to stage of completion of contract is often referred as per percentage of completion method. Under this method contract revenue is matched that contract cost incurred in reaching stage of completion, resulting in reporting of revenue, expenses and profit which can be attributed to profession of work completed. She argued that this method provides useful information on extent of contract activity and performance during period and submitted that findings of CIT(A) is wrong so far as to say that consistent method followed by assessee should not be disturbed and she placed reliance on Accounting Standard-7 (supra). Ms. Nandita Kanchan, ld. CIT-DR prayed to allow grounds raised by Revenue and restore order of Assessing Officer. 7. Shri S.K. Tyagi, ld. AR filed case sheet and placed reliance on submissions made and case laws therein. 4 ITA No.1217/PUN/2013, A.Y. 2009-10 8. Heard both parties and perused materials available on record. At outset, short point arises is to when amount Rs.13,47,24,228/- to be taxed in hands of assessee. According to ld. DR it is to be taxed in year under consideration for reason, it is being shown as sales, method to recognize revenue followed is percentage completion method. We note that, for A.Ys. 2007-08 and 2008-09, assessee accounted sale proceeds in its books under completion method and offered to tax. There is no dispute that for A.Y. 2007-08 similar issue was examined by Assessing Officer and no addition was made. For A.Y. 2008-09 no scrutiny assessment was effected. Therefore, if we go by stand taken by appellant-revenue in present appeal that CIT(A) is wrong in holding that method followed by assessee is correct to recognize revenue i.e. percentage completion method, would be contrary to its view taken in earlier assessment years, resulting into disturbance in method of recognizing revenue, as rightly held by CIT(A), therefore, we find no infirmity in impugned order and it is upheld. 9. At same time, it is relevant to mention that assessee in its Audit Report has itself indicated to follow percentage of completion method. If we go with impugned order that income should be taxed on basis of project completion method, then there is some contradiction between assessee s stand as taken in Audit Report and that of ld. CIT(A). However, facts remains that one income cannot be taxed twice. ld. AR submitted that amount in question has been offered to tax on completion of project in succeeding years. If this contention is correct, then obviously no amount can be charged to tax in year under consideration. Since assessee could not specifically point out as to whether sum of Rs.13,47,24,228/- was offered for tax in 5 ITA No.1217/PUN/2013, A.Y. 2009-10 succeeding years, we set aside impugned order and remit matter to file of Assessing Officer. Assessing Officer is directed to examine assessee s point of view about having offered Rs.13,47,24,228/- to tax for succeeding years. If such contention is found to be correct, then no addition should be made in year under consideration. In otherwise scenario, Assessing Officer will be at liberty to decide this issue afresh as per law after allowing reasonable opportunity of hearing to assessee. Therefore, grounds raised by Revenue are allowed for statistical purpose as indicated above. 10. In result, appeal of Revenue is allowed for statistical purpose. Order pronounced in open court on 24th September, 2019. Sd/- Sd/- (R.S. Syal) (S.S. Viswanethra Ravi) VICE PRESIDENT JUDICIAL MEMBER Pune; Dated : 24th September, 2019 RK Copy of Order forwarded to : 1. Appellant. 2. Respondent. 3. CIT(A)-1, Pune 4. Commissioner of Income Tax-1, Pune 5. DR, ITAT, B Bench, Pune. 6.Guard File. True Copy BY ORDER, Private Secretary, ITAT, Pune Asst. Commissioner of Income-tax, Central Circle 1(3), Pune v. CPI Gera Realty India Pvt. Ltd