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11. During the course of hearing, Ld.AR submitted that the assessee has changed its method of Revenue recognition of real estate business from POCM to CCM in view of the introduction of IND AS 115 by Ministry of Corporate Affairs. However, such change of method was not accepted by the AO who rejected the same and in terms of his observations made at Page 2 to 18 of the assessment order re-computed the revenue as per POCM. He further submitted that such action of the AO is challenged by the assessee before the First Appellate Authority and the matter is sub-judiced therefore, Ld. PCIT has no jurisdiction on this issue u/s 263 of the Act. It is further submitted that once the AO has applied his mind and reaches to the conclusion that POCM is most appropriate method for Revenue recognition and also computed the amount of addition therefore, there is no error in the order of the AO for which the proceedings could be initiated u/s 263 of the Act. He therefore, submits that once the assessee has specifically examined the issue by making separate and independent enquiry and further made the addition, there is no prejudice Page | 9 caused to the Revenue and therefore, the action of Ld. PCIT in holding the assessing order as erroneous and pre-judicial to the interest of the Revenue is without any basis and he prayed accordingly.

12. The Ld.AR for the assessee further made written submissions in this regard which is extracted as under:-

"At the outset, it is submitted that the issue of method of recognition of revenue is subject matter of dispute before the CIT(A) and as such the PCIT is ousted of its jurisdiction to issue direction in respect of the said issue u/s 263.

It is worth mentioning that the issue of working of revenue under POCM was duly considered by the assessing officer during the course of assessment and it is not a case of lack of enquiry. In fact, the AO having changed the method from CCM to POCM, it is implicit that the working of revenue and profit under POCM was duly subjected to scrutiny and as such the exercise of jurisdiction in respect of this issue is arbitrary and beyond scope.

15.1. It is further seen that this issue has been decided by the Co-ordinate Bench in the case of group company namely, DLF Assets Ltd. in ITA No.2355/Del/2024 wherein vide order dated 18.09.2024, the Co-ordinate Bench in para 4 & 5 of the order has held that the revisional jurisdiction invoked by Ld. PCIT on this issue is bad in law. The relevant observations of the Co-ordinate Bench are as under-

4. "This assessment was subjected to challenge by the assessee before the ld NFAC. The ld NFAC disposed of the appeal on 18.12.2023 giving partial relief to the assessee. It is pertinent to note that the assessee was Page | 12 following Percent of Completion Method (POCM) for recognition of revenue from the business of real estate activities. But during the year, there was a change in the method from percentage of completion to completed contract method (CCM) as per the Accounting Standard-7 (AS-7) issued by Institute Of Chartered Accountants of India (ICAI). The assessee had debited a sum of ₹609185.90 lakhs in the return representing reversal of excess revenues (net of cost) booked in the earlier years in respect of projects under execution as on 01.04.2018 on account of change in the method of accounting from POCM to CCM. In the return of income for the year under consideration, the assessee made a one time claim of ₹609185.90 lakhs in schedule BP in ITR. In the assessment proceedings, the said deduction was subject matter of examination by the ld AO. The assessee filed written submissions vide letters dated 22.09.2021 and 27.09.2021 on this issue before the ld AO. The assessee also pleaded that CCM is also one of the recognized methods under AS-7 issued by ICAI for the assessee engaged in real estate business. The AO disallowed the one time claim of deduction of ₹609185.70 lakhs. However, the ld AO allowed the alternative claim of the assessee as deduction to the tune of Rs. 104226.14 lakhs which was contingent upon and consequent to the outcome of proceedings for AYs 2017-18, 2018-19 and 2019-20. The ld NFAC took cognizance of the fact that the assessee has followed CCM in succeeding assessment years i.e. 2020-21 and 2021-22, for recognition of revenues and it was also accepted by the ld AO while completing the assessment for those two years. The ld CIT(A) found that the AO had indeed accepted the shift in method of accounting from POCM to CCM by the assessee in assessment years 2020-21 and 2021-22 and observed that the AO was not justified in rejecting the same in assessment year 2019- 20. Ld NFAC also took cognizance of the fact that POCM is one of the approved methods and the assessee was indeed entitled to follow the same for recognition of income. Reliance was also placed by the assessee on the decision of the Hon'ble Supreme Court in the case of CIT Vs. Bilahari Investments Pvt Ltd reported in 299 ITR 1 (SC) and the decision of the Hon‟ble Jurisdictional High Court in the case of CIT Vs. Manish Buildwell Private Limited reported in 16 Page | 13 taxmann.com 27 (Del HC) ; decision of Hon‟ble Karnataka High Court in the case of CIT v. Prestige Estate Projects Pvt Ltd reported in 440 ITR 343 (Kar.) ; and decision of Hon‟ble Jurisdictional High Court in the case of Paras Buildtech India Pvt. Ltd reported in 382 ITR 630 (Del). The ld NFAC also gave a categorical finding of reversal of excess revenues, which was booked in earlier years of ₹609185.90 lakhs which was claimed as a one time claim of deduction during the year under consideration due to shift in method of accounting from POCM to CCM was worked out by the assessee on the basis of recognized principles, applicable accounting standards and duly vetted by the auditors. Further, he also observed that the entire exercise of this addition made by the AO in the assessment proceedings is purely academic in nature as it is revenue neutral in view of the fact that the same would have to be allowed as deduction in subsequent years as it is only the effect of timing difference. The ld NFAC took cognizance of the fact that due to the statutory requirement of adoption of Ind AS-115, the assessee had to mandatory change the method of recognizing revenue from POCM to CCM since inception in respect of the projects which are under implementation and are yet to be completed. That being so, the revenue hitherto recognized under POCM followed upto AY 2018-19, the revenue had to be reversed in Assessment Year 2019-20 pursuant to adoption of CCM to avoid the situation of double taxation. Accordingly, the ld NFAC categorically had given observation that if one time claim of deduction of ₹609185.90 lakhs is not allowed to the assessee, then it would result in double taxation of income for the assessee which would in turn impair the real income theory.

5. Now the ld PCIT by invoking his revision jurisdiction u/s 263 of the Act is trying to reconsider the very same issue with regard to recognition of revenue as per POCM instead of CCM adopted by the assessee. In this regard, it is pertinent to note that the ld NFAC had already categorically held that the entire exercise of shifting from PCOM to CCM has been made as per the mandate provided in Ind AS -115 and also the effect of the same is revenue neutral as real income should be recognized in respect of Page | 14 method followed. It is pertinent to note that the order of the assessment got merged with the order of ld NFAC, Delhi and the order of the NFAC was passed prior to the date of passing of revision order u/s 263 of the Act by the ld PCIT. In fact, the order of NFAC dated 18.12.2023 was even brought to the knowledge of the ld PCIT. Despite the fact that the ld PCIT proceeded to pass the revision order u/s 263 of the Act by giving direction to the ld AO to determine the income by following POCM method. First of all, we find that the exercise is revenue neutral and recognition of revenue is only an effect of timing difference. The Hon'ble Supreme Court in the case of CIT Vs. Excel Industries Ltd reported in 358 ITR 295 had held that no addition need to be made by the revenue if the issue is revenue neutral as there is no loss of tax to the exchequer. Hence, the assessment order framed by the ld AO cannot be held to be prejudicial to the interest of revenue. It is trite law that ld PCIT in order to invoke his revision jurisdiction should cumulatively satisfy the twin conditions i.e. (i) that is the order of the AO must be erroneous and (ii) order of the AO must be prejudicial to the interest of revenue. Even if one condition is absent, revision proceedings u/s 263 of the Act cannot be invoked by the ld PCIT. Reliance in this regard is placed on the decision of the Hon'ble Supreme Court in the case of Malabar Industrial Company Ltd reported in 243 ITR 83 (SC). Further, we find that the basis of shift in the method of recognition of revenue from POCM to CCM has already been examined in detail by the NFAC and accepted by the NFAC to be in order. Hence, the order of the assessment got merged with the order of NFAC. This issue has been already decided by NFAC. Hence, in view of clause (C ) of Explanation to Section 263(1) of the Act, the ld PCIT could not have assumed revision jurisdiction at all on this issue. Hence, the revision jurisdiction invoked by the ld PCIT u/s 263 of the Act on this issue is bad in law for more than one reason and accordingly deserves to be quashed and is hereby quashed."