a) Foreign company was engaged in the business of erection, testing and commissioning of power plants. It had opened a project office for the execution of projects in India and opted for presumptive tax scheme under section 44BBB.
b) Its books of account were audited and prepared as per Accounting Standard-7 (AS-7).It claimed profits to be lower than the 10% presumptive rate u/s 44BBB.
c) The Assessing Officer (AO) discarded the method of accounting followed by the assesseeand rejected books of accounts in terms of section 145(3). He invoked the provisions of section 44BBB determined income @ 10%.
d) The CIT(A) held that AO had no right to reject audited books of accounts. Aggrieved from order of CIT(A), the revenue filed instant appeal before Tribunal.
The Tribunal held in favour of assessee as under:
1) Section 44BBBB clearly provides an option to an assessee to oer to tax lower profits and gains than profit deemed of 10% if books of accounts is maintained and also audited as per section 44AB.
2) Assessee had recognized revenue and cost following the percentage completion method prescribed by AS-7.
3) Assessee-company prepared its Balance Sheet and Profit & loss account in compliance with AS-7.
4) Assessee-company fulfilled all conditions prescribed u/s 44BBB and also has followed one of the recognized methods as prescribed in para 29 of the Accounting Standard-7 "Construction Contracts".
5) AO was of the view that method of accounting followed by assessee as per AS–7 was not correct and proper income could not be determined on that basis.
6) Hence, AO's action of rejecting books of accounts in terms of Section 145(3) and assessing income u/s 44BBBon presumptive basis was not justified.  77 taxmann.com 266 (Ahmedabad - Trib.)