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2013 (10) TMI 1071 - AT - Income TaxAccrual of income - Addition on account of advance received from the patients by the doctor-assessee - The facts of the case are that the assessee is a doctor by profession. He is a surgeon specialized in liver transplant. In the case of a liver transplant patient, regular consultancy and check up for several years is required. During the year under consideration, the assessee has received the sum of Rs. 69,29,500/- from patients which was accounted for as advance from patients – Held that:- The scheme of life time consultancy has been perused in detail. The name is only life time, whereas services are meant for a period of 48 months post surgery with a period of 12 months immediately after the surgery as free of charge, meaning there by the amount of advance would have to be exhausted with in a period of three years from surgery or else would have to be returned in case of non utilization of the same or in case of death of the patient. The appellant has done exactly the same. The appellant has accounted the said advances as and when realized. The same are accounted in the years of realization. Sufficient proof in the name of balance sheet and P & L account and Form 3CD to support the case of the appellant has been filed, which is enough proof to accept that what has been received as advance under the life time consultancy fee is only to be taxed as income when services to that effect are offered. Till then the amount remains a liability in the books of the appellant. Considering the details filed it is found that the advance need not be booked at the time of receipt nor it is a registration charge. The appellant has strictly followed the principles of mercantile system of accounting. Appellant has correctly followed the principles of mercantile system of accounting and the amount of advance received during the year cannot be booked as income – Decided against the Revenue.
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