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2014 (1) TMI 694 - AT - Income TaxAccrual of income versus Cash receipt - Disallowance on account of Compensation from customers - Shortfall in Minimum Guaranteed Offtake of gas - Delayed payment charges – Held that:- The assessee is following cash system as a matter of course or, perhaps, as a matter of convenience, being so uniformly for all customers, and in respect of an item/s of income which is regularly charged thereto, and for which they are contractually bound - in the absence of any details, it is not possible to say as to how much of Rs.78.18 lakhs offered by the assessee as income for the current year on receipt basis is in relation to the current year, toward which the A.O. has estimated a sum of Rs.30 lakhs - Preparation of memoranda accounts would lend clarity in the matter – the matter remitted back to the AO for fresh adjudication - the onus to prove its case with reference to uncertainty and its resolution would be on the assessee - the offer of income pertaining to a preceding year/s on cash basis, would not justify non accounting of income for the current year, or even for a preceding year, which though not received, yet stands accrued during the current year - there could be no option for following a mixed system of accounting and, two, the income not offered to tax on accrual basis, would not preclude it being brought to tax on receipt basis (even for an assessee following accrual method) inasmuch as the same falls within the scope of income u/s. 5 of the Act. Deletion of disallowance on account of prior period expenses – Held that:- The expenses stand claimed only on the basis of crystallization - Where an expenditure is disputed or indeterminate, liability in its respect, to the extent of dispute, would arise only in the year of resolution of the dispute – Decided in favour of Assessee.
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