Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (12) TMI 632 - AT - Income TaxReceipts allocated towards Warranty period - contention of the assessee is that the method of accounting followed by the assessee complies with the accounting principle of “Revenue cost matching principle”, i.e., the revenue is being spread by the assessee over the warranty period, since warranty expenditure shall be incurred by the assessee during the warranty period - Held that:- It is well settled proposition of law that the genuine change in the method of accounting to comply with the requirement of the accounting principles and accounting standards should be accepted. As regards the methodology adopted by the AO, we notice the same only shifts the year of assessing the income, whereas the methodology adopted by the assessee would comply with the requirement of the accounting principles and the accounting standards. Accordingly we are of the view that there is no requirement to disturb the methodology adopted by the assessee in accounting for Warranty period receipts. Accordingly we set aside the order passed by the CIT(A) on this issue and direct the Assessing Officer to delete the addition made by him on this issue. Seduction claimed u/s 80HHE - Held that:- As earlier restored the issue relating to Grants in aid to the file of the AO for examining its taxability afresh by duly considering the agreement entered by the assessee with the Government. Hence the claim of the assessee for deduction u/s 80HHE in respect of this income would depend upon the view that will be taken by the AO in the set aside proceedings. As contended by D.R, if it is found that the Government has given grant in aid to meet the expenses incurred in development and implementation of government programs and accordingly if it was held that the same is taxable, then we are of the view that the grant in aid shall form part of operating income and would be eligible for deduction u/s 80HHE of the Act. Provisions written back - Held that:- We agree with the said submission of the assessee. It is quite normal in any business to create provisions for known liabilities and to write back the same when the liability is no longer payable. The amount so written back is usually treated as income of the year in which it is so written back. Hence, we do not find any merit in the apprehension of Ld CIT(A). Accordingly we agree with the contentions of the assessee that the amount so written back should be treated as part of operating profit of the assessee, as it is not an independent source of income. Accordingly we direct the AO to include the amount written back by the assessee in “Profits of business” and allow deduction u/s 80HHE of the Act. Miscellaneous income - Held that:- There is some merit in the submission of the assessee that the miscellaneous income consisted of receipts arising during the course of carrying on of business. However, in the absence of actual details, in our view, it would be difficult to accept the claim of the assessee. Hence, in order to put this issue at rest, we direct the AO to take 50% of the miscellaneous income as income eligible for deduction u/s 80HHE of the Act and allow deduction accordingly. Levy of interest u/s 234D - Held that:- CIT(A) has decided this issue against the assessee. However, he has directed the AO to verify the computational error pointed by the assessee. In view of the above said binding decision, we confirm the order passed by Ld CIT(A). Addition of lease rentals claimed by the assessee - Held that:- CIT(A) has considered the issue in detail in AY 1997-98 and has given a finding that the lessor is the owner of the assets. It was not shown to us that the above said finding of CIT(A) was reversed by the Tribunal or High Court, meaning thereby, the said finding shall hold the field. During the year under consideration, the assessee has not entered into any fresh lease transactions and has paid only the lease rentals on the lease agreement entered in the earlier years. Hence the CIT(A) was justified in following his order passed in the earlier years on the very same issue. Accordingly we uphold the order passed by Ld CIT(A) on this issue.
|