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2020 (10) TMI 1116 - ITAT MUMBAIIncome recognition - Accrual of income - Addition being the value of consideration received by the assessee - Accounting principle followed - whether substantial amounts have been received by the assessee before signing of the agreements of sale during the year? - HELD THAT:- In the instant case, the AO has simply followed the AIR information of registration of agreements of sale made during the year and held that the assessee is not entitled to defer the receipts to later years. This is not the correct way to make an assessment. AO could have called for the books of accounts maintained by the assessee and examined it. He has not done so. There is no finding by the AO that the books of accounts maintained by the assessee are defective. Also we find that the AO has shifted the gross sale receipts recognized by the assessee in FYs 2011-12 & 2012-13 back to FY 2010-11 without shifting the expenditure incurred in connection with completion of the said properties. The assessee is following mercantile system of accounting. In the instant case, the addition made by shifting back the gross sale receipts recognized by the assessee in FYs 2011- 12 & 2012-13 to FY 2010-11, without shifting the expenditure incurred in connection with the completion of the said project violates the Accounting Standard I notified u/s 145(2) - we uphold the order of the Ld. CIT(A) in deleting the addition - Decided in favour of assessee. Interest / premium paid on cancellation of gala - Whether CIT(A) was right in deleting the addition by admitting fresh evidences in contravention of Rule 46A of IT Rules - HELD THAT:- CIT(A) having examined the balance sheet of the assessee as at 31.03.2010 (earlier year), ledger accounts and TDS certificates, has arrived at a definite finding that the amount was repaid to the parties and tax was also deducted on the compensation/premium paid on cancellation. A perusal of the details filed by the assessee before the AO clearly indicates that there is no contravention of Rule 46A of the Income Tax Rules, 1962 by the Ld. CIT(A). We uphold the order of the Ld. CIT(A) and dismiss ground of appeal of revenue.
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