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2021 (7) TMI 1072 - ITAT MUMBAIAddition of surveillance fee - Income recognition policy - effect of change in accounting policy - assessee company is following mercantile system of accounting - A.O has made addition of surveillance fee which was not offered in the current year but in the subsequent year i.e.A.Y.2013-14 - CIT(A) has accepted the system of accounting of surveillance fee which the assessee company for the first time has adopted in A.Y 2012-13 - HELD THAT:- Method of accounting employed by the assessee is acceptable and is followed by the similar credit rating agencies and the change is bonafide and has been recognized as standard industrial practice. A.O has never doubted the income and has also not accepted the fact of change in accounting policy on revenue recognition as the assessee was following mercantile system of accounting till last financial year. Whereas, in this present assessment year the assessee has bifurcated 60% fees as income of the current year and remaining 40% was carry forwarded and offered in A.Y 2013-14 which cannot be disputed - AR mentioned that due to change in system of accounting policy, the bench mark as applicable to other credit rating agencies are fallowed. When the query was raised to the Ld. AR to explain the basis of offering of fee in 60% and 40% ratio or industry yardstick or standard. AR reply/explanations are not supported by evidences. DR also accepted the fact of offering of income in the A.Y 2013-14 based on the supporting evidences including assessment order u/sec143(3) of the Act filed by the Ld.AR. We find that the CIT(A) relied on the submissions and the accounting policies and has deleted the addition. Whereas, in respect of 100% TDS claim made by the assessee on the 60% income/fee offered for taxation needs to be modified. When the income is recognized, the TDS claim should be restricted to the extent of income offered. In the income tax return filed electronically by the assessee, there is a Schedule of TDS, were there are columns earmarked for set apart/carry forward of income and TDS claim for the Subsequent assessment year, which needs to be opted. CIT(A) has passed a reasoned order and we up hold the same to the extent of deletion of addition of surveillance fee made by the Assessing officer. TDS claim - We modify the CIT(A) order and direct the A.O to restrict the claim of TDS to the extent of income offered in the A.Y.2012-13 and the balance of TDS shall be claimed against the income assessable in the assessment year A.Y.2013-14 and we partly allow the grounds of appeal of the revenue - Appeal filed by the revenue is partly allowed.
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