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2014 (12) TMI 292 - ITAT DELHIAddition of unexplained credits – Entire amount received was advance towards the services to be provided by the assessee - Held that:- The fee for services to the assessee accrues only when the services are completed to the satisfaction of the client - Otherwise, the entire amount is refunded to the customer - all the advances received have either been accounted for as income in the subsequent years or have been refunded to the customers – CIT(A) recorded that the identity of the four creditors were established beyond doubt with the help of their PAN No. and their being active listed company with the Registrar of Companies - The genuineness of the transaction can also not be doubted as the transaction took place between these four concerns and the appellant company through the banking channel and the amounts of advance received from them were offered for taxation by the appellant company as per agreement either in the AY 2009-10 or in the AY 2012-13 - the AO was satisfied that the credit cannot be treated as unexplained credit and therefore, he himself has recommended that the same should be treated as business income - the addition made by the AO for an amount of ₹ 3,87,27,750/- as unexplained credit cannot be sustained u/s 68 and has been rightly deleted by the learned CIT(A) – Decided against revenue. Accrual of income – Advances received - Professional income or not – Held that:- The assessee stated that the nature of the assessee’s business is such that until the services so provided by them are completed to the satisfaction of the client, the amount of professional fees received is shown as advance against assignment because as per agreement/understanding with the customer, the fee received in advance is liable to be refunded in case the assignment is not completed to the satisfaction of the customer - assessee has explained with reference to the subsequent years account about each and every advance from customers - most of the amounts have been recognized as income in the subsequent year and some amount was refunded say the sum of ₹ 6 lakhs was refunded to Rathi Rajasthan Steel Mills Ltd. on 14.5.2008, the sum of ₹ 50 lakhs was refunded to Ahluwalia Contracts (India) Ltd. on 16.7.2008, and the remaining amount was booked as income in the subsequent years and has been taxed in those years - assessee has given complete detailed explanation in respect of each and every advance though the AO has considered the advance of ₹ 1,35,25,000/- but the assessee has given the explanation for the entire outstanding amount of ₹ 4,07,52,750 - no discrepancy in the working has been pointed out by the Revenue - Revenue has also not disputed that the similar method has been accepted by the Revenue in the preceding years – thus, the order of the CIT(A) is upheld – Decided against revenue.
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