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2020 (12) TMI 338 - AT - Income TaxAccrual of income - deferred revenue income - Addition of development Funds and expenses - whether a particular receipt represents the income of the assessee in the years under consideration - AO being dissatisfied with the method of accounting for the receipt of development expenses fund held that the receipt of development expenses fund are trading receipt of the assessee - assessee has shown certain receipts as liability on the reasoning that such a liability shall be accounted for as income against the corresponding expenses but AO was of the view that such receipts, treated as deferred revenue income, has become the income of the assessee under mercantile system of accounting - HELD THAT:- Assessee has been following a unique method of accounting for recognizing the certain receipts as income in the future years. Method of accounting adopted by the assessee since incorporation 14-05-1992 was accepted by the revenue till the Assessment Year 2010-11 without pointing out any flaw in such method of accounting - revenue has no authority to change the method of accounting of the assessee until and unless it contains the defects or there is any specific prohibition under the provisions of law. As such we are of the view that the principles of consistency should be adopted. Receipts which was treated by the assessee as deferred revenue income has been offered to tax by the assessee in the subsequent assessment years. In such a situation, we are of the view that there is no loss to the revenue for the simple reason that receipt has finally been suffered to the tax but in the subsequent assessment year - if any addition is sustained in the year under consideration then there has to be deletion of the corresponding amount of the income shown by the assessee in the subsequent assessment years otherwise it would lead to double addition to the total income of the assessee which is not desirable under the provisions of law. - Appeal of the Revenue is dismissed.
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