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2008 (1) TMI 447 - AT - Income TaxAccrual Of Income -"scope of total income''- Method of accounting - CIT(A) held that the advance fee recovered from the clients was the income of the assessee - Principle of Consistency - HELD THAT:- Assessee received certain amounts for services to be performed over a period of time. The amount relatable to the services rendered in the year under consideration was shown as income, the reason being that the assessee became entitled to receive that amount from the client in respect of the services rendered. In other words, debt to the extent of the amount pertaining to services rendered only got vested in the assessee. The rest of the amount was taken as liability to be adjusted in subsequent year as and when the service was rendered. It is but clear that the excess amount would have to be returned in case the service was not performed in subsequent year and, therefore, in respect of such amount no debt came into existence in favour of the assessee. Therefore, this amount did not become the income. Accordingly, we are of the view that the learned CIT(A) erred in finding that the assessee was following hybrid system of accounting on the ground that the whole of the amount received from the clients as retainership fees was not declared as income in the year of receipt of the amount. Consistency of assessments - cash system of accounting - HELD THAT:- In the case of Radhasoami Satsang [1991 (11) TMI 2 - SUPREME COURT] held that their findings should not be taken as a general proposition of law to be followed in every case as it has confined to the facts of that case. We may add that if a manifestly wrong decision has been taken by the AO in one year or in a number of years, it will not bind the AO in assessment of a subsequent year because there cannot be any estoppel against the law. However, in this case, we find the earlier and subsequent assessments were made on correct appreciation of the principle of cash system of accounting. Since the assessee succeeds on merits on this aspect, there is no need for us to give a finding that the Assessing Officer was bound in this year to follow the past or future assessment. In the result, the appeal is allowed.
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