TMI Blog2012 (12) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... s opening work progress in next year. The assessee is following said method/policy consistently. On execution of the contract/purchase order, the assessee is showing the income of the said contract in the respective assessment year. Therefore, the assessee is recognizing revenue upon the completion of the contract i.e. transfer of the significant risk and rewards of ownership to the customers and not on/with reference to receipt of advances as per the Accounting Policy No. 4. The said fact has not been disputed by the department. Considering the said facts and Accounting Policy followed by CIT(A) - CIT(A) has rightly observed that the results of one year cannot be disturbed by picking up and applying a method in isolation when the assessee is following the method of accounting regularly which had been accepted by the Department in the preceding assessment year and the work in progress in the preceding year has been shown as opening work in progress in the subsequent year and the revenue has been recognized on completion of the Purchase Order - order of CIT(A) is upheld and reject the ground taken by the Department. - I.T.A.Nos.1785, 5378/Del/2011 & ITA No.2166/Del/2012 & C.O. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke UPS, Scanners, Printers, Cameras and Memory Card etc. Hence, the AO made an addition of Rs.29,740/- by restricting the depreciation @ 15%. In the first appeal the learned CIT(A) relying on the decision of Hon ble Delhi High Court in the case of CIT Vs. BSES Yamuna Power Ltd. dated 31st August, 2010 in ITA No.1267/2012, a copy placed on record, has directed the AO to allow higher rate of depreciation on computer peripherals as claimed by the assessee. Hence, this appeal by the Department. 6. At the time of hearing the learned DR relied on the order of the AO and whereas the learned AR submitted that the issue is covered in favour of the assessee by the decision of Hon ble Delhi High Court in the case of BSES Yamuna Power Ltd. (supra). 7. On consideration of the orders of the authorities below and the decision of the Hon ble jurisdictional High Court in the case of BSES Yamuna Power Ltd. (supra) we observe that the Hon ble High Court has held that the computer accessories and peripherals form an integral part of the computer system as the computer cannot be used without computer accessories and peripherals and consequently they are part of the computer system. Hence, they a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to financial year i.e. A.Y. 2006-07. Being aggrieved the assessee filed appeal before the first appellate authority. 10. During the course of hearing before the first appellate authority, the assessee filed an application under Rule 46A for admission of additional documents viz. (a) Purchase order giving details of advances received; (b) Details of advance received from MATE indicating the dates of advances received; (c ) Part of work in progress as on 31st March, 2006. The learned CIT(A) forwarded the said documents along with the submissions of the assessee to the AO for his comments. The learned CIT(A) stated that the AO submitted remand report dated 16th August, 2010 received on 9th September, 2010, wherein the AO opposed the admission of evidence stating that the assessee was never denied any opportunity by the AO nor was prevented by sufficient cause for producing evidences before the AO. However, the assessee in his reply stated that replies to all queries were filed by the assessee before the AO. However, no show cause notice was given, hence the above crucial evidences could not be furnished and the charts being produced are essential to understand the meth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not just the customer but the customer s, customer s satisfaction which is the ultimate test for acceptance of the moulds and dyes. Extensive trial runs are undertaken. Hence, this cautious approach for recognition of revenue. It was also submitted before the learned CIT(A) that beginning with the F.Y. 2004-05 i.e. A.Y. 2005-06 onwards, there has been substantial closing work in progress and advances from customers. It was also submitted that some of the work which were completed upto 70% had also been kept in work in progress relating to outside parties and the same treatment was being followed by the assessee for all the parties. It was also submitted that the assessee company has regularly/consistently been following the same method of accounting, the result of one year cannot be disturbed by picking up and applying another method in isolation. It was also submitted that the percentage completion has regularly been recognized as the policy for valuing closing work in progress which automatically becomes opening work in progress in the next year. 12. The learned CIT(A) considered the above submissions of the assessee and vide Para 3.6 3.7 of the impugned order, deleted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treatment for the A.Y. 2004-05 in the order passed under sec. 143(3) of the Act and filed a copy of the same to substantiate his submissions. He further submitted that in the A.Y. 2005-06 2007-08 the assessee also gave the same treatment but the returns filed by the assessee were accepted under sec. 143(1) of the Act. The learned AR submitted a chart and submitted that the percentage of completion of work which was shown as work in progress in the A.Y. 2005-06 offered for taxation in the A.Y. 2006-07 when the contract was fully executed. The learned AR also filed a copy of Term Note along with the terms and conditions of Purchase Order placed by MATE on the assessee. He referred to clause 11 of the said Terms and Conditions and stated that the purchaser reserves the right to treat the order as cancelled in the event of non-compliance of the agreed delivery schedule. He further submitted that as per clause 8 of the said Terms Conditions the purchaser reserves the right to cancel, amend and/or alter the order and delivery schedule without assigning any reason and without any manner incurring any liability upon it. He further submitted that if the material on receipt is rej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Purchase Order. Hence, we uphold the order of the learned CIT(A) and reject the ground No.2 taken by the Department. 15. Now we take up the appeal of the department for the A.Y. 2008-09. The solitary ground taken by the Department reads as under:- In the facts and circumstances of the case the ld. CIT(A) erred in law and on facts in directing the AO to delete addition of Rs.4932250/- on account of advance from customers. 16. Since the facts and the issue are similar to ground No.2 of appeal taken by the Department for the A.Y. 2006-07, which have been discussed by us in Para 8-12 hereinabove. For the reasons mentioned in Para 14, we uphold the order of the learned CIT(A) and reject the ground of appeal taken by the Department for the A.Y. 2008-09. 17. Taking up the appeal of the department for the A.Y. 2009-10, the solitary ground taken by the Department reads as under:- In the facts and circumstances of the case the ld. CIT(A) has erred in law and on facts in directing the AO to delete addition of Rs.54,16,984/- on account of advance from customers. 18. Since the facts and the issue are similar to ground No.2 of appeal taken by the Department for the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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