TMI Blog2013 (2) TMI 558X X X X Extracts X X X X X X X X Extracts X X X X ..... dustan Housing and Land Development Trust Ltd. [1986 (7) TMI 10 - SUPREME COURT] has been distinguished by the Hon’ble AP High Court in the case of CIT Vs. KCP Ltd., [1994 (12) TMI 21 - ANDHRA PRADESH HIGH COURT] wherein it was held that the assessee’s collection was acceptable as a trading receipt in the relevant year. The Hon’ble Supreme Court at [ 2000 (8) TMI 3 - SUPREME COURT] affirmed the decision of the AP High Court [1994 (12) TMI 21 - ANDHRA PRADESH HIGH COURT]. Therefore, the amount of Rs. 95,40,000/- which is due from M/s Param Power Projects Pvt. Ltd. is to be treated as income of the assessee company. - Decided in favor of revenue. - ITA No. 1862/HYD/2011 - - - Dated:- 23-11-2012 - Chandra Poojari And Asha Vijayaraghavan, JJ. Appellant Rep by: Smt. Amisha S. Gupt Respondent Rep by: Shri P. Vinod ORDER Per: Asha Vijayaraghavan: This appeal preferred by the revenue is directed against the order of the CIT(A)-IV, Hyderabad, dated 26/08/2011 for the assessment year 2008-09. 2. Briefly stated the facts of the case are that the assessee company is engaged in the business of financial services, biomass survey consultancy services and generation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany and added to the income returned. 5. Aggrieved, the assessee carried the matter in appeal before the CIT(A) and AR of the assessee submitted before the CIT(A) that the revenue recognition policy followed by the assessee was in line with AS-9, which is mandatory. He averred that the fact that the right to receive was in dispute was not controverted by the AO. The AR argued that it is not the hypothetical accrual of income based on the mercantile system of accounting that has to be taken into account, but what is to be considered is whether the income had really materialized. He maintained that the question whether real income has to be materialized has to be considered with reference to commercial and business realities of the situation and not merely with reference to the system of accounting followed by an assessee. 6. The learned AR relied upon various case laws and in order to substantiate his contention that there existed a dispute regarding the fee, filed a copy of affidavit filed by the assessee before the Chief Judge, City Civil Court, Hyderabad in Arbitration OP No. 03/2008 dated 19/05/2008, along with enclosures thereof. Copies of the Injunction order dated 19/0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, the CIT(A) held as follows:- 6. I have gone through the facts of the case and the submissions of the appellant. It is clear that the issue of receipt of fee for the service rendered by the appellant company was under dispute in the year under consideration. The fact of dispute is sufficiently established by the litigation documents submitted by the appellant. In fact, the AO has not disputed this fact in the assessment year. He, however, felt that despite such dispute, the fee receivable by the appellant in view of the agreement dtd. 25/06/2005, should have been offered as income on accrual basis , even if the same was not physically and actually received by the appellant. However, I am of the view that even if the appellant had raised invoices for such fee, the invoices had been raised so as to be in a position to recover the fees at a later date and to safeguard their claims for getting time barred. Notwithstanding the fact of raising of such invoices, it remains a fact that such income had neither been received nor was receivable during the previous year concerned. Besides, no corresponding debt in respect of such fees would have been made by M/s Varam Power P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on accrual basis. 3) The learned CIT(A) should have appreciated that the accounting standards cannot override provisions of Income Tax Act. 11. We have heard the arguments of both the parties and perused the record as well as gone through the orders of the authorities below. The CIT(A) analysing the issue with case laws and referring to the provisions of Accounting Standard-9 of ICAI, which deals with recognition of revenue that unless and until the receipt of revenue is certain, as on the date of the balance sheet, it cannot be included in the revenue, deleted the addition of Rs. 95,40,000/- made by the AO. The assessee submitted that the dispute was settled in the previous year relevant to AY 2010-11 and accordingly the income was offered to tax in the said year. 12. The learned counsel for the assessee Shri Vinod canvassed that under similar set of facts, non-recognition of revenue, whose ultimate collectability was in doubt, in terms of AS-9, was upheld by the jurisdictional bench of ITAT in the case of M/s Sri Balaji Bio Mass Power P. Ltd. in ITA No. 1748/Hyd/08, dt. 31/01/2011. 13. The Assessing Officer held that in the mercantile system of accounting the income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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