TMI Blog2014 (1) TMI 982X X X X Extracts X X X X X X X X Extracts X X X X ..... / meagre tax effect should not be raised by Department - Decided against Revenue. - I.T.A. No. 1443/Del/2013 - - - Dated:- 17-1-2014 - Shri U. B. S. Bedi And Shri Shamim Yahya,JJ. For the Petitioner : Sh. Satpal Singh Sr. D. R. For the Respondent : Sh. T. R. Talwar, Advocate ORDER Per Shamim Yahya: AM This appeal by the Revenue is directed against the order of the Ld. Commissioner of Income Tax (Appeals-XV), New Delhi dated 18.12.2012 pertaining to assessment year 2006-07. 2. The issue raised is that Ld. CIT(A) erred in deleting the addition of Rs. 1,75,51,561/- made by the Assessing Officer on account of advance receipt for which work was yet to be completed. 3. In this case original assessment order was framed vide order dated 12.12.2008 under section 143(3) of the I.T. Act. Thereafter, the order dated 30.9.2010 was passed under section 263 of the I.T. Act by the Commissioner of Income Tax. By way of this order assessment was set aside on the limited issue for carrying out the necessary verification and enquiry to determine the true value and correctness on the issue of treatment meted out to amount of Rs. 17.551.561/- collected from customers in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not examine the issue with respect to the AS-9. He opined that principle of res judicata is not applicable to Income tax proceedings. He further opined that Income Tax Act provide that income is to be computed in accordance with the method of accounting regularly employed by the assessee. Assessing Officer noted that where the assesse follows mercantile systems of accounting, the annual profits are worked out on due or accrual basis i.e. after providing for all expenses for which a legal liability has arisen and taking credit for all receipts that have become due regardless of their actual receipt or payment. In the case of the assessee, as per the notes on accounts which form a part of annual accounts, the assesse company collected from customers an amount of Rs. 1,75,51,561/- for the work in respect of which were yet to be completed. AO held that as the company is following mercantile system of accounting, the above income should have been offered to tax. Accordingly, the AO held that the amount of Rs. 1,75,55,561/- received from customers was business receipts and was added to the income of the assessee. 4. Against the above order the assessee appealed before the Ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2006-07 and further amount of Rs. 1,23,42,521/- as sales in financial year 2007-08." 5.1 Considering the above, Ld. CIT(A) agreed with the contention of the assessee and held as under:- "I have carefully considered the facts of the case, applicable accounting standards and relevant case laws in the matter. I find that, the appellant has been following the Accounting practice, relating to pre-billing advances for publishing advertisements in the yellow directories in the year in which directories are published, consistently. This stand is being consistently accepted by the Department as well. According to this, the revenue in respect of the advertising is booked by the appellant in the year in which such advertisement is published. The same practice has been followed by the appellant in the subsequent years also. It is thus not the case that the appellant had not booked any pre-billing advances as income at all, since the same have been booked in A.Y.2007-08 (Rs.52,09,040) and in A.Y.2008-09 (Rs.l,23,42,521). The appellant has followed this accounting practice consistently. Consistency has been sought to be a sound principle by several courts and particularly the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, media commissions will normally be recognised when the related advertisement or commercial appears before the public and the necessary intimation is received by the agency. He submitted that the advance amount is recevied towards advertisements which the assessee is to print and publish in the yellow pages of the forthcoming directories, which are yet to be completed and circulated to the public. Assessee treats these advertisement receipts, received as advance pre-billing payments and does not recognize these receipts as its advertisement revenue till the directories are complete, published and put to public circulation. He further pointed out that in accordance with the policy with regard to the impugned amount of Rs. 175,51,561/- the assessee has recognised an amount of Rs. 52,09,040/- pre-billing advance as sales in financial year 2006-07 and further amount of Rs. 1,23,42,521/- as sales in the financial year 2007-08. He further submitted that the accounting have been followed by the assessee regularly and accepted by the Revenue in the past. Hence, he contended that order of the Ld. CIT(A) may be sustained. 7.2 We have carefully considered the submissions and perused the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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