TMI Blog2014 (7) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... th regard to the year wise payment. The difference as noted by the AO is only an imaginary one and on that basis addition cannot be made - When it has been proved that the assessee has made the payments as per the entries made in the books of accounts, which is also corroborated by the bank statement furnished before the departmental authorities, only because M/s SEL has given a different accounting treatment in its books of account, it cannot be said that the assessee has 'suppressed the expenditure - the reconciliation made by the assessee with supporting evidence though has been forwarded to the AO, he has not been able to controvert the same with any reasonable argument – thus, the order of the CIT(A) is upheld – Decided against Revenue. - ITA.No.836/Hyd/2013, C .O. No.42/Hyd/2013 - - - Dated:- 13-6-2014 - Shri B. Ramakotaiah, A.M. And Saktijit Dey, J.M.,JJ. For the Petitioner : Sri P. Somasekhar Reddy For the Respondent : Sri V. Raghavendra Rao ORDER Per Saktijit Dey, J. M. This appeal filed by the Revenue and the Cross Objection by the assessee are directed against the order dated 28-2-2013 of CIT (A) pertaining to the assessment year 2004-05 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SEL respectively in their books of accounts. Being aggrieved of the addition made, the assessee preferred an appeal before the CIT (A). 4. In course of hearing before the first appellate authority, the assessee again reconciling the payments as appearing in the assessee's books as well as in the books of SEL, submitted that the assessee in fact has paid an amount of ₹ 44,00,62,552/- in the financial year 2002-03 relevant to the assessment year 2003-04 out of which M/s SEL had admitted contract receipts of ₹ 12,01,12,205/-. Explaining further it was submitted that the difference between the payment of ₹ 44,00,62,552/- made by the assessee and receipts shown of ₹ 12,01,12,205/- has been shown in the balance-sheet of SEL as advance under the head 'current liabilities'. Similarly, in the current year i.e, financial year 2003-04 relevant to the assessment year 2004-05 though the assessee has actually paid ₹ 21,23,15,674/- after deduction of tax at source, but, SEL has shown the receipts of ₹ 45,16,69,046/- by drawing amounts from the advances in the balance-sheet as at the end of the preceding previous year. Likewise for the immediatel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of a recipient and what part of it may be accounted as advance in its books depends on the execution of the work and the stage of execution of the work. The payment received by way of advance will figure in the balance sheet but not in the P LA/c unless and until it is earned by executing the sub-contract work. 8.1 In the instant case, what was paid by the assessee was only an advance towards sub-contracts and it not shown or claimed expenditure in its books because it was incurred towards acquiring a capital asset i.e. the road-bridge for which it got Built, Operate and Transfer contract. The assessee has clearly reconciled the payments made by it and the work contract receipts admitted by the sub-contract SEL over the period of 3 years during which the advance payments were made and the work executed. The AD is under a misconception about the mercantile system of accounting. He is not correct in holding that there is any escapement of income or incurring of expenditure which IS unexplained. When all payments made are established to be by way of bank cheques and no cash transactions were involved there could be no question of not being satisfied with the explanation of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ster concern M/s. SEL. The dispute lies within a narrow compass as to whether the actual payment made by the assessee during the year to M/s SEL is ₹ 22,60,62,390 after TDS. as shown by the assessee in its books or an amount of ₹ 45,16,69,046 shown as contract receipts by M/s. SEL for the year under consideration. The assessee has reconciled the payment of ₹ 68 lakh to M/s SEL as appearing in its books with that of the books of accounts of M/s SEL as under:- S.No. Asst. Yr. EPC payment made to Soma Turnover offered by Soma 1 2003-04 440062552 120112205 2 2004-05 212315674 451669046 3 2005-06 27621774 108218749 680000000 680000000 6. On perusal of the figures appearing in the table, it can be seen that there is no difference between the payment of ₹ 68 lakh and receipt of the same amount as appearing in the books of both the assessee and M/s SEL in the assessment years 2003-04, 2004-05 and 2005-06. However, the only difference is with regard to the year wis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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