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TMI Blog2014 (12) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... placed before us. The assessee is a company which is engaged in the business of financial consultancy and sale and purchase of shares. At the time of hearing before the CIT(A), the assessee pointed out that the entire amount received by the assessee was advance towards the services to be provided by the assessee. It was also explained that the fee for services to the assessee accrues only when the services are completed to the satisfaction of the client. Otherwise, the entire amount is refunded to the customer. It was also explained that all the advances received have either been accounted for as income in the subsequent years or have been refunded to the customers. The CIT(A) called for the remand report in which the Assessing Officer concluded as under:- "From the fact noted above it is clear that the amount shown as advance is not appearing as advance in the balance sheet companies concerned. This amount was paid as business expenses and TDS was also detected. In view of all these facts it is clearly proved that the advance of Simplex Infrastructure Limited Rs. 1,00,00,000/-, Subhash Projects & Marketing Limited Rs. 2,00,000/-, Shri Laxmi Cotsyan Limited Rs. 2,80,27,750/- & Dol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue has challenged the deletion of addition on account of unexplained credit. No specific ground is raised that the CIT(A) erred in not taxing the advance as trading receipt. Moreover, we find that though the CIT(A) has not dealt with the issue of taxability of the advance as revenue receipt of this year, he has dealt with the same in detail while dealing ground No.2. Therefore, the same would be considered while dealing with ground No.2 of the Revenue's appeal. So far as the addition of Rs. 3,87,27,750/- is concerned, learned CIT(A) prepared the chart in respect of all the four parties giving the details of amount received during the FY 2007- 08 i.e. the year relevant to the year under consideration and also the outstanding balance. The chart given at page 3 of the CIT(A)'s order is reproduced herein below for ready reference:- S. No. Name Amount received during financial 2007-08 (in Rs) relevant to asstt. Year 2008- 09 Amount outstanding as on 31.03.2008 (in Rs) 1 M/s Simplex Infrastructure Ltd. Nil 1,00,00,000/- 2 M/s Subhash Projects & 2,00,000/- 2,00,000/- Marketing Ltd. 3 M/s Shri Laxmi Cotsyan Ltd. 1,05,00,000/- 2,80,27,750/- 4 M/s Dolphin Developer Ltd. 5,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made the addition of Rs. 35,76,010/-. On appeal, learned CIT(A) deleted the addition with the following factual finding:- "6.2 I have carefully considered the submissions made by the ld.AR and have gone through the assessment order. It is observed that the AO has estimated the net profit ratio at the rate of 26.44% on the total amount of advance received from the following seven parties of Rs. 1,35,25,000/-. Name of Party Advance received from customers Kesar Hospital Ltd. 500000 Rathi Udyog Ltd. 1000000 Alok Industries Ltd. 3225000 Chiripal Industries Ltd. 700000 Rathi Rajasthan Steel Mills Ltd. 600000 Ahluwalia Contracts (I) Ltd. 5000000 Indian Vidyut & Ispat Ltd. 2500000 Total 1,32,25,000 Out of these seven parties, the appellant company has already credited the amount of Rs. 7,00,000/- in its P&L A/c during the relevant A.Y. 2008-09. Hence, this amount is not liable to be taxed again. It is further observed that the amount of advance received from Ahluwalia Contracts (I) Ltd. of Rs. 50 lakhs and Rs. 6 lakhs received from Rathi Rajasthan Steel Mills Ltd. has been refunded by the appellant company on 16.07.2008 and 14.05.2008 respectively i.e. during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l fees received is shown as advance against assignment because as per agreement/understanding with the customer, the fee received in advance is liable to be refunded in case the assignment is not completed to the satisfaction of the customer. This is also a trade practice. The assessee transfers such advance amount to the income head in the profit & loss account when work gets fully executed to the satisfaction of the customer. In case, work does not get executed to their satisfaction, then the entire amount has to be refunded. He further submitted that the assessee is following the same method of accounting since past many years and it has always been accepted by the Revenue in the order passed under Section 143(3) also. He further stated that in several cases, if the services could not be rendered to the satisfaction of the customers, the fees has actually been refunded and the details have been furnished by the assessee before the CIT(A) and which is also discussed by him at pages 11 & 12 of his order. He submitted that in fact, total credit in the customers advance account was Rs. 4,07,52,750/-. The assessee has explained with reference to the subsequent years account about eac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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