TMI Blog2008 (9) TMI 946X X X X Extracts X X X X X X X X Extracts X X X X ..... that change in method of accounting was not bonafide. 5. The facts, in brief, are that assessee is a company. It filed original return on 31.12.99 declaring loss and subsequently a revised return was filed on 30.3.2001 declaring the same loss. The A.O. noted from the notes and accounts that company had changed the method of accounting for recognizing export benefit under advance licence from accrual basis to utilization basis which had resulted into writing off of ₹ 27,79,65,270/- by transferring the same from reserves. It was also noted that if this change would not have been made, the profits of the assessee company would have been higher by a sum of ₹ 1,55,35,372/-. The assessee company on a query from the A.O. submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ange had made by the assessee, it was to be accepted. The ld. CIT(A), however, confirmed the action of A.O. for the reasons given by the A.O. Still aggrieved, the assessee is in appeal before us. 6. The ld. Counsel for the assessee contended that two aspects were involved in this regard. Firstly, the revised return was filed within the time allowed to the assessee, hence, it was a valid return which substituted the original return and, therefore, the same was liable to be accepted and considered. The assessee in support of this contention, placed reliance on the decision of Hon'ble Madras High Court in the case of CIT vs. Periyar District Co-Operative Milk Producers Union Ltd. as reported in 266 ITR 705 and on the decision of Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 44 to contend that if the method of accounting did not disclose true and proper income, then, the A.O. was entitled to invoke provisions of Section 145 to determine the true income and further stated that the ratio of this decision was squarely applicable here. The ld. D.R. also placed reliance on the decision of Hon'ble Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. vs. C.I.T. as reported in 227 ITR 172 to contend that principles of accountancy did not override the provisions of law and also referred to the observations of the Hon'ble Court that the taxability of income was not dependent upon its distribution or the manner of its utilization and it was to be recognized at the time when the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counting from accrual system to cash system of accounting in regard to export benefits and what was actually done was that the basis for accounting for such income was changed. 8. We have considered the submissions made by both parties, material on record and orders of authorities below. It is noted that assessee has filed revised return within the prescribed period, hence, the same cannot be ignored and the A.O. should have completed the assessment on the basis of such return, even if, he was of the opinion that change of method of accounting was not bonafide because in both the returns, the assessee has applied changed method of accounting. Now, coming to the aspect of change in accounting policy relating recognition of revenue from ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, we hold that the ld. CIT(A) is not correct in law and direct the A.O. to accept the revised return filed by the assessee and also the profits as shown by the assessee after adopting the changed method of accounting. Thus, ground No. 1 and 2 of the assessee is accepted. 9. In ground No. 3 the assessee is aggrieved by the decision of ld. CIT(A) in confirming the disallowance of ₹ 73,47,000/-, being expenses incurred on RandD claimed by the assessee u/s. 35(1)(iv) of the Act and restricting the same to ₹ 9,18,125/-. 10. The facts, in brief, are that in the PandL account, the assessee debited a sum of ₹ 9,18,125/- whereas in the computation of total income, a sum of ₹ 73,47,000/- had been claimed unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a different manner, the same could not be allowed in a staggered manner as done by the Revenue Authorities. 12. The ld. D.R. placed strong reliance on the order of ld. CIT(A). 13. We have considered the submissions made by both parties, material on record and orders of authorities below. It is noted that the entire expenditure claimed by the assessee in RandD which is allowable u/s. 35(1)(iv) of the Act in the year of incurrence. None of the Revenue Authorities have neither doubted the genuineness of expenditure nor applicability of the provisions of Section 35(1)(iv) of the Act and the assessee's claim have been rejected merely due to different treatment given in the accounts, which in our view, is not correct as the income has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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