9911796707
TMI Blog2016 (4) TMI 471X X X X Extracts X X X X X X X X Extracts X X X X ..... on. " 3. This appeal is filed on 21 st of March 2011 by the Revenue. First time this appeal was fixed for hearing on 30105/2011. Subsequent to that, hearing up to 05/05/2015 matter was adjourned at the request of the assessee. On the next date of hearing on 05/05/2015, it was adjourned at the request of the Learned DR. Subsequently, on 15/12/2015 an adjournment request was moved by Revenue stating that Ld. CIT (A) has admitted additional evidences without allowing opportunity to the assessing officer which is in violation of the provisions of rule 46A of the Income Tax Rules, 1962. Hence revenue would like to take an additional ground of appeal and therefore the matter may be adjourned. Therefore, LD DR submitted that a reminder letter has been issued to the assessing officer for amending and filing additional ground of appeal before the tribunal therefore adjournment was sought. On the request of learned DR, this case was adjourned to 3rd of March 2016. On 3rd of March 2016 on request of the DR this matter was further adjourned to 7/03/2016. On 7/3/2016, due to paucity of time and prolonged hearing of other matters, this matter was adjourned with the consent of both the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... policy and has recognized revenue from the services on the basis of period involved in the maintenance contract. It was mentioned in the notes on accounts of the balance sheet of the company that due to this change profit before taxation for the year is lower by Rs. 6298812/-. Therefore, AO was of the view that due to this change the profit has reduced substantially and the original accounting policy is consistently followed by the assessee, therefore change in the method of accounting is not bonafide. Hence, he made an addition of Rs. 6298812 to the income of the assessee. Assessee being aggrieved with the order of AO preferred an appeal before CIT (A). Learned CIT (A) deleted the addition because accounting standard 9 on revenue recognition issued by lCAI this change has become essential. It was also observed by CIT (A) that the method now being followed by the assessee is based on accrual method of accounting. Therefore, the change in the method is bonafide and hence he deleted the addition. Therefore revenue is in appeal before us in ground No. 1. 6. The learned DR relied upon the order of assessing officer and submitted that that the profit has reduced substantially because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee to offer this income for taxation at its sweet will. We are of the view that that the change in the method of accounting is more appropriate and in is in consonance with the accounting standard 9 issued by the ICAI. It was provided in that accounting standard with respect to sale of services that "7. Rendering of Services 7.1 Revenue from service transactions is usually recognised as the service is performed, either by the proportionate completion method or by the completed service contract method. (i) Proportionate completion method-Performance consists of the execution of more than one act. Revenue is recognised proportionately by reference to the performance of each act. The revenue recognised under this method would be determined on the basis of contract value, associated costs, number of acts or other suitable basis. For practical purposes, when services are provided by an indeterminate number of acts over a specific period of time, revenue is recognised on a straight line basis over the specific period unless there is evidence that so some other method better represents the pattern of performance." On query by the bench about the subsequent years Learned AR submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Ledger account of license purchase was submitted and it was further submitted by the assessee that out of the aforesaid sum of Rs. 6154283/- a sum of Rs. 2310623/- has been reversed. However, the assessing officer held that the provision for license purchase are being made without any basis and made an addition of Rs. 6154283/-. Against this, assessee preferred an appeal before CrT (A) who in turn deleted the addition. The CIT appeal was of the view that the provision for license purchase expenses is a crystallized liability and is not based on estimated. Against this order revenue is in appeal. 9. Learned DR relied on the order of assessing officer and submitted that that the details of the purchases provisions is on estimated basis and is not a crystallized liability as held by CIT (A). Against this Ld. AR relied on the order of CrT appeals and submitted that the liability provided for in the books is ascertained, crystallized and not contingent and therefore it should be allowed. 10. we have carefully considered the rival contentions and we are of the view that if the purchase provisions made by the assessee for the purpose of license fees is on sound basis supported by ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and there is no change in the terms of agreement in assessment year 2006 - 2007. In the past these expenditure have been allowed and therefore, this may also be allowed in this year. It was submitted that copy of the working of the purchase provision submitted before AO was also submitted before CIT (A). Before AO it was contended that copy of the commission account and the working of purchase provision was already submitted and regarding justification it was submitted that commission was payable as per the existing agreement with the party. Learned AR relied on the order ofCIT (A) stated that after verification of the all the details disallowance is deleted which is on the same facts and circumstances and the evidences furnished before the AO. He contended that there is no evidence which has been submitted by the assessee before CIT (A) which was not available before the assessing officer. He further submitted that the detail of the commission was already there. The amount of commission expenditure was already allowed to the assessee in past several years, therefore, it cannot be said that this information was not available before the assessing officer. In view of this is submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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