TMI Blog2016 (8) TMI 361X X X X Extracts X X X X X X X X Extracts X X X X ..... nting in a subsequent year unless he is able to demonstrate that there is under-estimation of profits by giving facts and figures in that regard. In the instant case no such facts and figures have been assigned by the Assessing Officer to discard the findings reached by the ld. CIT(A). Moreover, the treatment of the assessee with regard to accounting of income and expenses from the business of Fleet Management Services is in accordance with the accepted accounting method as laid down in AS-9 issued by the Institute of Chartered Accountants of India. The ld. DR could not rebut the contention of the assessee that the buffer account created is in the nature of amount received on account of services to be rendered over the period of lease in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee company is engaged in the business of providing fleet management services. The assessee filed its return of income declaring income of ₹ 35,01,314/-. The assessment was completed u/s. 143(3) of the IT Act at an income of ₹ 3,35,89,921/- and the AO made the addition of ₹ 3,00,88,607/- on account of provision created by the assessee out of the income. The AO made this addition on the ground that this amount was appearing during the year in the buffer account as current liabilities and no explanation was furnished by the assessee with regard to the query raised by AO in this regard and the assessee did not route the expenses in question through profit loss account. The case of the Assessing Officer is that the balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer as well as by the appellant. The Assessing officer has made an addition of ₹ 3,00,88,607/- which is the amount appearing during the year in the buffer account as current liabilities on the ground that no explanation was furnished by the appellant with regard to the query raised in this regard. There is no dispute over the fact that the assessee is following completed service contract method of accounting as per which income has to be accounted in the year in which the contract regarding lease and management of vehicles is complete. The assessee in the earlier years followed the same method which has been accepted by the department. It is also observed that in assessment year(s) 2001-02 and 2006-07, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.(21,35,34,129) Less: Provision for maintenance other expenses Rs.(3,00,88,607) Income from services Rs.70,35,774 4.2 It is established legal position that an assessee can follow any recognized method of accounting and condition is that the same method has to be followed consistently. The assessee has followed completed service contract method which was one of the prescribed methods and the same method has been accepted by the department in the earlier years. In accordance with the said method of accounting, any profit or loss in respect of contract regarding lease and management of vehicles is reflected only at the end of the peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see no reason to interfere with the conclusion given by the High Court and the Tribunal . 4.3 This view is also supported by several decisions some of which are cited below:- (i) CIT vs. Bilahari Investments (P.) Ltd. [2008] 299 ITR 1 (SC); (ii) Bakshi Vikram Vikas Construction Co. (P.) Ltd. vs. Dy. CIT [2007] 158 Taxman 61 (Delhi) (Mag.): (iii) IRB Infrastructure Ltd. vs. ITO [2008] 115 ITD 374 (Mum.); and (iv) Awadhesh Builders vs. ITO [2010] 37 SOT 122 (Mum). 4.4 Under the facts and circumstances of the case stated above, it is held that the addition of ₹ 3,00,88,607/- on account of provision created out of income cannot be sustained and accordingly, the same is directed to be deleted. As a result, Grounds of ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Bilahari Investment P. Ltd., 299 ITR 1 (SC) and plenty of other decisions of Hon ble High Courts and Tribunal. He, therefore, submitted that the conclusion reached by the ld. CIT(A) on this count is not in any way be said to be illogical or illegal. 5. Having considered the rival submissions in the light of relevant material available on record, we find no justification to interfere with the order of the ld. CIT(A) on the issue under consideration. It is notable that the ld. CIT(A) after considering the recognized system of accounting followed consistently by the assessee and accepted by department in previous years and keeping in view the rule of consistency as envisaged by Hon ble Apex Court in the case of CIT vs. Realest Builder ..... X X X X Extracts X X X X X X X X Extracts X X X X
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