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2017 (2) TMI 682 - DELHI HIGH COURT

2017 (2) TMI 682 - DELHI HIGH COURT - TMI - Revision u/s 263 - deferred revenue income showed by changing the method of accounting as per Accounting Standard (AS) -7, and it has resulted in lowering of profit - Held ITAT concluded that the invocation of Section 263 was not warranted in the circumstances of the case - that:- Ruling of the ITAT is largely based upon the recognition of AS-7 in the given facts and circumstances of the case and that in fact the matter had received scrutiny by the A.O .....

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w arises. - ITA 452/2016, CM APPL. 26465/2016 - Dated:- 8-2-2017 - MR. S. RAVINDRA BHAT & MR. NAJMI WAZIRI JJ. Appellant Through: Mr. Sanjay Kumar and Mr. Dileep Shivpuri, Advocates. Respondent Through: None. S. RAVINDRA BHAT, J. (Open Court) 1. The Revenue in this appeal under Section 260A of the Income Tax Act, 1961 ( the Act ) is urging that the ITAT fell into error in holding that Section 263 of the Act was invoked erroneously in the circumsta .....

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shown as deferred revenue income by changing the method of accounting as per Accounting Standard (AS) -7, and it has resulted in lowering of profit. The CIT(A) finally made an order revising the assessment as erroneous and prejudicial to the revenue, and remitted the matter for consideration to the A.O. The ITAT allowed the assessee s appeal. The ITAT concluded that the invocation of Section 263 of the Act was not warranted in the circumstances of the case. Its discussion on this aspect is in p .....

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' page 3, it has been explicitly mentioned that the audited accounts filed for the financial year ending on 31.3.08, 31.3.09, 31.03.10 & 31.3.11, it is clear that the assessee has followed the same system of revenue recognition i.e. AS-7 in all the subsequent Assessment Years. It was also submitted on behalf of the assessee that as per Assessment orders passed u/s 143(3) of the Act on 29.10.10 for Assessment Year 2008-09 and on 13.5.2011 for 2009-10, the Assessing Officer has accepted th .....

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d AS-7 for recognition of revenue which was changed w.e.f. 1.4.2006. 16. It is relevant to mention that the assessment proceedings were completed under Section 143(3) of the Act on 15.12.2009 and the CIT issued impugned order u/s 263 of the of the Act on 12.3.12 and impugned order was passed on 27.3.12 and entire proceedings of issuance of notice and passing order were completed within 15 days time. We further observe that in response to the show cause notice u/s 263 of the Act, the a .....

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he CIT has not given any findings on the issue of consistency in following the AS-7 in the subsequent Assessment Years and when he is issuing notice on 12.3.12 and passing orders on 23.12.12, it is obvious that the copies of the annual accounts for the year ending on 31.3.07, 31.3.08, 31.3.09, 31.3.10 and also copies of the assessment orders for Assessment Year 2008-09 and 2009-10 (supra) were part of assessment records and if the same were taken into consideration in the light of submissions an .....

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