TMI Blog2018 (10) TMI 1973X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred in the relevant assessment cannot be apportioned towards the income earned in the subsequent assessment year. At this juncture we are reminded of the various decisions of the Higher Judiciary wherein it was held that expenditure incurred towards advertisement is allowable as deduction in the relevant assessment year though certain benefit arising out of the same can be attributable to subsequent years. As per Mercantile System of Accounting, only the accrued income for the relevant assessment year can be treated as the income for the relevant assessment year. In the case of the assessee, there is no dispute that the amount received by the assessee pertains to the services to be rendered in the immediate succeeding assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption fees received in advance during the relevant assessment year as the income of the relevant assessment year without considering the fact that the income did not accrue to the assessee during the relevant assessment year. 3. The brief facts of the case are that the assessee is a private limited company formerly known as M/s. Consim Info Pvt. Ltd., is engaged in the business of rendering matrimonial other online services, filed its return of income for the assessment year 2007-08 on 31.10.2007 electronically admitting total loss of Rs.26,46,45,521/-. The case was selected for scrutiny under CASS and assessment was completed on 31.12.2009 determining the loss at Rs.26,78,16,064/-. Subsequently it came to the notice of the Ld.AO that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oliday Resorts India Ltd., vs. ACIT reported in 111 ITD 116 and the decision of EID Parry (India) Ltd., vs. CIT reported in 126 taxmann 174. 5. On appeal, the Ld.CIT(A) confirmed the order of the Ld.AO by observing as follows relying in the decision cited by the Ld.AO in his order:- 9. The assessee has quoted various decisions to claim that the matching principle of revenue and expenditure should apply. In this regard, it is noted that the expenses related to the uploading of the profile of any applicant is incurred at the time of uploading itself. The expenses in the nature of preparation of website and other software requirements, hardware support, marketing the services, receiving of profile by prospective applicants, verificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and carefully perused the materials on record. It is not disputed that the amount of Rs.2,68,12,597/- was received in advance for the services to be rendered in the immediate succeeding assessment year. Accordingly the assessee had treated the same as the income in the succeeding assessment year. However the Ld,Revenue Authorities was of the view that there is no concept of deferred income as per the provisions of the Act and therefore treated the amount of Rs.2,68,12,597/- as the income of the assessee for the relevant assessment year though it pertained to the succeeding assessment year. Further the Ld.CIT(A) was of the view that since the assessee had incurred certain expenditure in the relevant assessment year, a portion of which is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, there is no dispute that the amount of Rs.2,68,12,597/- received by the assessee pertains to the services to be rendered in the immediate succeeding assessment year. Hence the assessee has rightly recognized its revenue of Rs.2,68,12,597/- in the succeeding assessment year. Therefore the addition made by the Ld.AO which is further sustained by the Ld.CIT(A) by treating the fees received in advance for the succeeding assessment year as the income of the assessee for the relevant assessment year is erroneous. Hence we hereby set aside the order of the Ld.CIT(A) and direct the Ld.AO to delete the addition made by him for Rs.2,68,12,597/-. 8. Further it is pertinent to mention that the facts in the case of the assessee are not identical t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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