Revenue's Appeal Dismissed on Accounting Method Challenge

The revenue's appeal against the CIT(A)'s order for AY 2010-11, challenging the accounting method and tax deferment, was dismissed by the ITAT. The ITAT upheld the CIT(A)'s decision, citing a previous Tribunal order and a Supreme Court decision, determining the total loss for the assessee at ?(-)9,79,91,325. The adjustment made by the AO was deemed unwarranted, and the revenue's appeal was dismissed, rendering the assessee's cross objections infructuous.

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Issues:
Appeal by revenue against CIT(A)'s order for AY 2010-11 regarding accounting method and tax liability deferment.

Analysis:
The revenue appealed against the CIT(A)'s order for AY 2010-11, challenging the observation that the assessee's accounting method did not intend to defer tax liabilities. The revenue contended that revenue should be recognized as per the contract terms. The assessee, a resident corporate assessee providing corporate finance services, was assessed at a loss of Rs. 10.81 crores after adjustments. The adjustment of professional income amounting to Rs. 1.01 crores was the subject matter of the appeal.

During assessment, the AO noted that professional fees billed by the assessee in April 2010 related to services rendered in the previous financial year. The AO adjusted the income, enhancing the loss by Rs. 1.01 crores. The assessee challenged this before the CIT(A), who ruled in favor of the assessee, citing previous years' orders. The revenue further appealed to the ITAT.

The AR referred to a previous Tribunal order in the assessee's favor for AY 2009-10, which the DR agreed to. The ITAT reviewed the AY 2009-10 order where it was noted that income had been accounted for in subsequent years, and there was no undue benefit to the assessee. Citing a Supreme Court decision, the ITAT upheld the CIT(A)'s decision, dismissing the revenue's appeals.

Consequently, the revenue's appeal was dismissed, and the assessee's cross objections were deemed infructuous. The adjustment made by the AO was deemed unwarranted, and the total loss of the assessee was determined at Rs.(-)9,79,91,325. The ITAT pronounced the order on 14th March 2018, following the previous judgment in the assessee's favor.

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