Appeal dismissed: Trade deposit not revenue receipt. Double taxation avoided. Assessee's accounting method upheld.

The Revenue's appeal against the deletion of an addition of a trade deposit treated as a revenue receipt was dismissed. The CIT(A) found that the trade deposits were received as security and not as sales proceeds, leading to double taxation. The Tribunal upheld the CIT(A)'s decision, emphasizing the consistent accounting method followed by the assessee and rejecting the Revenue's arguments. The appeal was dismissed on 24/05/2018.

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Issues:
Revenue's appeal against deletion of addition of trade deposit as revenue receipt.

Analysis:
The Revenue appealed against the deletion of an addition of Rs. 80,00,000 made on account of a trade deposit treated as a revenue receipt by the assessee. The sole issue raised was whether the CIT(A) erred in deleting the addition. The assessee, engaged in the automobile business, had shown trade deposits of Rs. 80,00,000 received from parties in the balance sheet. The AO added this amount to the total income, considering it as the value/sale proceeds of vehicles. However, the CIT(A) deleted the addition after considering the appellant's submissions and the consistent method followed by the assessee in previous years.

The CIT(A) noted that the trade deposits were received as security from Authorized Representative Dealers (ARDs) and Sales Service Providers (SSPs) for displaying vehicles. The sales proceeds were accounted for when actual sales occurred, and the deposits were returned. The CIT(A) observed that the AO's action was against basic accounting principles and led to double taxation. The Tribunal, in a similar case involving the assessee, had decided in favor of the assessee, emphasizing the consistent accounting method followed. The Tribunal found no reason to interfere with the CIT(A)'s order, and the Revenue's appeal was dismissed. The judgment was pronounced on 24/05/2018.

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