TaxTMI 
TaxTMI 
2012 (7) TMI 64
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....ar 2002-03 on the ground that, the assessee has booked loss in the financial year relevant to assessment year 2002-03? 3. Whether the Tribunal committed an error in holding that, the assessee is entitled to claim expenses of Rs. 58,83,717/- in the assessment year 2002-03 when the liability was crystallized during the financial year relevant to assessment year 2003-04? 4. Whether the Tribunal was correct in holding that, brought forward business loss and unabsorbed depreciation should not be adjusted before computing deduction under Section 10A of the Act? 3. The assessee company is in the business of manufacturing and trading in electrical and electronic interconnection devices. For the assessment year 2002-03, the assessee filed return of income on October 29, 2002 declaring a book profit of Rs. 4,30,34,505/-. The return was processed under Section 143(1) and refund of Rs. 18,17,829/- was granted on 31.03.2003. The case was selected for scrutiny under Section 143(2). On 13.10.2003, a notice under Section 143(2) was issued. The assessee was heard. 4. First Substantial Question of Law: An amount of Rs. 23,65.207/-, out of export proceeds has not been broug....
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....hat the Tribunal committed a serious error in interfering with the well-considered orders passed by the lower authorities. 7. Per contra, the learned Senior Counsel appearing for the assessee supported the impugned order. 8. Section 10A(3) reads as under:- "(3) This section applies to the undertaking, if the sale proceeds of articles or things or computer software exported cut of India are received in or brought into India by the assessee in convertible foreign exchange, within a period of six months from the end of the previous year or, within such further period as the competent authority may allow in this behalf. Explanation 1 - For the purposes of this sub-section, the expression "competent authority" means the Reserve Bank of India or such other authority as is authorised under any law for the time being in force for regulating payments and dealings in foreign exchange." 9. A reading of the aforesaid provision makes it clear that the assessee to be entitled to the benefit of Section 10A, the sale proceeds would have to be brought into the country within a period of six months from the end of the previous year. However, the legislature has consciously in express ....
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....cial year 2001-02. Accordingly, a sum of Rs. 58,83,717/- shown as loss on KIADB project is added back to the total income of the assessee. Aggrieved by the same, the assessee preferred an appeal to the Appellate Commissioner, who confirmed the said order. In an appeal against the said order, the Tribunal held that the assessee booked the loss in the financial year 2001-02 as required under the Accounting Standards issued under Section 145(2) of the Act. As the said claim for loss is in accordance with the Accounting Standards, the Tribunal allowed the same. Aggrieved by the same, the revenue is in appeal. 11. The learned Counsel for the revenue assailing the impugned order contends that when admittedly forfeiture took place on 18.04.2002, the assessee can claim loss only for the accounting year 2002-03 and not for 2001-02. When the assessee was following the mercantile practice, the assessee was not justified in booking the loss for the financial year 2001-02. In support of his contention, he relied on two judgments of the Apex Court. 12. Per contra, the learned Senior Counsel appearing for the assessee relied on the accounting standards, which is extracted in the order of th....
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....e right to receive an amount under a contract accrue or arise to the assessee, i.e., come into existence? That depends upon the terms of a particular contract. No other relevant provision of the Act has been brought to our notice for there is none which provides an exception that though an assessee does not acquire a right to receive an income under a contract in a particular accounting year, by some fiction the amount received by him in a subsequent year in connection with the contract, though not arising out of a right accrued to him in the earlier year, could be related back to the earlier year and made taxable along with the income of that year. But that legal position is sought to be reached by a process of reasoning found favour with English Courts. It is said that on the basis of proper commercial accounting practice, if a transaction takes place in a particular year, all that has accrued in respect of it, irrespective of the year when it accrues, should belong to the year of transaction and for the purpose of reaching that result closed accounts could be reopened. Whether this principle is justified in the English law, it has no place under the Indian IT Act. When an ITO pr....
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.... the assessment of the succeeding assessment year. 16. In fact, the Accounting Standards prescribed by the Central Government reads as under:- "Accounting policies adopted by an assessee should be such so as to represent a true and fair view of the state of affairs if the business, profession or vocation in the financial statements prepared and presented on the basis of such accounting policies. For this purposes, the major considerations governing the selection and application of accounting policies are the following namely:- i. Prudence - Provisions should be made for all known liabilities and losses even though the amount cannot be determined with certainty and represents only a best estimate in the light of the available information; ii. Substance over form - The accounting treatment and presentation in financial statements of transactions and events should be governed by their substance and not merely the legal form; iii. Materiality - Financial statements should disclose all material items the knowledge of which might influence the decisions of the user of the financial statements." 17. In the instant case, the assessee was all....