2014 (6) TMI 472

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.... The brief facts of the case are as under:- The assessee is an electronics engineers, proprietor of M/s Comcon Industries, having registered office at S-54, Okhla Industrial Area, Phase II , New Delhi 110020, engaged in the manufacturing and selling of broadcast equipments besides representing some foreign companies in India. During the previous year, assessee received an amount Rs. 63,49,448.00 from M/s Dalet Media System, France towards the commission and cost involved to execute installation, testing and commissioning of system and at site warranty support to the end customer for order booked from M/s Maharashtra Electronics State Corporation Ltd (herein after called : MELTRON ) to execute "Supply , installation , testing and commissioni....

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....g services. d) No details of expenses carried out by the assessee has been provided. 4. Upon assessee's appeal Ld. CIT(A) considered the submissions of the assessee. Ld. CIT(A) held as under:- "Rival contentions have carefully been considered. After considering the rival submissions I find a substantial support in the contentions of the Id. A.R of the appellant. The nature of the business of the appellant is as such that the same has to be recognized as per the Accounting Standard 9 and AS 29. In the Accounting Standard 9 issued by the ICAI the revenue is recognized in a transaction involving rendering of services either under the completed service contract method or under the proportionate completion method whichever relates the r....

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....income in the year under consideration on the basis of accrual of the right to appropriate the money. Since the receipt was relatable to particular period in future, it would fructify and mature into income during that period and not earlier. The policy adopted by the assessee for recognizing its revenue was followed consistently for the last several years which was not distributed by the department in the earlier years. It has also been noticed that the accounting policy adopted by the assessee was in conformity with the accounting standard AS 9 and AS 29. Therefore, I do not find any reason to interfere with the policy adopted by the assessee for the last so many years in consideration. Otherwise also the revenue has not escaped assessmen....

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....onsidered as income for the year under consideration. Assessee would legally claim the amount only after the rendering the services. Since receipt was relatable to a particular period in future, it would fructify and mature into income during that period and not earlier. We further find that assessee has been following this principle of recognizing revenue in the past also. This has not been disputed by the Revenue. In these circumstances, when the assessee has been following AS-9 and AS-29 and has been following consistent system of accounting, we agree with the CIT(A) that there is no need to interfere with the assessee's method of accounting. 6.1 Furthermore, we find that the impugned amount has been offered by the assessee for taxati....