2015 (11) TMI 751

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....ic adjudication. 3. The second ground is against deletion of disallowance of Rs. 6,72,86,626/-, being the addition made by the Assessing Officer u/s 41(1) of the Income-tax Act, 1961 (hereinafter also called 'the Act') 4. Briefly stated, the facts of the case are that the assessee is a Public Sector Undertaking engaged in providing conceptual studies and management consultancy, healthcare facility, design, project management, procurement of health related products and logistic installation. During the course of assessment proceedings, it was observed by the Assessing Officer that there were certain old sundry creditors appearing in the assessee's balance sheet as at the end of the year. On being called upon to furnish the ....

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....hereof. It is only then that the amount for which remission or cessation is obtained that it becomes chargeable to tax u/s 41(1) of the Act. Adverting to the facts of the instant case, we find that the assessee was simply acting on behalf of its customers/clients and Government and getting consultancy fee from the client on account of services rendered. The sundry creditors as appearing in its books are actually on account of clients and not of the assessee. In such circumstances, the provisions of section 41(1) cannot be applied. It is further a matter of record that the assessee furnished details about the disputes going on between the two sides for which the payments were not made. The Executive Director of the assessee in his certificat....

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....peal. 7. After considering the rival submissions and perusing the relevant material on record, it is noticed that the assessee gave Note No.4 in Notes to Accounts enclosed with the return of income stating as under:- "Hitherto the company was recognizing the consultancy fee for "work done but not billable in respect of incomplete stages on the basis of technical certificate from the concerned SBU's/Functional Department. It was noticed that consultancy fee booked on the basis of above was not due as per agreement with clients and contractually not recoverable until completion of a particular stage. Part of consultancy fee accounted for on this basis as accrued income in previous year could not be realized and had to....