TaxTMI 
TaxTMI 
2016 (5) TMI 1229
X X X X Extracts X X X X
X X X X Extracts X X X X
....e AO on the basis of form No. 26AS of the assessee which showed the gross hire charges from Punj Lloyd Ltd of Rs. 6,10,41,854/- whereas as per the books of accounts of the assessee the amount was Rs. 5,56,09,575/-. 3. Brief facts of the case are that the assessee filed his return of income on 29.9.2010 declaring total income at Rs. 55,85,540-/. Initially the return was processed under section 143(1) of the Income Tax Act, 1961 (the Act) and thereafter the case was selected for scrutiny and the statutory notices u/s 143(2) and 142(1) was issued and served upon the assessee. The assessee an individual, while having salary income from Falcon Cargo Services India Pvt Ltd and Falcon Offshore Services India Pvt Ltd. amounting to Rs. 42,00,000/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mercantile system of accounting and therefore, the income which accrued during the particular year should have been accounted for accordingly regardless of the fact, whether the bills raised or not. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority, who also confirmed the action of the AO by considering and rejecting the submissions of the assessee. The observations of the ld.CIT(A) as has been incorporated in his order at para 3.1 to 4 are reproduced below: "3.1 I have carefully considered the facts stated in the assessment order as well as oral and written submissions of the Ld. Authorized Representative. It is undisputed that assessee's books of account are based on merca....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Thus period of hiring of vessel by Punj Lloyd Ltd. and providing consequent services falls in first half year of instant A.Y. although invoice is dt.31.5.201O. It is very much surprising that inspite of hiring period for the month of September 2009, the assessee had made invoice dt.31.5.201O. Similarly last invoice dt.2.4.201O represents period of hire from 26.3.2010 to 9.4.2010 and is represented by an amount of Rs. 20,68,125/-. These facts clearly shows that inspite of providing services in the instant year, the assessee had prepared invoice as per its convenience and not accordance with principles of accounting and therefore contention of the assessee cannot be accepted. On perusal of copy of TDS certificate issued by Punj Lloyd Ltd. is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....)[201O] 194 Taxman 37(KAR.) supports the action taken by the A.O. For ease of reference, relevant caption note of said decision is reproduced herewith as under :- "Section 28{i}, read with section 145 of the Income-tax Act, 1961 - Business income - Chargeable as - Assessment year 2005-06 - Assessee was deriving income from hiring of vehicles - During assessment proceedings, Assessing Officer noticed that amount of TDS certificates enclosed with return was more than receipts disclosed in income and expenditure account - Assessee explained that a portion of said TDS deductions was claimed in subsequent year and excess amount was also received by her in subsequent year and excess amount was also received by her in subsequent year - As....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xpenditure were accounted for in that year. The ld. AR also argued that had the bills of hire charges accounted for in the current year, credit of service tax on the said hire charges would not have been available to the assessee. The ld. AR finally submitted that if both the years were taken together i.e. assessment years 2010-11 and 2011-2012, the whole exercise of the department is rendered futile and waste of time as it became tax neutral for the reason that the assessee had paid the income tax in the next financial year which was not in dispute and virtually and factually there was hardly any difference in the gross receipt of hire charges as mentioned in the form no.26A and accounted for by the assessee. The ld counsel submitted that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....td accounted the expenditure in the current year i.e F.Y. 2009-10 relevant to AY 2010-11 and also deducted TDS thereon. We find merit in the arguments of the ld AR and also note that the whole exercise by the AO is neutral tax unit as the assessee had duly accounted for the difference of Rs. 54,32,279/- in the next financial year and also booked the corresponding expenditure in that year and the return of income was filed accordingly and was also accepted by the AO. We also find merits in the arguments of the ld. AR that the credit of service tax on the hire charges would not be available to the assessee had he booked the said hire charges under the current financial year. Looking to the totality of facts of the case , we are of he opinion ....