TaxTMI 
TaxTMI 
TaxTMI 
2016 (8) TMI 361
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....ase and in law, the learned CIT(Appeals) has erred in deleting the addition of Rs. 3,00,88,607/- made by the AO by disallowing the provisions directly debited in the balance sheet. 2.1. The Ld. CIT(A) ignored the fact that the assessee did not route the expenses in question through profit & loss account and also ignored the fact that the expenses have been claimed only to reduce the tax liability of the year." 2. The brief facts of the case are that the assessee company is engaged in the business of providing fleet management services. The assessee filed its return of income declaring income of Rs. 35,01,314/-. The assessment was completed u/s. 143(3) of the IT Act at an income of Rs. 3,35,89,921/- and the AO made the addition of Rs. 3,....
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....ried the matter before the ld. CIT(A), who after considering the detailed reply of the assessee and various decisions of Hon'ble High Court and Supreme Court, deleted the addition vide impugned order. The relevant observations of the ld. CIT(A) read as under : "I have carefully considered the submissions made on behalf of the appellant, the findings of the Assessing Officer and the facts on record. I have also perused the case laws relied upon by the Assessing Officer as well as by the appellant. The Assessing officer has made an addition of Rs. 3,00,88,607/- which is the amount appearing during the year in the buffer account as current liabilities on the ground that no explanation was furnished by the appellant with regard to the query ra....
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....costs and risk associated costs, which have not crystallized during the year. In the opinion of the A.O. , if the transaction would have been routed through the profit and loss account, the amount transferred to the balance sheet as buffer would have been shown as below:- Income accrued from customers Income accrued from customers Rs.25,06,58,510 Less: Actual expenses incurred Rs.(21,35,34,129) Less: Provision for maintenance & other expenses Rs.(3,00,88,607) Income from services Rs.70,35,774 4.2 It is established legal position that an assessee can follow any recognized method of accounting and condition is that the same method has to be followed consistently. The assessee has followed completed service contract method whi....
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....herwise, the presumption would be that the entire exercise is revenue neutral. In this case, that exercise has never been undertaken. The Assessing Officer was required to demonstrate both the methods, one adopted by the assessee and the other by the Department. In the circumstances, we see no reason to interfere with the conclusion given by the High Court and the Tribunal. " 4.3 This view is also supported by several decisions some of which are cited below:- (i) CIT vs. Bilahari Investments (P.) Ltd. [2008] 299 ITR 1 (SC); (ii) Bakshi Vikram Vikas Construction Co. (P.) Ltd. vs. Dy. CIT [2007] 158 Taxman 61 (Delhi) (Mag.): (iii) IRB Infrastructure Ltd. vs. ITO [2008] 115 ITD 374 (Mum.); and (iv) Awadhesh Builders vs. ITO [2010] 37 ....
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....ethod of accounting in the past and therefore, there is no reason to change the system of accounting consistently being followed by assessee-company and accepted by the Revenue authorities. Reliance was placed on the decision of Hon'ble Supreme Court in the case of CIT vs. Bilahari Investment P. Ltd., 299 ITR 1 (SC) and plenty of other decisions of Hon'ble High Courts and Tribunal. He, therefore, submitted that the conclusion reached by the ld. CIT(A) on this count is not in any way be said to be illogical or illegal. 5. Having considered the rival submissions in the light of relevant material available on record, we find no justification to interfere with the order of the ld. CIT(A) on the issue under consideration. It is notable that the....