2016 (12) TMI 400

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....Income Tax Act, 1961 ('the Act' hereinafter) for assessment year (AY) 2011-12 dated 24.01.2014. 2. The only issue arising in the instant appeal is whether the assesse had, in the facts and circumstances of the case and in law, correctly reversed its sales to the extent of Rs. 83.93 lakhs and, thereby, the corresponding income of Rs. 32.36 lakhs, valuing the relevant goods, since dispatched to its' customers, as part of the closing inventory, at Rs. 51.57 lacs. The assesse-company, in the manufacture of electronic weighing; material handling; and batching and blending systems, dispatched weighing machines and spares to different customers vide invoices raised on different dates from 28.03.2011 to 31.03.2011, recording the corresponding sa....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... on delivery. Both in the strict legal sense as well as under the accounting norms, which find expression in Accounting Standard (AS) 9 (issued by ICAI) - the two in fact being in harmony in-as-much as the delivery of goods generally signifies transfer of all significant risks and rewards associated with the ownership of goods, sales and, thus, income would accrue to the seller only on their delivery. It is only upon delivery to and the acceptance of goods by the corresponding party that a debt in favour of the transferor inures and income embedded in the consideration for transfer accrues. Even if therefore the sales, booked - as in the instant case, on the basis of invoices raised, are not reversed in its accounts, an assessee is entitled....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....g sales in the books of account, which may be done as a matter of course or as a matter of expediency. We say so as otherwise the assessee shall have to, for each consignment of goods dispatched, ascertain the exact date of delivery and book sales accordingly in-as-much as the date of dispatch and the date of delivery would invariably be different. However, as they would ordinarily fall within the same accounting year, the same would be to no consequence. The word 'generally' occurring in the relevant accounting policy, in our view, in the absence of anything to the contrary, is to be understood in this context, even as explained by the ld. A.R during hearing, emphasizing that neither in the past nor in the future had such a situation occur....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....s is the assessee-sellers's responsibility. Though there is nothing on record to substantiate the same, we consider this is as reasonable as any buyer would only want a functional machine, even as installation by the seller may be insisted upon only where some technical expertise is required. The same though does endorse the assessee's case of the supplier being obliged to deliver the same at the buyer's premises. Then, again, who has the insurable interest in the goods under transit? We find no inquiry and, accordingly, no finding in the matter, though, to be fair to the Revenue, there is equally no assertion by the assessee in this regard at any stage. We consider this as relevant and, in fact, as clinching the issue. If the insurable int....