TaxTMI 
TaxTMI 
2021 (7) TMI 1072
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.... leave to amend or al ter any ground or to submit additional new ground, which may be necessary. 2. The Brief facts of the case are that, the assessee is engaged in the business of credit rating, evaluation, appraisal of debts and commitments, information services, consultancy and advisory services. The assessee company has filed the return of income electronically on 28.09.2012 with total income of Rs. 126,46,31,880/-, the return of income was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny under the CASS and notice u/s 143(2) and 142(1) of the Act along with questionnaire are issued. In compliance the Ld.AR of the assessee appeared from time to time and filed the information and explanations. The A.O on perusal of the financial statements found that (i) the assessee company has made a excess claim of leave encashment expenses and disallowed Rs. 1,30,30,181/- .(ii)Similarly A.O. identified that the assessee has debited expenses of Rs. 14lakhs related to increase of authorized capital. The A.O found that the claim is in the nature of capital expenditure, therefore the same was disallowed.(iii)IPO expenses Rs. 11.25 lakhs was disallowed u/s 37(1) ....
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....tion on surveillance fee due to change in method of system in accounting policy. The CIT(A) considered the observations of the A.O on this particular disputed issue at page 5 to Para 7 of CIT(A) order and further at Para 7.1 the written submissions of the assessee on the surveillance fee. The CIT (A) on perusal of the submissions and the findings in order of the A.O. has observed that the Assessing officer (A.O.) has not given any finding that, the change in revenue recognition policy in respect of surveillance fee is not giving appropriate or correct picture of financial statements. The CIT(A) find that the A.O has not demonstrated how the income change in revenue recognition shall result in under estimation of profit. The CIT(A) find the policy adopted by the assessee is in line with Accounting standard issued by the ICAI. Further no addition was made on account of change in the accounting in the A.Y.2013-14 on this disputed issue of surveillance fee. Accordingly, the CIT(A) has observed that the change in method of revenue recognition accounting with respect of surveillance fee is bonafide and directed the A.O. to delete the addition and also allow the credit of TDS certificate ....
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....mmittee after the end of the financial year and the same was incorporated in the financial statements. Whereas, the contentions of the Ld.AR that the assessee company is following mercantile system of accounting and there are operational reasons for bifurcation to give correct revenue on quarterly basis. The A.O has made addition of surveillance fee which was not offered in the current year but in the subsequent yeari.e.A.Y.2013-14, where the assessee has offered in the revenue from operations as per note 17 to the profit and loss account which cannot be disputed. The Ld.AR has made submissions with respect to the income recognition policy, Accounting standards, effect of change in accounting policy and referred to the material information adopted in the similar credit rating agencies. At this juncture, we considered it appropriate to refer to the observations of the CIT(A) at page 14 to 15 Para 7.2 of the order which is read as under: "7.2 I have carefully perused the assessment order and the submission of the appellant. It is seen that the AO has not given any finding that the change in revenue recognizing policies which respect to surveillance fees is not giving the appropriat....
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.... observed that the change in method of accounting was not supported by any adverse observation of the A.O. Further, the A.O. has not explained, how the change in method of accounting system on income recognition would show under estimation of income. Finally CIT(A) concluded that the method of accounting fallowed is a bonafide. The Ld.AR has emphasized with the submissions in respect of revenue recognition, committee on ICAI accounting standards and the income has to be considered on the quarterly basis in the financial statements. Therefore the assessee has adopted for change in accounting policy and the income is reflected accurately. The contentions of the Ld.AR are that the change in method of accounting policy is followed by the minutes of the board of directors of the company referred at page 21 of the paper book. Further for the subsequent assessment year from 2013-14 to 2017-18, the assessment orders were passed u/sec143(3) of the Act. Where the similar accounting policy was fallowed for income recognition referred at page 52 to 92 of the paper book. The Ld. AR trust upon the fact that the assessment orders have been passed considering the assessee's submissions and there ....