TaxTMI 
TaxTMI 
2020 (1) TMI 1520
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....the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made by the Assessing Officer amounting of Rs. 1,91,00,000/- made on account of deferred income by ignoring the fact that the grant is of revenue income and the entire income should be charged for tax for the year under consideration." 2. "On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made by the Assessing Officer amounting to Rs. 42,04,450/- made on account of difference amount paid by NIRD as per 26AS and shown by the assessee by ignoring the facts that the assessee has taken complete TDS benefit during the year but difference of above income has not shown in the books of the assessee." 3.....
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....ant in aid from the Central Government. The total cost of the project was Rs. 1491.28 lakhs out of which Rs. 1118.46 lakhs were to be funded by the Central Government and the assessee's contribution of Rs. 372.82 lakhs. The project was to be completed within two years i.e. from 17.05.2020 to 16.05.2012 from the date of realization of the first installment of the payment by the Central Government. The assessee was released a grant of Rs. 2,75,42,077/- during the financial year 2010-11 and Rs. 5,50,84,155/- during the financial year 2011-12 towards first and second installments of grant. According to the assessee, the grant was for specific project which was to be completed within two years. The assessee recognized the revenue from the grants....
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....res during the year. It utilized grant of Rs. 5.26 crores and carried forward the balance grant of Rs. 1.91 crores to the next year. In terms of the MOU with the National Institute of Rural Development (NIRD), the project was to be completed within two years i.e. from 17.05.2010 to 16.05.2012 from the date of realization of the first installment of the payment of the Central Government. The appellant was released grant of Rs. 2.75 crores during the F.Y. 2010-11 and Rs. 5.50 crores during the year under consideration which was accounted for as per AS -12 as above. The AO however, was of the view that the deferred portion of the grant is also taxable during the year as the appellant is following mercantile system of accounting. The Ld. AR has....
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....r the A.Y. 2013-14. I have perused the accounting of Government grant by the appellant company, whereby it is consistently recognizing the expenditure incurred for the project against the grant received during the year and offering matching income. The unutilized grant is carried forward to the next year and is reported as deferred revenue grant in the Balance sheet. This accounting treatment is as per the MOU with the Government and also clause 15 of the Accounting Standard AS - 12 prescribed by the ICAI. The appellant is consistently following this accounting method. On the issue of consistency, the Hon'ble Supreme Court in the case of Radhasoami Satsang vs. CIT 1992 AIR 377 has ruled as under: "..................................
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....ng method and thus, the learned CIT(A) has deleted the addition in view of the rule of consistency. In view of the facts and circumstances of the case above, we do not find any error in the order of the learned CIT(A) on the issue in dispute. Accordingly, we uphold the same. The ground no. 1 of the appeal of the Revenue is dismissed. 4. The ground no. 2 of the appeal relates to deletion of addition of Rs. 42,04,450/- made on account of difference amount paid by NIRD as 26AS. 4.1 The facts qua the issue in dispute is that National Institute of Rural Development (NIRD) deducted TDS of Rs. 11,56,767/- on the entire grant of Rs. 5.50 crores issued to the assessing during the year under consideration. However, the assessee offered income o....
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....t source and paid to the Central Government and the income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax." 5.3. Since the appellant as per the method of accounting has not booked the entire revenue of Rs. 5.50 crores on which TDS is claimed but has only offered receipts of Rs. 5.08 crores during the year, the AO is directed to withdraw the TDS credit allowed to the appellant on the amount of Rs. 42,04,450/-. Further, as the said amount is deferred to the next year as per the accounting method of Government grant, the addition of Rs. 42,02,450/- shall also stand deleted. This ground of appeal is partly ruled ....