TaxTMI 
TaxTMI 
2022 (3) TMI 426
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.... revenue to be recognized under the BSNL project in AYs 2007-08 and 2008-09 are similar to the facts and issues involved in AY 2006-07. ITAT vide its order dated March 2, 2012, for AY 2006-07 in assessee's own case has set aside this issue of BSNL revenue and remanded it back to the file of the AO for re-adjudication. 11.11 Ld. Counsel for assesse further stated that the matter for AY 2006-07 has not yet been re-adjudicated by the AO. Since the relevant details submitted by the assesse have been overlooked by the AO and DRP in these years and the earlier years' revenue recognition has important bearing on the years in question. After hearing both the parties and perusing material available on record, we deem it appropriate to set aside the orders of the AO on the issues, i.e. revenue under BSNL project including percentage of completion, and remand it back to the file of the AO for read-judication. Needless to say that the assessee will be given adequate opportunity of being heard and to provide necessary details / working in this behalf. The AO shall consider the same afresh in accordance with law. These grounds of the assessee are allowed for statistical purposes." 2.1 Post ....
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....ring AYs 2005-06 to 2007-08, yet the fact remains that the assessee has not accepted the AO's order for AY 2006-07 and its appeal is pending. Therefore, it would not be proper at this stage to reduce the recognizable revenue entirely in AY 2008-09, when the matter for AY 2006-07 is still sub-judice as on date. If the assessee gets relief in decision on its appeal, the consequential effect to the appellate order will be given in the relevant assessment year. 8.12 Regarding the issue of deduction on account of AMC cost, it is observed that the assessee has expressed satisfaction over the allowance of 1/3rd of AMC cost given by the AO in the original proceedings, however, at the same time, the assessee agitates taxing of AMC revenue during the subject AY 2008- 09 on the ground that the same has already been taxed in the earlier years. The matching principle as pointed out by the assessee itself requires that revenue and cost must be matched to arrive at the true income. 8.13 The entire AMC revenue amounting to Rs. 44,36,24,597/- has been recognized by the assessee during the year under consideration, which means that going by percentage completion method, the revenue credited fo....
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....he percentage completion method for the project with BSNL and till the end of present Financial Year i.e. upto31st March, 2008, the work upto97.76% of the total estimated revenue i.e. Rs. 1606,85,17,755/-, which comes to Rs. 1570,82,26,462/- has already been completed and recognized by appellant but against it, the AO has already recognized the aggregate amount of Rs. 1629,35,75,658/ (Rs. 519,96,70,457/- + Rs. 827,73,00,682/- + Rs. 281,66,04,519/-) from A.Y. 2005-06 to 2007-08 and taxed in the corresponding years. Thus, as per appellant, the AO has already taxed the revenue more than what the appellant has computed as per percentage completion method and, therefore, the excess amount taxed, should be reduced from the income of the year under consideration by giving the set off of the said income. The appellant has worked out such excess revenue at Rs. 39,77,95,919/- as per the chart. 3.2 However, the perusal of the facts and details given by appellant reveal that the appellant has misled by giving the incorrect and selective figures of the revenue recognized and as taxed by the AO to arrive at the final figure. The perusal of assessment order of A.Y. 2005-06, which is the first ....
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.... 1961 ('Act') ('impugned order') confirming the order passed by the Deputy Commissioner of Income Tax, Circle 18(2), New Delhi ('learned AO') under section 254/143(3) of the Act for the subject AY, on the following grounds: 1. Ground no. 1: Non-grant of deduction for excess revenue taxed in earlier years: 1.1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the order of the learned AO wherein excess revenue under the BSNL project amounting to 1NR 39,77,95,919 was taxed. 1.1.1 On the facts and in the circumstances of the case and in law, the learned CIT(A) has failed to appreciate that for AYs 2005-06 to 2008-09, revenue of INR 15,70,82,26,462/- has been offered to tax by the Appellant under BSNL project on project completion basis, whereas the learned AO has taxed higher revenue of INR 16,10,60,22,380/- for the said AYs, resulting in taxation of excessive revenue amounting to INR 39,11,95,919 under BSNL project up to the subject AY. 1.1.2. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in not appreciating that revenue to be recognised and taxed upto the subject AY cannot exce....
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...., amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal." 3.0 Before us, the Ld. Authorized Representative ("AR") of the Assessee submitted that during the assessment year ("AY") 2005- 06, the Assessee entered into a long term contract with BSNL for supply of telecommunication network system on a turnkey basis, which was finalized in AY 2010-11. Under this contract, the Assessee was responsible for planning, engineering, supply, installation, testing and commissioning of GSM based cellular mobile network across North East-I and Southern Telecom Region in India. Revenue recognition under the project with BSNL was done as per Percentage Completion Method (PCM). 3.1 It was further submitted that in the appeal effect order dated 26.06.2015, the Assessing Officer accepted that during the relevant period, estimate of revenue under BSNL project was INR 1606,85,17,755/- and that 97.76% of the project was completed, and, thus, the recognizable revenue of the Assessee from BSNL project was INR 1570,82,26,462/-. However, the Assessing Officer did not reduce the amount of revenue under BSNL project which had already....
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....m of the Assessee was premature. In this regard, it was argued that, undisputedly, since the inception of the BSNL project (i.e., AY 2005-06) only percentage completion method has been applied by the Assesseeas well as the Assessing Officer both, therefore, it was not open for the Ld. CIT(A) to deviate from the consistent accounting policy on an ad hoc basis. The Ld. AR further pointed out that the proceedings for earlier assessment years (viz. AY 2006-07 and AY 2007-08) have been settled and have attained finality under the Direct Tax Vivid Se Vishwas Act, 2020 whilst accepting the income assessed by the Assessing Officer. Further, even the proceeding for AY 2005-06 has attained finality. Even the subsequent years i.e., AY 2009-10 and AY 2010-11 have attained finality, as the Assessing officer accepted the position of the Assessee and no addition was made on this account in the assessment order. 3.5 The Ld. AR, whilst referring to the "Schedule L" to Profit & Loss Account at Page 127 of the paperbook and Annexure 3 to submission dated 19.12.2021 at Page 212 of paperbook, submitted that the Ld. CIT(A), in the impugned order, has inadvertently failed to take into account the revenu....
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....oceedings for earlier years (i.e., AY 2005-06 to AY 2007-08) have been settled and/or attained finality and, thus, the income assessed by the Assessing Officer is frozen. 5.1 We are of the considered opinion that whilst applying the percentage completion method, the estimated revenue of a project would be dynamic year-on-year and would keep on changing over the contract period. Thus, the myopic view taken by the Ld. CIT(A) in comparing the total estimated revenue from BSNL contract vis a vis the assessment order of AY 2005-06 (i.e., sum of INR 1617,62,89,128/-) and as claimed by the Assessee (i.e., sum of INR 1606,85,17,755/-) in the relevant AY 2008-09, is baseless and devoid of merits. Our view is fortified by the judgment of the Hon'ble Supreme Court in CIT v. Bilahari Investment (P.) Ltd. (2008) 299 ITR 1 (SC), wherein, whilst enunciating the difference between completed contract method and percentage of completion method, it was observed as follows: "15. Recognition/identification of income under the 1961 Act is attainable by several methods of accounting. It may be noted that the same result could be attained by any one of the accounting methods. Completed contract method ....