TaxTMI 
TaxTMI 
2023 (1) TMI 867
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....ted to be engaged in the business of civil contractor work of road and building. The assessee electronically filed its return of income for A.Y 2015-16 on 12.10.2015 declaring total of income at Rs. 3,62,62,910/-. The case of the assessee was selected for scrutiny and thereafter assessment was framed u/s. 143(3) vide order dated 26.12.2017, and the total income was determined at Rs. 33,42,62,910/-. 2.2. Aggrieved by the order of the AO, assessee carried the matter before the Ld. CIT(A) who vide order dated 14.02.2019 in appeal no. 10505/17-18 allowed the appeal of the assessee. 3. Aggrieved by the order of the Ld. CIT(A), the Revenue is now in appeal and has raised the following grounds:- 1 "Whether on the facts and circumstances of the....
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....red by the assessee and the assessee has not been able to demonstrate that the expenses was incurred wholly and exclusively for the purpose of business, the amount of Rs. 29.80 crore cannot be allowed as deduction. He accordingly, denied the claim of expenses of Rs. 29.80 crores and made its addition. 5. Aggrieved by the order of AO assessee carried the matter before Ld. CIT(A). CIT(A) deleted the addition by observing as under: 4. DECISION: It is seen that the assessee is a civil construction contractor. It had executed contracts and shown the revenue from operations at Rs. 104.86 crores, the details whereof are in Note No. 15 of the profit & loss account and it included a separate figure of Rs. 29.80 crores on account of the claims lod....
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....raph 11 of ICDS III. Further that without prejudice to the above contentions, that even as per paragraph 5 of ICDS IV of Revenue Recognition it does not become income. 4.3 The contention of the Appellant has been considered and the order of AO has also been perused. Since the three grounds are interlinked same are being disposed off in a consolidated manner. The appellant is a contractor and during the course of its business activities had executed various contracts and had shown the revenue from operations at Rs. 104,85,73,341/-, the details whereof had been given in Note No. 15 attached to the profit and loss account of the appellant. Such Revenue from operations also include an amount of Rs.29,80,00,000/- which comprises of the variou....
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....recognition. As per paragraphs 9 and 11 of IDS III, which is reproduced hereunder: "9. Contract revenue shall be recognized when there is reasonable certainty of its ultimate collection." "11. Where contract revenue already recognized as income is subsequently written off in the books of accounts as uncollectible, the same shall be recognised as an expense and not as an adjustment of the amount of contract revenue" Similarly, paragraph 5 of ICDS IV of normal Revenue Recognition - which also has the same position regarding claims made, and it is reproduced hereunder: "5. Where the ability of assessee to the ultimate collection with reasonable certainty is lacking at the time of raising any claim for escalation of price and export....
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....othetical claim of Rs.29.80 crores in the books of account, also made a corresponding debit entry of Rs.29.80 crores in the profit & loss account in order to nullify the effect of book entries made by the appellant in relation to disputed additional claims for the purpose of working out the real income accrued under the law which is chargeable to tax u/s 4 of the Act, as explained by Supreme Court in the case of Shoorji Vallabhdas (supra). The debit entry of an amount of Rs.29.80 crore is basically not the expenditure claimed by the appellant as inferred by the Assessing Officer, but such entries have been made to nullify and to balance the effect of credit entries made by the appellant in books of account. It is not the case of the Asse....