2023 (6) TMI 81

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....i (hereinafter referred as Ld. First Appellate Authority or in short Ld. 'FAA') in appeal No. 28/10393/2019-20 & 26/10205/2019-20 respectively arising out of an appeal before it against the orders dated 31.12.2018 & 31.12.2019 respectively for the AY 2016-17 and 2017-18, passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as 'the Act') by the ACIT, Central Circle-15, New Delhi (hereinafter referred as the Ld. AO). And the Cross Objections have been raised by assessee. Grounds of ITA No. 2404/Del/2022, A.Y. 2016-17 are being taken up to dispose both the appeals. 2. Assessee is a company engaged in the business of construction and allied services. For the relevant assessment years with respect to appeals before the Tribunal....

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....7,190/- (Rs. 2,52,32,908 less 2,04,95,718/-) ignoring the fact that corresponding income of mobilisation advances was not offered to taxation by the Assessee during the year. 4. Whether Id. CIT(A) has erred on the facts and in law in deleting the addition of Rs. 8,70,00,000/- made by AO on account of disallowance of salary and wages ignoring the fact that assessee has violated matching principle of accounting by claiming excess expenditure in proportion to the revenue offered to taxation. 5. The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal. 2.1 And the assessee has raised following cross objections :- 1. "That the additions/disallowance ....

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....t the mobilization advance is initially recognized as a liability by the assessee and based on the work done and approved by the client, the amount is billed to the customer and mobilization advance is adjusted as part of revenue/ billing and recognized as income over the period of project. It is claimed that this is the consistent accounting method followed by the assessee in line with recognized Percentage Of Completion Method (POCM) followed in terms of Accounting Standards-7. The Assessing Officer had noticed a difference in the receipt reflected in Form 26AS and that credited to the profit and loss account. Assessee claimed that the same was primarily on account of mobilization advances received by the assessee and initially recognized....

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....ing to mobilization advances which were not duly considered and have been relied by the Ld. CIT(A); 1. Audited income and expenditure account and balance sheet for the relevant assessment year; 2. Complete details of mobilization advances as on 31.03.2016. 3. List of current liabilities with reference to the relevant notes of audited financial statements. 4. Reconciliation of 26AS and receipts shown in P&L a/c. 5. Details of Project advances during the AY and the income earned from the same projects during the AY. 6. Intent Letters/ Notice of Awards of the 7 projects to whom project advances relate to. 7. Breakup of mobilization advances i.e., amount receipt, amount recognized i....

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....ctually incorrect in view of information, facts and details available on records in the assessment folder." 9. Ld. AO failed to take into consideration the details of mobilization advances in the form of short term and long term mobilization advances duly matched with the total outstanding mobilization advances i.e. Rs. 172.17 Crs. Thus, the Bench is not inclined to interfere in the findings of Ld. CIT(A) deleting the addition. Accordingly ground no. 1 and 2 deserves to be allowed. 10. In regard to ground no. 3 it can be observed that the claim of assesses was that mobilization advances received during the year on which TDS gets deducted stands offered as income of the same year and stand offered in the form of WIP. Ld. CIT(A) has dul....