TaxTMI 
TaxTMI 
TaxTMI 
2024 (10) TMI 32
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.... u/s 143(2) of the IT Act was issued on 20/08/2010. A detailed questionnaire dated 01/02/2011 was sent to the assessee company along with notice u/s 142(1) on 06/07/2011. In response to the above notices, Authorized Representative on behalf of the assessee attended proceeding. On completion of assessment proceedings, Ld. AO passed order dated 22/03/2013. 3. Appellant/assessee preferred appeal before Ld. CIT(A), which was partly allowed. 4. Being aggrieved appellants, the Department of Revenue and the assessee company preferred present appeals. 5. The Assessee company pleaded ground of appeal as:- "1. That the order of learned Commissioner of Income-tax (Appeals)-IX, New Delhi ["CIT(A)"] is bad both in law and on facts of the case. 2. That the learned CIT(A) has erred in making erroneous observations, assumptions, interpretations and conclusions, both on facts and in law. 3. That the learned CIT(A) has erred in upholding the additions of Rs. 15,23,35,414 crore made by the learned assessing officer in respect of 'Advance received from Customers' under the contracts entered into by the assessee, which does not constitute revenue/income of the relevant assessment year,....
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....nd ignoring the audited financial statements. Ld.CIT(A) has erred in ignoring orders of the CIT(A) for earlier years in this regard and observations made therein as regards following of Accounting Standards by the assessee. Ld. CIT(A) erred in merely following order passed in earlier years regarding addition in respect of advance received from customers under AMC contract, without appreciating that the observation made in the earlier year assessment orders and CIT(A)'s orders are factually erroneous. The issue is covered by in Assessee's own case in order(s) dated July 27, 2023 passed by Hon'ble High Court of Delhi in the case of PCIT vs ThyseenKrupp Elevator (India) Pvt. Ltd. ITA No. 1182 & ITA No. 1214 of 2018 for A.Y 2005-06, ITA No. 1233 of 2018 for A.Y 2006- 07 and ITA No. 1198 & ITA No. 1269 of 2018 for A.Y 2007- 08. Copy of order(s) enclosed as Annexure 1 (Pg. 10 to 21). Covered by assessee's own order passed by Hon'ble ITAT for J.K 2005-06 to AY 2007-08 (See Vol-II Page 494-532). Covered by assessee's own order passed by Hon'ble ITAT for A.Y 2008-09 (Vol-II Page 518-532). For Asst. Year: 2008-09 titled as "ThyssenKrupp Elevator (India) Pvt. Ltd. vs. DCIT....
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....e Assessing Officer is required to compute the Income in accordance with the method of accounting regularly employed by the assessee and in appropriate cases he has to make appropriate variations where the system adopted by the assessee does not indicate the profits." 10. This issue was decided by Hon'ble ITAT for A.Y. 2005-06, wherein para 21 of the order, it held that:- "21 This method of accounting cannot be found fault with as assessee is regularly following the same. In view of this, we direct the Id Assessing Officer to delete the addition of Rs. 20313101/- on account of advances received. " (Pg. 500-501/Vol-II) Once again the Tribunal reiterated it in its order for A.Y. 2008-09 in para 6 of the order at Pg. 520-523/Vol-II. The assessing officer, following his order for A.Y. 2008-09 and earlier years held that these advances are taxable receipts in the hands of the assessee. Ld. A.O. also brushed aside the assessee's contention that the assessee has been correctly maintaining its accounts in accordance with Accounting Standard 7 {paragraph 6 at 6.6 of Pg. 8). 11. The Ld. CIT(A) upheld Ld. AO's order treating unadjusted advances totalling Rs. 15,23,35,414 received from c....
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....e Contract. The said clauses of the contract are at Pgs. 194-195/Vol-I. A(e) Ld. CIT(A) emphasized Schedule of Dates of Milestone Payments as per clause 12 read with completion period stipulated in clause 10 of the Contract read with annexures 3. It is an admitted position that as on 31.3.2009 the assessee had received only 20% of the contract value which clearly shows that only the first two milestones were achieved by that date and the remaining milestones like import and delivery of material at site were yet to be achieved. Therefore, no payment of more than 20% of the value of the contract was received during F.Y. 2008-09. (Pg. 228/PB). A(f) Ld. Ld. CIT(A) has confused 'Milestone Payments' stipulated in the contract for the purpose of billing with the actual progress in execution of work on the basis of which income is recognized in the accounts. Method of accounting has been consistently followed by the assessee since inception and is in accordance with the matching principle prescribed in AS 7. The assessee raises bill on client as and when the 'Milestone' event takes place. But, the revenue is recognized on the basis of actual percentage of completion of the work in a gi....
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....ed the assessee's explanation after duly examining it. It appears from the official website of the IT AT Delhi the Department is not in appeal for A.Y. 2011-12. The assessee has also not received any notice of revenue's appeal from the ITAT. B Lanco Infra. B(a) The Ld. CIT(A) has observed that "No evidence was produced by the appellant in support of its claim that the revenue was rightly recognized at an amount lower than the bills raised. " This adverse inference was drawn without giving the assessee any opportunity. The Ld. CIT (A) again confused the basis of billing and the basis of booking income as per AS-7. As desired by him, the assessee had submitted details of revenue from the contract recognized upto 31.3.2009 (Pg. 174/Vol.-I). These details clearly show advances received/ progress billing, estimated cost, cost incurred till 31.3.2009. The computation of revenue recognised in F.Y. 2008-09 together with ledger accounts and the Agreement was also furnished to the Ld. CIT(A). (page 174-185/ Vol-I). B(b) In respect of work to be performed for Unit 1 based on the percentage completion at 56.22%, the revenue was recognized to the extent of Rs 22,39,576 as against the adva....
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....hanically following the orders passed by CIT(A) for earlier assessment years. (para 6.5 at Pg. 18 of order). The Ld. CIT(A) has upheld the disallowance even though the assessee had explained that the amounts equivalent to the TDS amount were withheld by the customers but were neither deposited in Govt, treasury & nor did the assessee claim credit of this amount in earlier years (para 6.5 at Pg. 18 of order). The assessee, had booked it as part of income in its accounts in the relevant year. These facts have not been questioned by the Ld. A.O. and Ld. CIT(A). The write off of such debts in allowable deduction u/s 36(l)(vii) r.w. S. 36(2) of Act. The Ld. CIT(A) however followed his predecessor's order for A.Y. 2008-09. The Hon'ble Tribunal has dealt with this issue in favour of assessee for A.Y. 2008-09 (Para 16 of order at pg. 528/PB-II). 16. Learned Authorized Representative for respondent/assessee submitted that Ld. CIT(A) rightly deleted disallowance of Rs. 2,71,50,036/- made by AO on account of depreciation claimed on intangible assets. The issue is covered in assessee's own case for AY. 2008-09. 17. Learned Authorized Representative for Revenue relied on Oder of Ld. CIT(A). T....
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.... from Customers' relying on the decision of Taparia Tools Ltd. (SC) (2015) 55 Taxmann.com 361. (Annexure -2 Pg. 22 to 33) observing as under:- "In order to determine the net income of an accounting year under the mercantile system of accounting, the revenue and other incomes are matched with the cost of resources consumed. The matching is to be done on accrual basis. Under this matching concept, revenue and income earned during an accounting period irrespective of actual cash in-flow is to be compared with expenses incurred during the same period irrespective of actual out-flow of cash. The Income-tax Act, 1961, makes no provision with regard to valuation. It charges for payment of tax, the income which is to be computed in the manner provided by the Act. The Assessing Officer is required to compute the Income in accordance with the method of accounting regularly employed by the assessee and in appropriate cases he has to make appropriate variations where the system adopted by the assessee does not indicate the profits." 21. This issue was decided by Hon'ble ITAT for A.Y. 2005-06, wherein para 21 of the order, it held that:- "21 This method of accounting cannot be found ....
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....sue of disallowance of Rs. 8,51,913/- debited under 'TDS recoverable written off' in the books of account is covered by assessee's own case. Accordingly, Ground No.4 is also sustainable. 25. Ld. CIT(A) deleted disallowance of Rs. 2,71,50,036/- on account of depreciation claimed on intangible assets. The issue is covered by the assessee's own case in order dated 15th October, 2015 for AY. 2003-04 by the Hon'ble High Court. "3. The first question urged by the Revenue in this appeal is whether the ITAT was right in holding that the Assessee was entitled to depreciation on the 'contract maintenance portfolio' under Section 32(1)(ii) of the Act ? 4. The findings recorded by the ITAT is that the Assessee had acquired maintenance contracts for 3578 elevators, which was the main source of revenue for the Assessee. Maintenance contracts for 1001 elevators which were under warranty period were expected to start yielding revenue once the warranty period expired. The ITAT has, in the impugned order, rightly noted that since the maintenance portfolio was purchased by the Assessee as part of the purchase by way of 'slump-sale', it constituted the basis income earning apparatus and was there....