TaxTMI 
TaxTMI 
2018 (9) TMI 2149
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....om customers. These advances in fact constitute receipt in the hands of the assessee in view of its nature of business activities." 2. At the outset, ld. counsel for the assessee submitted that this issue stands squarely covered by the decision of the Tribunal in assessee's own case in the earlier year right from the Assessment Years 2005-06 to 2007-08 passed in ITAs No. 956, 1118, 3755/Del/2009 & 3354 & 3488/Del/2010 order dated 07.11.2017. 3. The facts in brief are that assessee-company is engaged in the business of marketing, selling, installing, commissioning, service, repairs, maintenance and modernization of elevators and escalators. The learned Assessing Officer following the earlier years' assessment orders held that advance received by the assessee from the customers is income of the assessee. The assessee had shown an amount of Rs. 41.96 in his balance sheet as advance from the customer including deferred revenue, the details of which is as under:- (a) Rs. 17.07 crores Representing initial advance received against the contract (b) Rs. 2.9 crores Representing unadjusted advance against maintenance contracts. (c) Rs. 21.99 crores Una....
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....nitial advance received against the contract and Rs. 4.87 cores were unadjusted advances in case of new installation and modernization job. The Rs. 7.87 crores is purely an advance for which work is to be done therefore; in this year, correctly no revenue can be recognized. Further, revenue has been recognized out of this advance in subsequent years. With respect to Rs. 4.87 crores is an advance received after adjustment of progressive billing. Therefore, from both these sums no revenue is to be recognized during the year. Further, the unadjusted advances are offered for taxation in subsequent years. Hence, we do not find any infirmity in the order of the Id CIT(A) in deleting the addition of Rs. 127455308/-. In the result ground No. 2 of the appeal is dismissed." 6.1 Once it is an undisputed fact that assessee has been following 'percentage of completion method' as prescribed by AS-7 and AS-9 and in pursuance to the said system of accounting the assessee has been recognizing revenue in the following manner:- (a) New installations and significant modernization jobs - On percentage of completion method where on the percentage of completion method, where ....
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....s without considering the facts on record and on erroneous observations and interpretation of provisions of the Act, upheld the disallowance of Rs. 39,732 being amount of 'Rent deposit' written off in the books of account. 4.4 That the ld. CIT(A) without appreciating the facts, has erred in upholding the disallowance of Rs. 1,648 being amount of 'Excess TDS deposited' written off in the books of account. 5. That the ld. CIT(A) has erred in confirming levy of interest u/s. 234B & 234D and withdrawal of interest under section 244A of the Act." 8. In so far as grounds No. 3 and 3.1 are concern, learned counsel submitted that this issue also stands covered by the Tribunal in assessee's own case for the earlier years wherein Tribunal has deleted the said addition. 9. On the other hand, learned Department Representative has strongly relied upon the order of the ld. CIT(A). 10. On a perusal of the impugned order we find that, this issue is quite similar to the issue raised by the Department because the ld. CIT (A) held that in so far as advances received for maintenance of elevators under annual maintenance contract should be routed through P&L accoun....
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....09/- to the total income of the assessee. Aggrieved with this assessee preferred an appeal before the Ld. CIT (A) who granted relief of Rs. 78702572/- and Rs. 48752736/-. However, he confirmed the addition of Rs. 20313101/- on account of maintenance contracts. Therefore, assessee is in appeal against the confirmation of the above advance with respect to the maintenance contract of Rs. 20313101/-. 19. The ld AR submitted that the above amount is advance for the annual contract for maintenance of the elevator, which is accounted for as income of the assessee on the period basis. He submitted that this policy is followed by the assessee for last several years consistently and no fault has been found with. He father submitted that in maintenance contract, which are for a period and therefore, the amount of income if recognized based on the period, is the correct accounting method. 20. The Id Departmental Representative vehemently supported the order of the ld CIT(A) and further submitted a chart from which he asserted that it is not the case of the assessee that over a period the amount of advances and amount of revenue recognition are becoming equal. He further that ....
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....h a claim cannot be disallowed as a bad debt, and therefore, to hold that condition of Section 36(2) has not been satisfied would be wholly erroneous. The claim has to be allowable u/s. 37(1) r.w.s. 28 of the Act, being the loss incurred in carrying out the operation of the business. This principle is covered by the judgment of Hon'ble Supreme Court in the case of CIT vs. Mysore Sugar Co. Ltd., reported in 46 ITR 649 (SC). Accordingly, grounds No. 4 and 4.1 as raised by the assessee is allowed. 15. Similarly, in so far as the disallowance of TDS recoverable written off and rent deposit written off in the books, same reasoning has been given by the Assessing Officer as well as ld. CIT(A). 16. In so far as TDS amount written off on account of its non recoverability from the customers, it has been stated that customers had deducted tax at source services provided by the assessee and in earlier years also certain payment for services of the assessee were withheld by the customers which were equivalent to the TDS amount. The assessee had booked the same in TDS recoverable amount under the books of account. However, the customers neither provided the TDS certificates nor deposi....
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....sessee exclusively for carrying out its business activities has to be allowed as deduction because it falls in the nature of expenditure and repairs. If the amount shown as refundable deposit has not been received as stated to be spent on repairs without debiting the same to the P&L account then writing off of such an amount has to be allowed as deduction and it cannot be held that conditions of Section 36(2) requires to be fulfilled. 18. Lastly, on account of 'Excess deposit of TDS' written off, it has been stated that assessee while depositing the TDS deducted from the salaries to the employees inadvertently paid excess amount of Rs. 1,648/- over and above the amount deducted as TDS. However, when the assessee came to know its mistake, it had to recover the same from the department. Learned Assessing Officer held that TDS amounts cannot be claimed as business losses and disallowed the same which has been confirmed by the ld. CIT(A) also. If it is not in dispute that excess TDS has been deposited and could not be recovered from the Department, then same has to be allowed u/s. 37(1) r.w.s. 28 of the Act. Accordingly, the same is directed to be allowed. 19. The issue o....