2023 (7) TMI 1525

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....ncome Tax Appellate Tribunal [in short, "Tribunal"]. 3. The appellant/revenue has proposed the following questions of law: "(i) Whether on the facts and circumstances of the case and in law, Id. ITAT erred in deleting the addition of Rs. 1,02,88,91,000/- made by Assessing officer on account of unearned revenue ignoring the fact that Accounting Standard cannot override the provision of the Income Tax Act, 1961? (ii) Whether on the facts and circumstances of the case and in law. Id. ITAT erred in deleting the addition of Rs. 57,93,45,721/- made by Assessing officer on account of provision for liquidated damages?" 4. Insofar as the first question is concerned, it would be convenient to refer to paragraph 14 of the impug....

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....tality, in the light of contractual terms and conditions, and considering the fact that the unearned revenue has been offered for tax in the subsequent years as exhibited in chart elsewhere, we are of the considered opinion that addition of Rs. 1,02,88,91,000/- is uncalled for and deserves to be deleted. Thus, Ground No. 2 is allowed". 6. From a reading of the impugned order two findings of fact emerge. (i) First, the money received by the respondent/assessee was offered for imposition of tax only when services were rendered. (ii) Second, this was an accounting practice followed consistently for several years. (iii). Lastly, since the tax rate remained the same, no loss was caused to the revenue by the respondent/assess....

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....age from the decision of Bombay High Court in Commissioner of Income Tax v. Nagri Mills Co. Ltd., [1958] 33 ITR 681 (Bom): "We have often wondered why the Income tax authorities, in a matter such as this where the deduction is obviously a permissible deduction under the income tax Act, raise disputes as to the year in which the deduction should be allowed. The question as to the year in which a deduction is allowable may be material when the rate of tax chargeable on the assessee in two different years is different; but in the case of income of a company, tax is attracted at a uniform rate, and whether the deduction in respect of bonus was granted in the assessment year 1952-53 or in the assessment year corresponding to the account....