2025 (9) TMI 630

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....om the order of the Learned Deputy Commissioner of Income-tax-3(2), Mumbai (for brevity the "Ld. AO") passed under section 143(3) of the Act, date of order 25/02/2016. 2. The revenue has taken the following grounds "1. Whether on the facts and in the circumstance of the case and in law, the Ld. CIT(A) has erred in granting relief to the assessee company by deleting the disallowance/addition of Rs. 8,17,36,990/- made by the AO, ignoring the fact that the invoices raised to sister concern by the assessee were netted off against the expenditure claimed by the assessee which is totally wrong as same was not included in gross turnover and therefore remained unexplained. 2. The Appellant prays that the order of the CIT(A) on the above groun....

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....report and the notice was issued. The assessee complied the notice of the Ld.AO in remand proceeding. But finally, the Ld.CIT(A) had not received any remand report from the Ld. AO and the appeal attained finality, in favour of the assessee. Being aggrieved on the appeal order, the revenue filed an appeal before us. 4. The Ld. AR argued that the impugned appeal order correctly identified the difference in the amounts between the assessee's books of account and ECIS. We note that the variation in turnover arises due to the differing definitions of "turnover" under the Income-tax Act and the Service Tax Act. This issue has been explained in detail by the Ld. CIT(A) on pages 12-14 of the order, which are reproduced below: "Adjudication Grou....

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.... has attached copies of debit notes/invoices raised by the appellant on ECIS along with the expenditure ledgers which are netted with its submissions. The appellant has not reflected the reimbursement in its turnover whereas ECIS has claimed the amount as an expenditure in its books of accounts. It is seen that every item included in the sales turnover as per P&L account need be includible in the turnover definition for service tax purposes. Accordingly, the basis for inclusion of amounts in the two sets of documents (i.e. service tax return and P&L account) may be different due to underlying principles governing the same. The appellant has followed Indian accounting standard-1 (Ins AS-1), Para 32 of the Ins AS 1 issued by Accounting Sta....