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2018 (4) TMI 326 - ITAT MUMBAIAccrual of income - Addition on account of retention money - Held that:- As decided in assessee's own case for previous AY held thatamount of retention money did not accrue to assessee as income till the performance of the contract is fulfilled and accepted by contractee. - Decided against revenue G.P. determination - unfinished contracts - method of accounting - Held that:- We find that assessee was following PCM for the incomplete projects for the last so many assessment years, that the AO had never objected to the method of accounting, that while rejecting the method applied by the assessee, the AO had not mentioned the reasons as to why the method could not be applied for the year under consideration. It is true that principle of res judicata does not apply to the Incometax proceedings, but it is also equally true that rule of consistency applies to Income-tax proceedings. If there was no change in the facts and circumstances of the case, then he was not justified in disturbing the book results of the assessee. The FAA has given categorical finding of fact that the books of assessee were maintained as per the mandate of AS-7.- Decided against revenue Addition of outstanding creditors - survey action u/s 133 - one of the Directors offered ₹ 30, 00, 000/- (approximately)for taxation on account of old creditors - Held that:- The addition should be based on some evidence. In the case under consideration, the assessee had clearly mentioned the additional income offered was based on some estimate. During the survey proceedings, the Director of the company could not refer to the regular books of accounts. After reconciling the financials the exact amount of the disputed creditors was shown in the return of income. Therefore, in our opinion, the FAA was not justified in confirming the addition of ₹ 2. 78 lakhs especially when the statements recorded during the survey proceedings talked of estimated income only. - Decided in assessee’s favour. Disallowance of interest paid to the custom authorities - Held that:- We find that the identical issue i. e. use of machinery outside the state of Maharashtra and levy of penalty had travelled up to Settlement Commission and the Hon’ble Bombay High Court. The Commission deleted the penalty and the Hon’ble Court held that the interest paid by the assessee was of compensatory nature i. e. it is not penal nature. We are of the opinion that after the order of the Commission and the judgment of the Hon’ble Court there is no justification for holding that the interest was penal interest and that the expenditure claimed by the assessee should not be allowed. Reversing the order of the FAA we decide the issue in favour of the assessee.
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