2010 (7) TMI 1157 - AT - Income Tax

Summary

Issues involved:
The issue involves the addition of Rs. 3,38,250 made by the Assessing Officer, challenged by the assessee in the appeal against the order of the CIT(A) relating to assessment year 2006-07.

Facts and Decision:
The Assessing Officer found that the assessee did not account for a bill of Rs. 3,38,250 issued to M/s. Ajmera Cement Pvt. Ltd. before 31.3.2004. The CIT(A) upheld the addition, stating that the income accrued to the appellant at the time of issuing the bill. The appellant contended that the bill was accounted for in the financial year 2004-05 when services were rendered. The Tribunal noted that the ship sailed on 1st April, 2004, and the income accrues when the right to receive it becomes vested. Referring to legal precedents and Accounting Standard 9, the Tribunal held that the income was correctly accounted for in the subsequent year and directed the Assessing Officer to delete the addition.

Conclusion:
The Appellate Tribunal ITAT, Mumbai allowed the appeal filed by the assessee, setting aside the order of the CIT(A) and directing the Assessing Officer to delete the addition of Rs. 3,38,250. The Tribunal considered the timing of the services rendered and the accrual of income in determining the correct assessment year for the disputed amount.