2016 (10) TMI 625 - AT - Income Tax

Accrual of income - Addition to income made on the basis of AIR information received by the AO - it is assessee s submission that the amount was received by the assessee in AY 2010-11 and has also been offered to tax in AY 2010-11 as the cheque was received in subsequent years and the amount was received as advance payment and therefore the income did not accrue to the assessee in AY 2009-10 - Held that - We find force in the contention of the assessee but however apart from the oral contentions, assessee has not placed any material on record to demonstrate that the amount has been offered to tax in subsequent years. In view of these facts, we are of the view that the matter needs to be re-examined at the end of AO. We therefore set aside the issue to the file of AO to verify and see that the same amount is not taxed twice, i.e. in AY 2009-10 and in AY 2010-11. In case, the amount is found to be taxable in AY 2010-11, then suitable credit of TDS be given to the assessee in accordance with law but in case the amount is found to be taxable in AY 2010-11, then AO is directed to give the credit of the TDS in AY 2010-11. The assessee is also directed to furnish all the required details promptly to the AO. - Decided in favour of assessee for statistical purposes.

Summary

Issues involved:
1. Addition of alleged accrued income based on AIR information - ?40,00,000
2. Consideration of appellant's submissions by the authorities

Detailed analysis:
Issue 1: The appellant contested the addition of ?40,00,000 based on alleged accrued income as per AIR information. The AO found a variance in the income reported by the appellant and the amount received from Alstom Projects Pvt. Ltd. The AO asserted that since TDS credit was claimed, the amount should have been accounted for in the relevant year. The CIT(A) upheld the AO's decision, stating that the income had accrued to the appellant in the current assessment year based on the mercantile method of accounting. The CIT(A) emphasized the timing of cheque issuance and TDS credit as factors supporting the accrual of income. The appellant's argument of accounting the income in the subsequent year was dismissed, leading to the confirmation of the addition.

Issue 2: The appellant raised concerns regarding the double taxation of the same income if the addition was made in the current year. The appellant argued that the amount was received as an advance payment in the subsequent year and had been offered for taxation in that year. The ITAT acknowledged the appellant's contention but noted the lack of concrete evidence supporting the taxation of the amount in the subsequent year. Consequently, the matter was remanded to the AO for further verification to ensure no double taxation occurred. The ITAT directed the AO to provide suitable credit for TDS based on the final assessment of the taxable year for the disputed amount. The appellant was instructed to furnish all necessary details promptly to facilitate the re-examination by the AO.

In conclusion, the ITAT allowed the appeal for statistical purposes, emphasizing the need for a thorough examination by the AO to prevent double taxation and ensure accurate assessment of the disputed income.