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Issues:
1. Addition of surplus amount in terminated kuries account as the assessee's income for the respective years. Detailed Analysis: The judgment involves three consolidated appeals by the same assessee against the order of the CIT(A) regarding the addition of surplus amounts in terminated kuries accounts as income for the assessment years 1987-88, 1988-89, and 1991-92. The main contention revolves around whether the CIT(A) erred in confirming these additions as part of the taxable income for the respective years. The assessee, a company engaged in the chitty business, had balances in terminated kuries accounts that were not brought to the Profit & Loss account for the relevant years. The Assessing Officer (AO) considered these balances as includible in the taxable income due to the mercantile basis of accounting maintained by the assessee. The CIT(A) upheld these additions towards unaccounted profit in terminated kuries, leading the assessee to appeal before the Tribunal challenging the correctness of these additions. During the proceedings, the assessee's representative argued that the company accounted for profits from terminated kuries on actual realization basis due to outstanding dues from subscribers even after termination. The representative highlighted the financial stability reasons for delaying profit recognition until full realization. The representative also cited precedents where similar accounting methods were approved by the Tribunal and the High Court, emphasizing the consistency of the assessee's approach. On the other hand, the Departmental Representative supported the CIT(A)'s decision, asserting that profit from terminated kuries should be accounted for on an accrual basis at the time of termination, irrespective of actual realization timing. Relying on legal precedents, the Departmental Representative argued for taxing the entire profit on accrual basis to align with mercantile accounting principles. After considering the arguments and precedents cited by both sides, the Tribunal acknowledged the liability to tax the profit on terminated kuries but focused on the timing of recognition. Referring to previous Tribunal decisions and High Court dismissals of reference applications, the Tribunal emphasized the assessee's consistent method of accounting based on actual realization. Consequently, the Tribunal held that the CIT(A) was unjustified in confirming the additions and directed the AO to assess the profit based on actual realization, aligning with the assessee's accounting method. In conclusion, the Tribunal allowed the appeals, instructing the AO to revise the assessments for the relevant years in line with the method consistently followed by the assessee for accounting profit from terminated kuries.
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