2024 (11) TMI 1067 - AT - Income Tax

Addition of receipt not been offered for tax by the assessee - Impugned amount was apparently debited internally and shown as advance to Govt. account, while at the same time, it was credited to the Income and Expenditure Statement under the head grant-in-aid for establishment expenses - CIT(A) has recorded that in reality, no funds were received by the institution from any third party and this transaction was merely an inter head adjustment - HELD THAT - It is seen that in the department s ground of appeal it is specifically mentioned that the mandate provided in Accounting Standard -12 ( AS-12 ) has not been kept in mind while ensuring an appropriate treatment of the impugned amount in the accounts. This Accounting Standard deals with treatment of Govt. grants in the books of account. As noticed that the AS-12, in question, as an individual issue was neither before the AO nor was it before the CIT(A). However, it needs to be mentioned that for recognition of an amount as a receipt under this Accounting Standard two conditions are required to be present viz. (a) if the Govt. grant is expected to be realised or its collection is reasonably certain, (b) conditions pertaining to the said Govt. grant have been complied with. As has been mentioned earlier, this issue of the specific Accounting Standard was not dealt with either by AO or CIT(A), hence, we deem it fit to remand the matter back to the file of the AO for verifying whether the said amount was actually receivable, whether the assessee has been accounting for such grants on receipt or mercantile basis in the past and finally whether there are any terms and conditions pertaining to the said arrangement between the assessee and the Govt. regarding the receipt of such amounts. AO would do well to analyse these issues and thereafter come to a conclusion as to whether the impugned amount would be treated as income for the year under consideration or alternatively treated as income in the year of actual receipt. Delayed filing of Form 10 which was required u/s 11(2) r.w.s. 13(9) - CBDT has its powers u/s 119(2)(b) of the Act to condone the delay and in case, the said action is done then the assessee would get consequential benefits u/s 11(2) r.w.s. 13(9) of the Act. This appeal is allowed for statistical purposes.

Summary

Issues:
1. Delayed filing of Form 10 under sections 11(2) and 13(9) of the Income Tax Act.
2. Addition of Rs.3,58,00,000 as unreported income by the assessee.

Analysis:

Issue 1: Delayed filing of Form 10
The appeal was filed by the revenue against the order of the CIT(A) regarding the delayed filing of Form 10 required under sections 11(2) and 13(9) of the Income Tax Act. The CIT(A) refrained from dealing with the condonation of delay and directed the appellant to seek condonation from the Jurisdictional Commissioner of Income Tax. The ITAT supported this decision, citing the powers of the Central Board of Direct Taxes under section 119(2)(b) to condone the delay, which would enable the assessee to avail benefits under sections 11(2) and 13(9) of the Act.

Issue 2: Addition of Rs.3,58,00,000 as unreported income
The second issue involved the addition of Rs.3,58,00,000 as unreported income by the assessee. The CIT(A) allowed this amount as relief, stating that it was an internal transfer and not an actual receipt from a third party. The department appealed this decision, arguing that the amount should have been treated as income per Accounting Standard -12 (AS-12) since it was not shown as a receipt in the return of income. The ITAT remanded the matter back to the Assessing Officer to verify if the amount was actually receivable and to consider compliance with AS-12 conditions before determining whether it should be treated as income for the relevant year or the year of actual receipt.

In conclusion, the ITAT allowed the appeal for statistical purposes, supporting the CIT(A)'s decision on the delayed filing of Form 10 and remanding the decision on the addition of Rs.3,58,00,000 back to the Assessing Officer for further examination in light of AS-12 requirements.