2012 (10) TMI 901

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..... from the customers were settled after protracted litigation and arbitration, the crediting and debiting of the receipts and expenses as and when the claims settled were reported in the return, which apparently required an investigation into the claims of the assessee. If the relief on the merits of the claim could be considered only through the process of reasoning, given the limited scope of Sec .....

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..... prior year expenditure can be adjusted against the income of the subsequent year where the assessee is following the mercantile system of accounting? and (ii) Whether in the facts and circumstances of the case, the Tribunal was right in holding that the issue of adjustment of the prior year expenditure against the income of the subsequent year is debatable and the same cannot be considered in pr .....

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..... eposits. In order to ensure the performance of timely supply of equipments, security deposit, in most cases, was being adjusted towards the various claims by the customers. Accordingly, debit entry or credit entry was made. However, on account of the disputed claims, the deposits remained as security deposits or earnest money deposits and the finality of the transactions came to an end only after .....

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..... f prima facie facts available in the return and no reason was required therein. Hence, the appeal was rejected. 4. Aggrieved by this, the assessee went on appeal before the Income Tax Appellate Tribunal. On going through the records, the Tribunal came to the conclusion that the claim of the assessee as regards the credit, expenses and income, being the subject matter of a debatable question, t .....

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..... limited scope of Section 143(1)(a) of the Income Tax Act, which is only a prima facie adjustment on a non-debatable issue, we have no hesitation in agreeing with the reasoning of the Tribunal that the Officer was not correct in considering the claim under Section 143(1)(a). Thus, the matter could be gone into in the course of regular assessment. Hence, we reject the revenue's appeal and thereby co .....

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