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TMI Blog2013 (8) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing mercantile method of accounting. As such, in terms of s. 5 r/w s. 145, income becomes chargeable to tax when the assessee acquires the right to receive such income. In fact, apart from the auditor’s report, to which reference has been made by the CIT, the notes to the assessee’s accounts itself state that the sales-tax (VAT) paid on purchases are included in the cost of the purchases, is, though refundable from the Sales Tax Department, not taken as income as the same is subject to acceptance by the Sales Tax Authority. The assessee has throughout completely failed to exhibit the uncertainty that it claims to have prevailed, and which weighed with it in deferring the recognition of the said income, i.e., in its accounts. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done by him. In fact, all his order shows is that the issue had not been verified at the time of the assessment proceedings and, accordingly, directs the AO to pass a fresh order upon due verification and in accordance with the law. As such, on the merits of both the objections, it is find the revisionary order as sustainable in law. Against assessee. - ITA No.7573/Mum/2011 - - - Dated:- 23-5-2013 - I P Bansal and Sanjay Arora, JJ. For the Appellants : Shri D C Saboo Shri Shyam Saboo For the Respondent : Mrs R M Madhavi ORDER:- Per: Sanjay Arora:- This is an Appeal by the Assessee directed against the Order by the Commissioner of Income Tax-24, Mumbai ( CIT(A) for short) dated 12.10.2011 passed u/s.263 of the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that no adverse inference there-from ought to have been derived by the revisionary authority. The second objection raised by him is in respect of non following the prescription of section 145A; the assessee admittedly following exclusive method of accounting, though to not effect, even as established by it before the assessing authority in the proceedings pursuant to impugned section 263 order, placing a copy of the said order on record, whereby no addition stood made by the assessing authority after issuing a finding that there was no impact on the profits disclosed following the exclusive method of accounting as against the inclusive method as mandated by section 145A of the Act. The ld. CIT had clearly failed to apply his mind on bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and examining the relevant aspects of the assessment. Further, the phrase prejudicial to the interest of the revenue , is again of wide import, and not confined to a mere loss of tax, which in fact exists in the instant case inasmuch as the income to this extent has remained to be brought to tax. 2.3 In rejoinder, it was submitted by the ld. AR that an order, for being subject to revision, ought to be also prejudicial to the interest of the Revenue, i.e., apart from being erroneous. No prejudice thereto in the instant case has been shown to be caused by the Revenue, or has in fact been actually caused, inasmuch as the refund under reference has been received in a subsequent year and offered to tax, for which the tax rate remai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inty that it claims to have prevailed, and which weighed with it in deferring the recognition of the said income, i.e., in its accounts. The assessee is rather, it is apparent, following the same, i.e., the said procedure, as a matter of course, regularly accounting for the VAT refund only upon receipt, and which, as explained, cannot hold in view of section 145 proscribing (w.e.f. A.Y. 1997-98) a mixed method of accounting in preference to a pure, i.e., either cash or mercantile, method of accounting. The apex court in the case of CIT vs. Punjab Bone Mills [2001] 251 ITR 780 (SC) clarified that income by way of cash incentive accrued to the assessee at the time of filing of the claim in its respect (with the concerned authority). We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 188 ITR 44 (SC). The direction by the ld. CIT, therefore, for including the amount of VAT refund accrued to it is to be upheld. We decide accordingly. 3.2 Again, on the second aspect, the fact that the assessee has been before the A.O. able to exhibit that no difference to its returned income arises when reckoned in terms of section 145A, would not in any manner undermine the jurisdiction or the validity of the revisionary order on that score. The ld. CIT could have examined the said issue himself, and it is quite within his competence to direct the AO to examine the assessee s case, as stands done by him. In fact, all his order shows is that the issue had not been verified at the time of the assessment proceedings and, accordingly, dir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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