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TMI Blog2014 (1) TMI 536X X X X Extracts X X X X X X X X Extracts X X X X ..... eding year, which though not received, yet stands accrued during the current year - This is as there could be no option for following a mixed system of accounting - the income not offered to tax on accrual basis, would not preclude it being brought to tax on receipt inasmuch as the same falls within the scope of income u/s. 5 of the Act. Disallowance of prior paid expenses – Held that:- The expenses being admitted as prior period expenditure in the assessee’s accounts - Where an expenditure is disputed or indeterminate, liability would arise only in the year of resolution of the dispute – Decided partly in favour of Revenue. - ITA No. 6832/Mum/2011 - - - Dated:- 27-2-2013 - DINESH KUMAR AGARWAL AND SANJAY ARORA , JJ. For the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come computed accordingly. The issue is not new for the assessee, having also arisen in its case for the preceding years. The first appellate authority for the said years, while approving the Revenue s case in principle, directed relief to the assessee in-as-much as the income sought to be taxed had already been subject to tax on receipt basis for the subsequent years. For the current year, the ld. CIT(A) observed likewise, and was of the view that no amount of the addition of Rs.30 lakhs toward compensation, which is arrived on an estimated basis, is maintainable, as the assessee had itself accounted and offered income at Rs.78.18 lakhs for the current year on receipt basis. Aggrieved, the Revenue is in appeal. 3. We have heard the parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus, validly defer recognition of income till the time the said uncertainty is resolved, without the inference of it following cash method of accounting, which though cannot be used as an alibi to postpone recognition of income, but must have its basis in facts, i.e., the reason/s for, subsistence and, finally, the actual resolution of uncertainty, which again may not necessarily coincide with the receipt of cash, and surely not in all the cases all the time, even as observed earlier. In the instant case, the assesse, as it appears, is following cash system as a matter of course or, perhaps, as a matter of convenience, being so uniformly for all customers, and in respect of an item/s of income which is regularly charged thereto, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after allowing the assessee a reasonable opportunity of being heard. The onus to prove its case with reference to uncertainty and its resolution would be on the assessee. Further, we may also clarify that the offer of income pertaining to a preceding year/s on cash basis, would not justify non accounting of income for the current year, or even for a preceding year, which though not received, yet stands accrued during the current year. This is as there could be no option for following a mixed system of accounting and, two, the income not offered to tax on accrual basis, would not preclude it being brought to tax on receipt basis (even for an assessee following accrual method) inasmuch as the same falls within the scope of income u/s. 5 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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