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TMI Blog2015 (11) TMI 751X X X X Extracts X X X X X X X X Extracts X X X X ..... ing sundry creditors treated as cessation of liability by the Assessing Officer continue to be part of the assessee's outstanding as per records. The ld. CIT(A) after entertaining the Assessing Officer's report on additional evidence, in our considered opinion, was right in deleting the addition. - Decided against revenue. Disallowance on account of decrease in income due to change in method of accounting relating to consultancy fees - CIT(A) deleted the disallowance - Held that:- With the changed method of depicting consultancy fee, the assessee started recognizing income on the basis of work/stage completed as scheduled in agreement with clients as against the earlier policy of recognizing income on work done even in respect of incompl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, disposing them off by this consolidated order for the sake of convenience. Assessment Year 2005-06 2. The first ground is general, which does not require any specific adjudication. 3. The second ground is against deletion of disallowance of ₹ 6,72,86,626/-, being the addition made by the Assessing Officer u/s 41(1) of the Income-tax Act, 1961 (hereinafter also called 'the Act') 4. Briefly stated, the facts of the case are that the assessee is a Public Sector Undertaking engaged in providing conceptual studies and management consultancy, healthcare facility, design, project management, procurement of health related products and logistic installation. During the course of assessment proceedings, it was obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of loss, expenditure or trading liability, etc., incurred by the assessee and then the obtaining of some benefit in respect of such trading liability by way of remission or cessation thereof. It is only then that the amount for which remission or cessation is obtained that it becomes chargeable to tax u/s 41(1) of the Act. Adverting to the facts of the instant case, we find that the assessee was simply acting on behalf of its customers/clients and Government and getting consultancy fee from the client on account of services rendered. The sundry creditors as appearing in its books are actually on account of clients and not of the assessee. In such circumstances, the provisions of section 41(1) cannot be applied. It is further a matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upply from suppliers for installation of equipments/goods. Not convinced with the assessee's reply, the Assessing Officer made addition of ₹ 1,35,20,437/- which came to be deleted in the first appeal. 7. After considering the rival submissions and perusing the relevant material on record, it is noticed that the assessee gave Note No.4 in Notes to Accounts enclosed with the return of income stating as under:- Hitherto the company was recognizing the consultancy fee for work done but not billable in respect of incomplete stages on the basis of technical certificate from the concerned SBU's/Functional Department. It was noticed that consultancy fee booked on the basis of above was not due as per agreement with clien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. The first ground is against the deletion of addition of ₹ 10,63,568/- made by the Assessing Officer in respect of static creditors by admitting additional evidence without providing opportunity to the Assessing Officer to verify the same. It can be seen from the assessment order that the Assessing Officer simply followed the view taken by him in earlier year. Both the sides are in agreement that the facts and circumstances of this ground are, mutatis mutandis, similar to those of ground No.2 for assessment year 2005-06. Following the view taken hereinabove, we uphold the impugned order deleting this disallowance. This ground fails. 10. The only other ground is against the allowing of depreciation @ 60% on computer peripheral ..... X X X X Extracts X X X X X X X X Extracts X X X X
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