9911796707
TMI Blog2016 (5) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... tion/ training centre, software development, support and maintenance. It had filed its return of income declaring a total income at Rs. 69,96,748. The assessment was completed at a total income of Rs. 1,11,51,637, inter alia, making following disallowances : (Rs.) (i) Capital expenses 3,30,195 (ii) Provision for sale and maintenance of software 33,61,059 3. The learned Commissioner of Income-tax (Appeals) allowed the assessee's appeal and deleted both these additions. Being aggrieved, the Department is in appeal before us and has taken the following two grounds of appeal : "1. On the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) has erred in deleting the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation at 60 per cent. Thus, made a disallowance of Rs. 3,30,195. 5. Before the learned Commissioner of Income-tax (Appeals) it was submitted that the assessee was the implementation partner of "hyperion software", which was installed to evaluate performance of the employees. It was submitted that the assessee undertook to devise systems for performance evaluation in organisations. In the performance of these services, "hyperion software", which it purchased from time to time after customisation depending upon the needs of the customers, the software was installed on the customer's system and, thereafter, it was used by the customer. Once installed on the customer's system, it was no longer available for use by the assessee. He, ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was bifurcated into amount for the year and the amount received for services to be provided in the next year. This bifurcation was made on time basis and, accordingly, the provision for sale and maintenance of software of Rs. 33,61,059 represented the unexecuted portion of the AMC income, which was received in advance. It was further clarified that the assessee was following the mercantile system of accounting and, therefore, the revenue recognisable for the year under consideration from annual maintenance contract sale was that which pertained to the period falling in the financial year 2005-06 and which was covered by the annual maintenance contract period. This accounting treatment was as per the accounting standard "AS-9" on revenue rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld take a different view when there is no change in the facts of the case. I also find that the case law relied on by the appellant is squarely applicable to the facts of the appellant's case. In view of the reasons above, the addition is directed to be deleted." 10. We have considered the rival submissions and have perused the record of the case. The facts are not disputed. The assessee is following the mercantile system of accounting and as per the accounting standard 9, the net effect of the accounting treatment was for only that part of the annual maintenance contract receipt was taken into consideration which pertained to the year under consideration. This method has consistently been followed by the assessee. We, therefore, do no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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