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TMI Blog2016 (5) TMI 1229X X X X Extracts X X X X X X X X Extracts X X X X ..... erits in the arguments of the ld. AR that the credit of service tax on the hire charges would not be available to the assessee had he booked the said hire charges under the current financial year. Looking to the totality of facts of the case , we are of he opinion that since the assessee has booked the full amount of hire charges as per Form No.26AS into two years and offered the same for taxation though the claim of TDS on the entire hire charges was made in the assessment year 2010-11. In any case, if the hire charges as mentioned in form No.26AS are to be considered in the current year then the corresponding income as shown in the next year with the relevant expenditure are to be deleted from the next year which seems to be meaningless and un-productive at this stage. Even worth noting is fact that the income has been accepted by the department in the subsequent year. We, therefore, are of the considered opinion that since the full amount of hire charges stood offered to tax by the assessee in two years , addition of ₹ 54,32,279/- can not be sustained as it will result in double taxation of the same income. Accordingly, we set aside the order of ld.CIT(A) and direct th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the services were rendered accounted for the expenditure of hire charges in the financial year 2009-10 relevant to the assessment year 2010-11 and deducted TDS thereon accordingly. The reply of the assessee has been incorporated at page 2 of the assessment order. The AO not satisfied with the reasoning of the assessee added the ₹ 54,32,279/- being the difference between the hire charges as per form 26AS and as per books of the assessee to the total income of the assessee on the ground that the assessee was following mercantile system of accounting and therefore, the income which accrued during the particular year should have been accounted for accordingly regardless of the fact, whether the bills raised or not. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority, who also confirmed the action of the AO by considering and rejecting the submissions of the assessee. The observations of the ld.CIT(A) as has been incorporated in his order at para 3.1 to 4 are reproduced below: 3.1 I have carefully considered the facts stated in the assessment order as well as oral and written submissions of the Ld. Authorized Representati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made payments from 31.12.2009 to 28.2.2010 which invariably falls within the instant year. The assessee had taken another plea that corresponding expenditure were incurred In subsequent year and therefore the same should be considered in subsequent year. This argument is not tenable in the eyes of law as well facts for the reason that if the assessee had provided vessels to Punj Lloyd Ltd. in the instant year, how it is possible for assessee to hire vessels in the subsequent year to provide services (i.e. vessels) to Punj Lloyd Ltd. The claim is contradictory perse. This fact neither matches with the principles of accounting i.e. to say matching of expenses with revenue nor logically possible (i.e hiring vessels) incurring of expenses subsequent to the event of providing services of vessels to Punj Lloyd Ltd. Moreover the assessee had claimed TDS for impugned amount in the instant year itself. Had the claim of assessee was genuine as to accounting of the said receipts in subsequent year, it should have claimed corresponding TDS credit for the subsequent year as per Rule 37BA. Be that as it may, fact of rendering services in the extant year itself establishes that said receipts are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the ships spanned and overlapped till the beginning the next year and also corresponding bills of expenditure were accounted for in that year. The ld. AR also argued that had the bills of hire charges accounted for in the current year, credit of service tax on the said hire charges would not have been available to the assessee. The ld. AR finally submitted that if both the years were taken together i.e. assessment years 2010-11 and 2011-2012, the whole exercise of the department is rendered futile and waste of time as it became tax neutral for the reason that the assessee had paid the income tax in the next financial year which was not in dispute and virtually and factually there was hardly any difference in the gross receipt of hire charges as mentioned in the form no.26A and accounted for by the assessee. The ld counsel submitted that the AO , by going into the technicalities of the issue without appreciating the fact that the whole exercise has become tax neutral, wrongly added the same in the current year resulting into double taxation of the same income. Finally, the ld.AR prayed that the addition made by the AO and sustained by the ld.CIT(A) deserved to be deleted otherwi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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