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TMI Blog2016 (12) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... ices or of passing entries recording sales in the books of account, which may be done as a matter of course or as a matter of expediency. We agree that the accounting policy, using the word ‘coincide’, is not very appropriately worded, but then the same is not to be read strictly, as one would read a provision of law, giving due emphasis to every word, but as conveying broadly the intent, as of transfer of ownership of goods in the present case. Then, again, could an accounting policy override substance when no sale, either in law or as per the accounting norms, can be said to have taken place? Surely, not. Revenue has not raised any issue qua the valuation of the goods under reference, which is stated by the ld. A.R. as being in conformity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reversed its sales to the extent of ₹ 83.93 lakhs and, thereby, the corresponding income of ₹ 32.36 lakhs, valuing the relevant goods, since dispatched to its' customers, as part of the closing inventory, at ₹ 51.57 lacs. The assesse-company, in the manufacture of electronic weighing; material handling; and batching and blending systems, dispatched weighing machines and spares to different customers vide invoices raised on different dates from 28.03.2011 to 31.03.2011, recording the corresponding sales at ₹ 83,93,188/-. The supplies were on FOR destination basis (PB page 2). However, as the goods were delivered to the respective parties only from April 01, 2011 to April 18, 2011, i.e., in the next year, the sale entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly signifies transfer of all significant risks and rewards associated with the ownership of goods, sales and, thus, income would accrue to the seller only on their delivery. It is only upon delivery to and the acceptance of goods by the corresponding party that a debt in favour of the transferor inures and income embedded in the consideration for transfer accrues. Even if therefore the sales, booked - as in the instant case, on the basis of invoices raised, are not reversed in its accounts, an assessee is entitled to claim a withdrawal or reduction in income as per books to the extent of the profit on 'sales' not accompanied by delivery of the goods 'sold'. The only issue that would arise in that case is if it had offered income for the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly in-as-much as the date of dispatch and the date of delivery would invariably be different. However, as they would ordinarily fall within the same accounting year, the same would be to no consequence. The word 'generally' occurring in the relevant accounting policy, in our view, in the absence of anything to the contrary, is to be understood in this context, even as explained by the ld. A.R during hearing, emphasizing that neither in the past nor in the future had such a situation occurred. Clearly, such a situation would obtain only where dispatches are made at the fag end of the year. We agree that the accounting policy, using the work 'coincide', is not very appropriately worded, but then the same is not to be read strictly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where some technical expertise is required. The same though does endorse the assessee's case of the supplier being obliged to deliver the same at the buyer's premises. Then, again, who has the insurable interest in the goods under transit? We find no inquiry and, accordingly, no finding in the matter, though, to be fair to the Revenue, there is equally no assertion by the assessee in this regard at any stage. We consider this as relevant and, in fact, as clinching the issue. If the insurable interest therein is of the assessee, the property in the goods has not transferred and it continues to be to the owner of the goods till their physical delivery. The word 'dispatch' in its accounting policy is in such a case, as contended, a euphemism ..... X X X X Extracts X X X X X X X X Extracts X X X X
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