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TMI Blog2018 (4) TMI 995X X X X Extracts X X X X X X X X Extracts X X X X ..... , without giving benefit of corresponding expenditure. Since assessee has accounted for the amounts over a period of three years on the method of accounting consistently being followed by her, we are of the opinion that there is no need to disturb the P&L A/c. The expenditure claim corresponding to this receipt was more than the income brought to tax, which may result in reducing the originally declared income. Therefore, we are of the opinion that the addition per se is not required to be made - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... Mercantile System of Accounting and assessee duly bound to declare all credits. His order in para 6.2 is as under: "6.2. I have considered the arguments of the assessee and have gone through the details filed. It is undisputed that the assessee is following mercantile system of accounting. It is also not in dispute that SWDL credited an amount of ₹ 8.22 crore to the assessee's account during the year under consideration. It is also true that the assessee claimed this TDS based on the certificate issued by SWDL. It is legally not permitted for the assessee to follow cash system on account of certain receipts and mercantile system for other items as per the convenience of the assessee. So called mixed system of accounting is no more allowed. As the assessee is following mercantile system he is duty bound to declare all credits as per mercantile system. From the details filed by the assessee it is seen that there is a negative difference of ₹ 6,64,666/- for AY. 2004-05 between the scheme credits and scheme payments. Even if this version of the assessee is assumed to be correct it is not understood as to why there is no corresponding debit in the profit and loss accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e credit of TDS should be given in the year of receipt. The facts of the case of M/s. Progressive Constructions Ltd. (supra) and Toyo Engineering India Limited (supra) are almost similar to that of the present case. In the case of Supreme Renewable Energy Limited (supra), the Tribunal has held that when the interest income is incidental to the acquisition and installation of an asset and is not directly liable for tax, assessee is entitled for the credit of TDS from the interest income which has been duly received by the Government. The relevant observation of the Tribunal are extracted hereunder: "The deposit on which interest was earned by the assessee is mandatory as per statutory requirement. Therefore, the interest income earned on the deposit is not out of surplus fund of the assessee but due to the statutory requirement under which the deposit was made for availing the credit facility of installation of machinery. When the interest income is in the nature of capital then the assessee has rightly deducted the same from the cost of the assets and while doing so the assessee has offered the said income though capitalized for assessment. When the interest income is not direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Thus, it was the contention that the TDS credit has to be given in the year of deduction so as to avoid complications and it was the contention that since assessee-proprietrix is following cash system of accounting, the finding by the CIT(A) that assessee is maintaining books of account on Mercantile System is not correct and the credit for TDS can be given in the year under consideration. 6. Ld.DR, however, relied on the orders of AO and CIT(A) and reiterated the facts as stated in the assessment order and CIT(A)'s order. 7. We have considered the rival contentions. As can be seen from the details extracted earlier, assessee has accounted for the entire amount of ₹ 16,98,83,820/- over a period of three years and also booked corresponding expenditure under the scheme to an extent of ₹ 16,66,55,777/-. Thus, over a period of three years, the entire receipts from SWDL have been accounted. There is no dispute about either the receipts in the three years or the expenditure claimed by assessee against the said receipts towards the schemes of SWDL over a period of three years. Since the company deducted tax on a higher amount without full payment to assessee and having as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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