Case Law Details
M/s. Optum Health & Technology (India) Pvt. Ltd. Vs ITO (ITAT Bangalore)
The Assessee follows mercantile system of accounting and therefore under the Act, the AO is empowered and bound to compute income in accordance with the mercantile system of accounting. There is no dispute that under mercantile system of accounting debit of value of services to the tune of Rs. 1,50,84,240 was not because of non-accrual of income but only because bills were not raised on the customers for value of services which had already accrued. The fact that bills were not raised does not stop accrual of income under the mercantile system of accounting. Therefore the claim of the Assessee which is purely based on AS-9 is not sustainable and the action of the revenue authorities in making the impugned addition was justified. We however wish to make it clear that the aforesaid observations will hold good only for AY upto AY 2012-13 because Sec.145 of the Act has undergone some statutory amendments and the position after such amendment is not and cannot be subject of decision in this appeal. The fact that value of services recognised for the purpose of levy of service tax is not relevant in the context of computation of total income for the purpose of levy of income tax under the Act. The concept of value of service for the purpose of levy of service tax and total income for the purpose of levy of income tax are different and are determined on relevant statutory provisions applicable.
We however wish to make it clear that the income recognition of which was postponed by the Assessee by following AS-9 cannot be regarded as income in the year in which it is offered to tax by the Assessee, because the law is well settled that same income cannot be taxed twice. The burden will however be on the Assessee to show as to how the income offered in a later assessment year was income which was not recognised in earlier Assessment year by reason of application of AS-9. Subject to these observations, we find no merit in this appeal by the Assessee and dismiss the same.
FULL TEXT OF THE ITAT ORDER
This is an appeal by the assessee against the order dated 08.03.2016 of the CIT(Appeals)-V, Bengaluru relating to assessment year 2012-13.
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