Case Law Details
UL India Pvt. Ltd. Vs DCIT (ITAT Bangalore)
The next issue relates to the addition made rejecting the claim of change in method of revenue recognition. The Ld A.R fairly admitted that this issue has been decided against the assessee by the co-ordinate bench in AY 2009-10 (referred supra). We notice that this issue has been decided against the assessee by the coordinate bench in AY 2009-10 with the following observations:-
“36. We have considered the rival submissions and are of the view that the conclusion of the DRP in this regard deserves to be upheld. It is no doubt true that the Assessee is at liberty to change the method of accounting provided the change in the method of accounting is bonafide and is being consistently followed subsequently. But the method followed by the Assessee in the present case of postponing revenue recognition without postponing the cost incurred for earning the revenue cannot be said to be proper. There is no valid explanation for claiming expenses related to the CAS services rendered by the Assessee when recognition of income there from is postponed. The change in the method of accounting was therefore not bonafide and was rightly rejected by the revenue authorities. We find no merit in the claim of the Assessee in this regard. The cases cited by the learned counsel for the Assessee are with regard to the right of an Assessee to change the method of accounting provided it is bonafide and is followed subsequently. Therefore the case laws cited are not discussed. Suffice it to say that the principle laid down in those cases are not applicable to the present case in view of the finding that the change in the method of accounting was not bonafide and proper. Gr.No. 15 to 18 are therefore dismissed. As far as Gr.No.19 raised by the Assessee which is to the effect that if the income recognition which is postponed in this year is considered as revenue for the current year, then the AO should allow consequential benefit in the subsequent year in which the same income has been offered to tax, we are of the view that the Assessee is at liberty to pursue remedies available to it in law and the AO shall consider the same in accordance with law and in the light of the findings as above.”
Following the above said order of the co-ordinate bench, we decide this issue against the assessee. Accordingly, the addition made by the AO is confirmed.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
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