Gujarat State Road Development Corporation Ltd Vs DCIT (ITAT Ahmedabad)
Income Tax Appellate Tribunal (ITAT) Ahmedabad has directed a de novo assessment for Gujarat State Road Development Corporation Ltd. (the Assessee) for the Assessment Year 2017-18. The decision, dated June 14, 2024, came in response to an appeal filed by the Assessee challenging an order from the Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi, which had upheld an addition of Rs. 4,66,86,192 to the Assessee’s income.
The Core Dispute: Deferred Revenue Recognition
The dispute originated during the assessment proceedings when the Assessing Officer (AO) observed a significant discrepancy between the income reported in the Assessee’s Profit and Loss Account (Rs. 9,63,30,302) and the total receipts reflected in Form 26AS (Rs. 14,30,16,494). This led to an alleged short accounting of Rs. 4,66,86,192.
In response, the Assessee contended that the difference was due to an accounting policy adopted to defer income recognition for three projects, citing a lack of “ultimate collection with reasonable certainty.” The Assessee explained that it had entered into deferment agreements with Larsen & Toubro (L&T) for these projects, where L&T agreed to pay additional concessional premium and interest on delayed payments due to financial constraints. Copies of these agreements were submitted to the AO.
