Case Law Details
Case Name : CIT Vs Johnson Lifts Pvt Ltd (Madras High Court)
Related Assessment Year : 2009-10
Courts :
All High Courts Madras High Court
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CIT Vs Johnson Lifts Pvt Ltd (Madras High Court)
Madras High Court held that amount received in advance towards Annual Maintenance Service is revenue in the hands of the assessee at the time of receipts and accordingly tax is leviable in the year of its collection.
Facts-
In this appeal, the dispute is confined to the “Annual Maintenance Charges” (AMC) collected by the respondent-assessee in advance from its customers for maintenance of Lifts installed and commissioned by the respondent-assessee.
The respondent-assessee had treated the same
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Author Bio
The Hon’ble Delhi High Court in the case of Uttam Singh Duggal& Co. (P) Ltd Vs CIT (1981) 127 ITR 21 (Delhi) held that an amount received in advance converts into an income only when the work corresponding to the amounts received in advance is actually done. In the said case work against the advance received earlier was done in subsequent two years and it was held that the advance receipts proportionate to work done in subsequent years is income by way of accrual only in those succeeding years.