Johnson Lifts Pvt Ltd Vs DCIT (ITAT Chennai)
The appeal before the Income Tax Appellate Tribunal, Chennai Bench, arose from an order dated 08.10.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, which confirmed an addition made by the Assessing Officer in the assessment order dated 20.03.2024 under Section 143(3) of the Income-tax Act, 1961 for Assessment Year 2022-23.
The assessee company, engaged in the manufacture, supply, erection and maintenance of elevators and escalators, filed its return of income on 29.11.2022 declaring income of ₹1,72,22,53,940. The case was selected for scrutiny under CASS, and statutory notices under Sections 143(2) and 142(1) were issued. After examination, the Assessing Officer completed the assessment and made an addition of ₹4,26,66,144 relating to charges received under Annual Maintenance Contracts (AMC).
The assessee explained that it enters into AMC agreements with customers for maintenance services for periods ranging from one to two years. Under the mercantile system of accounting followed by the company, revenue from such contracts was recognised proportionately based on the period during which services were rendered. The portion of AMC receipts relating to future periods was treated as advance income and offered to tax in subsequent years. The assessee also relied on Income Computation and Disclosure Standards (ICDS-IV) concerning revenue recognition.
