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Income Tax Appellate Tribunal, “I” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI DR. A.L. SAINI
Aforesaid appeal by theRevenue is against order dated18th October 2016, passed by the learned Commissioner (Appeals)–4, Mumbai, for the assessment year 2013–14.
The dispute in the present appeal is confined to deletion of addition of an amount of ` 1,53,52,679, relating to surplus of student fees.
2 M/s. Maya Entertainment Ltd.
Brief facts are, the assessee a company is in the business of providing animation and multimedia education. For the assessment year under dispute the assessee filed its return of income on 27th September 2013, declaring total income of ` 2,28,47,210. During the assessment proceedings, on verifying the details available on record, the Assessing Officer found that the assessee has received income of ` 42,85,62,308, under three different heads viz. (i) student fees; (ii) share of income from franchise fee; and (iii) other income from operation. On verifying the details of income offered, the Assessing Officer found that the assessee has not offered full amount of the fees billed during the assessment year 2013–14 in respect of student fees. On further enquiry, he found that till financial year 2005–06 the assessee was recognising the income from training courses on the basis of billed amount. However, from the financial year 2006–07, the assessee changed the revenue recognition method by recognising income relating to student’s enrollment fee to the extent of actual training rendered during the relevant previous year. Thus, the assessee has bifurcated the total billed amount for the financial year 2012–13 in two years i.e., assessment year 2013–14 and 2014–15. The Assessing Officer did not accept the changed revenue recognition method adopted by the assessee and proceeded to make addition on the basis of billed amount and thereby added an amount of `
3 M/s. Maya Entertainment Ltd. 1,53,52,679, to the income of the assessee. The assessee challenged the addition before the first appellate authority.
The learned Commissioner (Appeals) noted that the revenue recognized by the assessee is as per the changed system of recognizing the income from billing to recognizing the income only to the extent it had imparted training to student. He found that assesse has adopted this method of revenue recognition from assessment year 2007–08 and in assessment year 2012–13 he has accepted the accounting method followed by the assessee and deleted similar addition made by the Assessing Officer.Following the said decision he deleted the addition made in the impugned assessment year as well.
At the outset, the learned Counsel for the assessee submitted that identical addition made by the Assessing Officer in the preceding assessment years were deleted either by the learned Commissioner (Appeals) or by the Tribunal. In this context, he drew our attention to the order dated 28th February 2017, passed by the Tribunal in assessee’s own case for assessment year 2007–08 and 2009–10 in ITA no.507/Mum./2013 & Ors. A copy of the order was also placed before the Bench. The learned Counsel for the assessee further submitted, against the order passed by the learned Commissioner (Appeals) deleting similar addition made by the Assessing Officer in assessment year 2012–13, the Department has not preferred any appeal before
4 M/s. Maya Entertainment Ltd. the Tribunal, thereby, accepted the decision of the learned Commissioner (Appeals). Thus, he submitted, the order of the learned Commissioner (Appeals) deserves to be upheld.
Learned Departmental Representative, though, fairly submitted that the disputed issue has been decided in favour of the assessee by the appellate authorities in the preceding assessment years, however, he relied upon the observations of the Assessing Officer.
We have considered rival submissions and perused materials on record. As could be seen from the facts on record, the assessee was recognizing revenue on the basis of billed amount till assessment year 2006–07 and thereafter he changed the method of recognizing revenue from the billed amount to the actual training imparted during the year. It is evident, the changed method of revenue recognition adopted by the assessee was not accepted by the Assessing Officer from assessment year 2007–08. However, the Tribunal while deciding the issue in the preceding assessment years, in the order referred to above, has accepted the changed revenue recognition method adopted by the assessee and accordingly deleted the disallowance made by the Assessing Officer. In this context, it is necessary to reproduce hereunder the finding of the Co–ordinate Bench on the issue.
“18. We have carefully considered the rival submissions and perused the material placed before us including the orders of authorities below on the point. We find that during the year under 5 M/s. Maya Entertainment Ltd. consideration the assessee has changed system of revenue recognition qua the course fee received from the students in cinematic training division from billing basis to only to the system which recognized the revenue basis on the training imparted / services rendered. In our opinion, the assessee has every right to change the method of accounting provided the same is consistently following the subsequent years. Moreover, the ld. CIT(A) called for the remand report from the AO which confirmed that the assessee was following the said system of accounting in the subsequent years. We are therefore in agreement with the conclusion drawn by the ld. CIT(A) that the AO was not right in rejecting the method of accounting followed by the assessee and therefore we uphold the same. Accordingly, the ground taken by the revenue is rejected by upholding the order of the ld. CIT(A) on this issue.”
The learned Counsel for the assessee has also made a statement at the Bar that against the order passed by the learned Commissioner (Appeals) deleting similar addition made by the Assessing Officer in assessment year 2012–13, the Department has not preferred any appeal before the Tribunal. There being no difference in fact relating to the disputed issue in the impugned assessment year, respectfully following the decision of the Co–ordinate Bench in assessee’s own case as referred to above, we uphold the decision of the learned Commissioner (Appeals) on this issue. Grounds raised are dismissed.
In the result, Revenue’s appeal stands dismissed. Order pronounced in the open Court on 27.06.2018