The assessee has been following consistent accounting policy to recognize income by way of service charges on receipt basis. It was submitted that there was uncertainty in recovering service charges. There should not be any dispute that an income can be recognized under mercantile system of accounting also, only if there is certainty of its recovery. Considering the past consistent practice followed by the assessee, addition was not justified. (AY.2010-11)
Dy. CIT v. National Bank for Agriculture & Rural Development [2023] 221 TTJ 25/ 221 DTR 369 (Mum) (Trib)
S. 4 : Charge of income-tax -Accrual -Service charges accrued but not received -Addition is not justified. [S. 5, 145]