Re: Effect of VSVS in subsequent years

Dear Sir,

I am in Contract service business in which each contract will be having period of more than 90 days. In computing income from said business, I recognized 25% of revenue in Year 1 and balance revenue in next three years (this method is based on survey method). During assessment proceedings, the Ld. AO has contends that the entire income should be offered in Year 1 itself. This issue is pending before the Hon’ble ITAT for about 10 years.

In this situation, if I file VSVS petition and offer the income based on Ld. AO position, can I claim the amount offered for AY 2017-18 as reduction in subsequent years.

As per our  understand the AO has made entire addition in one year and the assessee is appeal before the Appellate Tribunal  for that assessment year as well as other years . If the AO has made protective addition in later years  and if the assesseee  takes the benefit of the scheme  in first year the protective assessment may not survive . On the other hand if later years additions are on other accounts  the assessee will not get automatic benefit . The assessee may have to contend that it will lead to double addition . The assessee may have to approach the designated authority , if designated authority or the Assessing  officer passes rectification order based on the declaration made in the first year  the assessee can avail the benefit of the scheme.

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