Bombay H.C : the assessee was required to make deposits on behalf of its customers on various accounts with the Mumbai Port Trust

High Court Of Bombay

CIT vs. Modest Maritime Services (P.) Ltd.

Section : 41

J. P. Devadhar And Smt. R. P. Sondurbaldota, JJ.

ITA No. 3622 Of 2010

July 1, 2011

JUDGMENT

1. Whether the Income-tax Appellate Tribunal was justified in deleting the addition made under section 41(1) of the Income-tax Act, 1961, is the question raised in this appeal.

2. The assessee is a shipping agent providing services to ships and act as a offshore representative. During the course of its business, the assessee was required to make deposits on behalf of its customers on various accounts with the Mumbai Port Trust. After recovering the charges, Mumbai Port Trust used to refund the amount which were admittedly returned by the assessee to its principal as and when demanded. The refund amounts lying with the assessee for more than three years were considered by the assessee as its income and offered to tax.

3. The Assessing Officer rejected the method of accounting followed by the assessee and brought the entire refund amount lying with the assessee to tax under section 41(1) of the Income-tax Act, 1961, on the ground that the assessee failed to furnish particulars called for by the officer.

4. The Tribunal while deleting the additions, held that there is no infirmity in the method followed by the assessee and moreover, the balance refund amount has been offered to tax in the subsequent assessment years which the Department has accepted.

5. In this view of the matter, we see no reason to entertain this appeal. The appeal is accordingly dismissed with no order as to costs.

[Citation : 338 ITR 64]

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