DR. O.K. NARAYANAN, A.M. T.K. SHARMA, J.M. G.E. VEERABHADRAPPA, VICE PRESIDENT (AS THIRD MEMBER) DR. O.K. NARAYANAN, A.M. ORDER This appeal is filed by assessee. relevant assessment year is 1997- 98 . appeal is directed against order passed by CIT(A)-XXXVII t Mumbai on 19th Dec., 2000. appeal arises out of assessment completed under s. 143(3) of IT Act, 1961. 2 . assessee is individual carrying on business of providing security and housekeeping services. She is regularly assessed to income-tax. assessee is following mercantile system of accounting and said system has been consistently and regularly followed in all assessment years. 3. In course of assessment proceedings, AO found that as per TDS certificates submitted by assessee along with her return of income, total receipts amounted to Rs. 1,06,15,995.55 whereas receipts credited in P&L a/c worked out to Rs. 95,19,657. When asked to explain difference, assessee stated that out of many TDS certificates submitted by assessee, certificate pertaining to Rs. 4,925 also was submitted in year under appeal but corresponding receipt of Rs. 2,46,268 has been credited in succeeding previous year. This is because, according to assessee, assessee was billing for services rendered in month only in subsequent month. said receipt of Rs. 2,46,268 in fact related to services rendered by assessee in month of March, 1997 for which assessee had raised bill only in succeeding month April, 1997. assessee explained that said amount accounted in month April, 1997 has been included in total receipts furnished for asst. yr. 19 98 -99. He submitted that this is according to consistent practice of accounting followed by assessee-company. 4 . assessing authority, on other hand, held that assessee should have credited amount of Rs. 2,46,268 due for month March, 1997, in relevant previous year itself as assessee was following mercantile system of accounting. Therefore, he made addition of Rs. 2,96,460.92 in this regard to returned income of assessee. This addition has been confirmed in first appeal. Therefore, second appeal before us. 5. contentions raised by assessee in this appeal read as below : "1. addition of Rs. 2,96,460.92 made to gross total income may please be deleted. 2. interest charged under s. 234B may please be revised and same should be charged to date of filing of return, i.e., upto October, 1997." 6. Shri Shailesh Doshi, learned chartered accountant appearing for assessee, argued case in detail. According to him, assessee was raising bill against his clients for services rendered in month, in succeeding month alone and, therefore, bill against services rendered in March, 1997 was raised only in month of April, 1997. Accordingly, receipts corresponding to services rendered in March, 1997 have already been credited in accounts of succeeding previous year 1997- 98 , relevant to asst. yr. 19 98 -99. He submitted that this method is consistently followed by assessee and this method does not any way affect crucial system of accounting followed by assessee. learned chartered accountant further submitted that on above method followed by assessee, he has already included receipts for 12 months for impugned assessment year and by adding receipts for March, 1997 in impugned assessment, AO has in fact considered receipts for 13 months for purpose of income-tax and at same time without giving deduction for corresponding expenditure relating to said receipts pertaining to March, 1997. learned chartered accountant submitted that as far as impugned assessment year is concerned, total of receipts from month of March, 1996 to February, 1997 has been considered and if this method is not followed in regular pattern, assessment for impugned assessment year will be on exaggerate amount of income, which assessee in fact had not received at all. 7. Shri Sanjay Kumar, learned Departmental Representative contended that if assessee is following accrual system of accounting, assessee should provide for accounting receipts due for month of March, 1997 also. He submitted that this is more important because assessee has claimed credit for TDS certificate for Rs. 4,925 which in fact belonged to bills raised for month of March, 1997. learned Departmental Representative submitted that credit for TDS and offering of corresponding income, both should be considered in same assessment year. He submitted, therefore, that orders passed by lower authorities on this point are to be upheld. 8 . We considered matter in detail. There is no dispute regarding method of accounting followed by assessee. He is following mercantile system of accounting. Therefore, whenever income is recognized, assessee has credited same in his books of account, irrespective of its actual receipt. This accrual of income is something different from raising bills against services rendered by assessee from month to month. question of following either accrual system of accounting or cash system of accounting arises only when income is recognized. In method of billing employed by assessee, income is recognized only on raising of bills. assessee raised bills after expiry of month in which services are rendered. In one way that alone is possible. assessee can raise bills for services rendered in March only in month of April because assessee has to wait till end of month of March. As far as assessee is concerned, income is to be recognized on issue of bills for services rendered. For services rendered by assessee in month of March, 1997, he has raised bills in succeeding month, i.e., April, 1997. Therefore, income could be recognized only in month of April, 1997 and not in month of March, 1997. Once bill has been raised in month of April, 1997, assessee has to credit bill amount as his receipts for month of April, 1997 irrespective o f fact whether he received amount or did not receive amount immediately. Even if assessee did not receive amount till March, 19 98 , still assessee had to show it as its receipt in books of account. 9 . In present case, assessee has strictly followed above pattern. In fact assessing authority as well as CIT(A) misconstrued distinction between recognition of income on basis of issue of bills distinction between recognition of income on basis of issue of bills and accounting of income. In fact income accrued to assessee only on recognition of income which is based on raising of bills. Therefore, it is not possible here to hold that assessee has deviated from regular method of accounting followed by him. We should notice distinction between raising of bills and accounting of receipts. 1 0 . As rightly pointed out by learned chartered accountant, if addition is sustained, assessee would be subject to tax for income relating to 13 months, which is not justified. In preceding asst. yr. 1996-97 also, assessee had offered receipts for 12 months period from March, 1995 to February, 1996. In present assessment year, he has shown receipts for month of March, 1996 to February, 1997. He has followed consistent method of billing. Once bills are raised and income is recognized, he has again followed mercantile system of accounting. 1 1 . Therefore, there is no justification in making addition of Rs. 2,96,460.92 to income of assessee. It is to be deleted. We order so. As assessee is claiming credit for corresponding TDS of Rs. 4,925, equivalent amount would be treated as income of impugned assessment year, which would be reduced from receipts of ensuing assessment year. 1 2 . In result, appeal filed by assessee is allowed. Order accordingly. After having gone through proposed order of learned AM, I find it difficult to agree with findings and conclusion as drawn by him in view of specific provisions contained in ss. 1 98 and 199 of IT Act regarding allowance of credit of TDS. 14. undisputed facts are that assessee is individual, engaged in business of providing security and housekeeping services to various establishments, such as UTI, RCF and HDFC, etc. assessee claimed TDS amounting to Rs. 5,929 in respect of three TDS certificates issued by RCF, Chembur pertaining to period 1st April, 1996 to 31st March, 1997 as under : Date of credit Amount credited TDS 9-4-1997 2,46,268.00 4,925 3-4-1997 8,954.25 179 21-4-1997 41,238.67 825 15. All aforesaid three amounts were not included by assessee in his income for asst. yr. 1997- 98 , though assessee was maintaining accounts on mercantile basis and claimed credit for TDS amounting to Rs. 5,929. AO allowed credit for TDS amounting to Rs. 5,929 and also taxed corresponding income. 16. assessee carried matter in appeal and learned CIT(A) in impugned order upheld action of AO with following observation : "2.3 submissions made have been carefully considered. From 1st April, 1997, system of accounting has to be either in cash or mercantile alone and no mixed system of accounting or system of accounting regularly followed can be accepted under s. 145 of IT Act. In view of it, sum of Rs. 4,96,460 pertaining to period 1st April, 1996 to 31st March, 1997 as per TDS certificates has accrued in asst. yr. 1997- 98 and accordingly to be assessed in asst. yr. 1997- 98 alone. On that logic, receipts for March, 1996 which appellant has included in asst. yr. 1997- 98 should be reduced and corresponding expenditure be also reduced while working out profits and gains from business. However, such benefit of deduction cannot be allowed as same has not been claimed. By allowing such claim, appellant s earlier year s assessment will also have to be reviewed. Whatever may be way to get out of situation, impugned receipts of Rs. 4,96,460 accruing in month of March, 1997 have to be taxed in year ending 31st March, 1997. This position also appears to have been accepted in way when appellant has himself claimed TDS deducted on these receipts. No interference is, therefore, called for in AO s order." Aggrieved by aforesaid order of learned CIT(A), assessee is before Tribunal. 17. From facts, it is clear that assessee has claimed credit for TDS in asst. yr. 1997- 98 , i.e., assessment year under appeal whereas he has offered income relating thereto for taxation in asst. yr. 19 98 -99. limited issue, therefore, is whether assessee can claim credit for TDS in asst. yr. 1997- 98 and offer income relating thereto for taxation in asst. yr. 19 98 -99. In my humble opinion, provisions of ss. 1 98 and 199 of IT Act are quite clear. According to s. 1 98 , all sums deducted under Chapter XVII are required for purpose of computing income of assessee, to be deemed to be income received. Therefore, TDS has to be treated as income received in asst. yr. 1997- 98 , i.e., year in which assessee has claimed credit. According to s. 199, credit for TDS is required to be given for amount so deducted on production of certificate furnished under s. 203 in assessment made under this Act for assessment year for which such income is assessable. It is, therefore, evident on bare perusal of provisions of s. 199 of IT Act that credit for TDS is required to be given in assessment year in which income relating thereto is assessable. It is undisputed position in case under consideration that assessee has claimed and AO has allowed credit for TDS in asst. yr. 1997- 98 and hence, it is equally indisputable that income relating thereto has to be brought to tax in said assessment year alone and in no other assessment year. This view is quite apparent and clear, as stated above, on bare perusal of provisions of s. 199. 18. undisputed position that emerges is that credit for TDS and assessment of income relating thereto have to go together in same assessment year and that they cannot be divorced from each other. Sec. 199 prohibits credit for TDS to be given in assessment year different from one in which income relating thereto is assessable. It was case of assessee before Departmental authorities that credit for TDS should be given to him in assessment year under consideration and hence Departmental authorities were justified in treating income relating thereto also as his assessable income for asst. yr. 1997- 98 . Having claimed and obtained TDS in asst. yr. 1997- 98 , it was incumbent upon assessee to offer income relating thereto to tax in asst. yr. 1997- 98 . 1 9 . submission of assessee that he has followed mercantile system of accounting for assessment year under appeal also supports aforesaid view. assessee claimed credit for TDS in asst. yr. 1997- 98 and hence admitted and recognized assessability of income relating thereto in asst. yr. 1997- 98 . Be whatever it may, system of accounting cannot defeat express provisions of law contained in s. 199, which mandates that credit for TDS shall be given in assessment year in which income relating thereto is assessable. As held by Hon ble Supreme Court in Tuticorin Alkali Chemicals & Fertilizers Ltd. vs. CIT (1997) 141 CTR (SC) 387 : (1997) 227 ITR 172 (SC), IT law does not march step by step in divergent foot prints of accountancy profession. 20. entire controversy boils down to two points : (i) Whether it is possible to give credit for TDS in year different from one in which income is assessable; (ii) Whether income of assessee was assessable in case before us in asst. yr. 1997- 98 . 21. As far as first issue is concerned, provisions of s. 199 are absolutely clear in that credit for TDS shall be given in assessment year in which income is assessable. It, therefore, follows that assessability of income and credits for TDS have to be considered in one and same assessment year and not in two different years. It is, therefore, not possible to allow assessee to avail credit for TDS in asst. yr. 1997- 98 and bring corresponding income to tax in asst. yr. 1998 -99. 22. As far as second issue is concerned, fact that assessee himself has claimed and obtained credit for TDS in asst. yr. 1997- 98 itself precludes assessee from alleging otherwise. provisions of s. 115 of Evidence Act are quite apposite. assessee made declaration before AO that it was entitled to get credit for TDS in 1997- 98 . AO acted on that declaration and allowed credit for TDS in asst. yr. 1997- 98 . Department thus altered its position on basis of declaration made by assessee, which was also in conformity with provisions of s. 199 of IT Act. Department acting on said declaration, did not charge interest under s. 234A/234B/234C, which would have been chargeable if credit for TDS had not been claimed by assessee and allowed by Department. On these facts, assessee cannot be heard at this stage to say that its income in respect of which credit for TDS has been obtained by him in asst. yr. 1997- 98 should be assessed in asst. yr. 19 98 -99. If assessee felt that its income was assessable in asst. yr. 19 98 -99, he should have shown income in asst. yr. 19 98 -99 and also claimed credit for TDS accordingly in asst. yr. 19 98 - 99. assessee did not do so. Having claimed and obtained credit for TDS in asst. yr. 1997- 98 , assessee should have also shown corresponding income in asst. yr. 1997- 98 as required under s. 199. Besides, learned AM has also proposed in draft order (para 11) that income to extent of TDS should be assessed to tax in asst. yr. 1997- 98 . In my view similar principle applies to entire income in respect of which tax has been deducted at source. deductor of tax and assessee have treated income covered by TDS to be income assessable to tax this year (asst. yr. 1997- 98 ) and it is only on this premise that credit for deduction of tax at source was claimed. Having taken this position, assessee cannot contend that income covered by TDS should not be taxed in assessment year under appeal but in subsequent assessment year. 23. It is well-established that it is income and not gross receipt, which is taxable. assessee follows mercantile system of accounting and hence he is eligible to allowance of expenditure incurred by him wholly and exclusively for purposes of business. AO has recorded categorical finding in para 5 of assessment order as under : "5........ Since receipts of above amounts are shown to extent of TDS instead of actual billed amount, no separate expenses are allowed as all expenses pertaining to this year, i.e., asst. yr. 1997- 98 are debited to P&L a/c." 24. No material was placed at time of hearing before us to show that aforesaid finding recorded by AO was incorrect. Having claimed corresponding expenditure under mercantile method of accounting, assessee cannot defeat taxability of income on ground that he had not raised bill. Here is case where he has executed work, received benefit of TDS and was also allowed expenditure incurred in executing said work. He cannot, in my humble view, turnaround to say, in face of aforementioned facts, that corresponding income is not taxable. 25. In result, appeal of assessee is dismissed. There being difference of opinion between Members constituting Division Bench, Hon ble President has referred under s. 255(4) of IT Act, 1961, following point of difference to me as Third Member to resolve controversy : "Whether, in facts and circumstances of case, learned CIT(A) is justified in confirming addition of Rs. 2,96,460.92, made by AO in respect of three TDS certificates pertaining to period 1st April, 1996 to 31st March, 1997 issued to assessee by RCF ?" 2 . facts in brief are assessee, individual, was carrying on business of providing security and housekeeping services to different clientele. assessment year involved is 1997- 98 . There is no dispute that assessee was following mercantile system of accounting for reporting income for purpose of assessment. 3 . During assessment proceedings, AO found that business receipts, as per TDS certificates submitted by assessee along with his return of income, was to extent of Rs. 1,06,15,995 whereas receipts credited to P&L a/c was only to extent of Rs. 95,19,657. assessee was asked to explain difference. assessee explained difference by providing reconciliation statement, except in respect of three TDS certificates received for services rendered to Rashtriya Chemicals & Fertilizers (RCF for short), Chembur. details of certificates as also amounts credited are as under : Date of credit Amount credited TDS 9-4-1997 2,46,268 4,925 3-4-1997 8,954 179 21-4-1997 41,239 825 assessee explained that aforesaid three receipts were not included i n his income for asst. yr. 1997- 98 on reasoning that these TDS certificates were received after close of relevant previous year ending on 31st March, 1997. AO included actual billed amounts as per TDS certificates to declared income and has also allowed credit of TDS amounting to Rs. 5,929. CIT(A) confirmed action of AO. 4. It was contended before Tribunal that assessee was raising bills against his clientele for services rendered in month only in succeeding month and on that basis bills in respect of services rendered in March 1997 were placed only in month of April, 1997. Accordingly, receipts corresponding to services rendered in March, 1997 have been credited i n accounts of succeeding assessment year. learned counsel submitted that this method has been consistently followed by assessee. assessee has already included receipts for twelve months in accounts for year under consideration and by adding receipts for March, 1997 AO would be considering receipts of thirteen months in assessment for year under consideration. learned AM in his proposed order accepted claim of assessee after having satisfied with method of accounting consistently employed by assessee. However, learned JM was of view that assessee has claimed credit for TDS in asst. yr. 1997- 98 whereas, in fact, amounts received were offered for taxation in succeeding assessment year. He opined that in light of provisions of ss. 1 98 and 199 of Act, action of assessee is not justified. According to learned JM, s. 1 98 of Act provides that all sums deducted under Chapter XVII are required for purpose of computing income of assessee to be deemed to be income received and, therefore, TDS has to be treated as income received in asst. yr. 1997- 98 itself. learned JM further opined that according to s. 199 of Act, credit for TDS is required to be given for amount so deducted on production of certificate furnished under s. 203 of Act in assessment made under this Act for assessment year for which such income is assessable. According to him, bare perusal of s. 199 of Act shows that credit for TDS is required to be given in assessment in which income relating thereto is assessable. AO having allowed credit for TDS in asst. yr. 1997- 98 , it is indisputable that income referable to that credit should also be brought to tax in same assessment year and in no other assessment year. According to learned JM, s. 199 of Act prohibits credit for TDS to be given in assessment year different from one in which income relating thereto is assessable. learned JM further opined that system of accounting cannot defeat express provisions of law contained in s. 199 of Act, which mandate that credit for TDS shall be given for assessment year in which income relating thereto is assessable. According t o him, Hon ble Supreme Court in Tuticorin Alkali Chemicals & Fertilizers Ltd. vs. CIT (1997) 141 CTR (SC) 387 : (1997) 227 ITR 172 (SC) has held that I T law does not march step by step in divergent foot prints of accountancy profession. learned JM further observed that having claimed corresponding expenditure under mercantile system of accounting, assessee cannot defeat taxability of income on ground that he has not raised bills. According to him, this is case where assessee has executed work, received benefit of TDS and was also allowed expenditure in executing said work. Therefore, assessee cannot, in opinion of learned JM turnaround to say that corresponding income is not taxable. He, therefore, upheld order of AO. expression of different opinions on this matter has brought before me question as abstracted above. 5. I have heard both sides extensively and have carefully gone through records. On facts, both learned Members are clear. difference is result of understanding exact purpose and intent of provisions of ss. 1 98 and 199 of IT Act, 1961. On method of accounting consistently followed by assessee for billing, there is absolutely no difference. I, therefore, take up provisions of ss. 1 98 and 199 of Act by extracting same under as applicable to assessment year under consideration : "1 98 . All sums deducted in accordance with provisions of ss. 192 to 194, s. 194A, s. 194B, s. 194BB, s. 194C, s. 194D, s. 194E, s. 194EE, s. 194F, s. 194G, s. 194H, s. 194-I, s. 194J, s. 194K, s. 195, s. 196A, s. 196B, s. 196C s. 194G, s. 194H, s. 194-I, s. 194J, s. 194K, s. 195, s. 196A, s. 196B, s. 196C and s. 196D shall, for purpose of computing income of assessee, be deemed to be income received. 199. Any deduction made in accordance with provisions of ss. 192 to 194, s. 194A, s. 194B, s. 194BB, s. 194C, s. 194D, s. 194E, s. 194EE, s. 194F, s. 194G, s. 194H, s. 194-I, s. 194J, s. 194K, s. 195, s. 196A, s. 196B, s. 196C and s. 196D and paid to Central Government shall be treated as payment of tax on behalf of person from whose income deduction was made, or of owner of security, or depositor or owner of property or of unit-holder or of shareholder, as case may be, and credit shall be given to him for amount so deducted on production of certificate furnished under s. 203 in assessment made under this Act for assessment year for which such income is assessable : Provided that : (i) in case where such person or owner or depositor or unit-holder or shareholder is person, whose income is included under provisions of s. 60, s. 61, s. 64, s. 93 or s. 94 in total income of another person, payment shall be deemed to have been made on behalf of, and credit shall be given to, such other person; (ii) in any other case, where dividend on any share is assessable as income of person other than shareholder, payment shall be deemed to have been made on behalf of, and credit shall be given to, such other person in such circumstances as may be prescribed : Provided further that where any property, deposit, security, unit or share is owned jointly by two or more persons not constituting partnership, payment shall be deemed to have been made on behalf of, and credit shall be given to, each such person in same proportion in which rent, interest on deposit or on security or income in respect of unit or dividend on share is assessable as his income." Both sections, viz., 1 98 and 199, fall within Chapter XVII of IT Act, 1961 which are titled as "Collection and Recovery-Deduction at source". In other words, these are machinery provisions for effectuating collection and recovery of taxes that are determined under other provisions of Act. In other words, these are only machinery provisions dealing with matters of procedure and do not deal with either computation of income or chargeability of income. basis of charge of income to tax in case of business income is provided in s. 28 of Act. computation provisions of ss. 28 to 43A deal with assessment of profits and gains of business. In computing income from business or profession, method of accounting followed by assessee becomes relevant. After all, profits and gains of business or profession carried on by assessee should be computed in accordance with method of accounting regularly followed by assessee as provided in s. 145(1) of IT Act, 1961. In fact, words "profits and gains" referred to in ss. 28 and 29 of Act deal with only commercial profits as understood in commercial parlance as held by Lord Halsbury in Gresham Life Association Society vs. Styles 3 Tax Cases 185 (HL) "in its natural and proper sense in sense which no commercial man would misunderstand". This principle has been approved by Privy Council in Pondicherry Railway Co. Ltd. vs. CIT 5 ITC 363 (PC), and by Supreme Court in Badridas Daga vs. CIT (1958) 34 ITR 10 (SC), Calcutta Co. Ltd. vs. CIT (1959) 37 ITR 1 (SC) and CIT vs. Bai Shirinbai K. Kooka (1962) 46 ITR 86 (SC). profits mentioned herein are real profits and they must be ascertained on ordinary principles of commercial practice and commercial accounting. Therefore, assessee s method of accounting becomes relevant for determining income from conduct of any business or exercise of any profession. assessee, in this case, is rendering security and housekeeping services to various clientele such as UTI, RCF, HDFC, etc. deductibility of any expenditure incurred by assessee depends upon method of accounting followed by him. assessee, in this case, is following mercantile system of accounting. All expenses, to which liability is accrued in accounting year, are deductible as business expenditure. In same manner all business receipts will have to be determined on basis of method of accounting employed by assessee. Unless assessee renders services for entire month, it is not open to him to raise bill upon his clientele. In other words, some of services rendered in March, 1997 will have to be necessarily billed after close of month which falls outside accounting year under consideration and, in fact, assessee has billed same immediately after close of accounting year, in month of April, 1997 which is subsequent to previous year for year under consideration and has treated same as part of business receipts for next assessment year. I do not think that there is any flaw in this method of accounting regularly employed by assessee and accepted by Department from year-to-year in past. After all, TDS certificates which are again dated and received in months subsequent to accounting year cannot be accounted in assessment year under consideration, which has already been closed. It is not necessary for assessee to account those receipts by reopening books of account of earlier year because assessee himself has raised bills in subsequent month after close of accounting year in question. Therefore, it is incorrect on part of Revenue to work out any addition, on basis of bills subsequently raised, in accounting year which has already passed wherein according to method of accounting employed by assessee, such receipts have not been recognized as part of business profits. 6. Secs. 1 98 and 199 of Act nowhere provide for exception either to determination of income under aforesaid provisions of ss. 28, 29 or as to method of accounting employed under s. 145 of Act, which alone could be basis for computation of income under provisions of ss. 28 to 43A of Act. Sec. 1 98 has limited intention. It only declares amounts deducted at source under ss. 192 to 194, s. 194A, s. 194B, s. 194BB, s. 194C, s. 194D, s. 194E, s. 194EE, s. 194F, s. 194G, s. 194H, s. 194-I, s. 194J, s. 194K, s. 195, s. 196A, s. 196B, s. 196C and s. 196D to be treated as income received. purpose of s. 1 98 is not to carve out exception to s. 145 of Act. Sec. 199 of Act has two objectives one to declare TDS as payment of tax on behalf of person on whose behalf deduction was made and to give credit for amount so deducted on production of certificate in assessment made for assessment year for which such income is assessable. second objective mentioned in s. 199 is only to answer question as to year in which credit for TDS shall be given. It links up credit with assessment year in which such income is assessable. In other words, AO is bound to give credit in year in which income is offered to tax. This s. 199 does not empower AO to determine year of assessability of income itself but it only mandates year in which credit is to be given on basis of certificate furnished. In other words, when assessee produces certificates of TDS, AO is required to verify whether assessee has offered income pertained to certificate before giving credit. If he finds that income of certificate is not shown, AO has not only to give credit for TDS in that assessment year and has to defer credit being given to year in which income is to be assessed. At cost of repetition, it may be mentioned that ss. 1 98 and 199 do not in any way change year of assessability of income, which depends upon method of accounting regularly employed by assessee. They only deal with year in which credit has to be given by AO. It cannot be disputed that according to method of accounting employed by assessee income in respect of three TDS certificates, which are mentioned in para 3 above, does not pertain to assessment year in question, but it pertains to next assessment year and, in fact, in that year assessee has offered same to tax. Therefore, credit in respect of these three TDS certificates shall not be given in assessment year under consideration, but credit for same shall be given in next assessment year in which income is shown to have been assessed. 7. In light of above discussions, I agree with reasoning given by learned AM, who has correctly directed exclusion of income represented by these three TDS certificates from being assessed in asst. yr. 1997- 98 , i.e., year under consideration. But assessee, in light of scheme of provisions of ss. 1 98 and 199 of Act, shall not be allowed to claim credit in respect of these TDS certificates for which income has not been returned by her as result of method of accounting employed. credit shall be carried forward and assessee will get credit for present TDS certificate in year in which she offers income to tax on basis of method of accounting regularly employed. 8. Before parting with matter, I think it is necessary for me to deal with certain observations regarding claim of expenditure as discussed by learned JM. claim of deduction for expenditure depends upon again method of accounting regularly employed by assessee. There is no dispute method of accounting regularly employed by assessee. There is no dispute that assessee has incurred these expenses even in respect of services rendered to its clientele in month of March, 1997 (to which bills are not raised). These expenses have been undoubtedly incurred during previous year in question. Only matching receipts have not accrued to assessee in accounting year in question due to method of accounting employed by her. But over years, effect on P&L a/c gets neutralized. Secs. 1 98 and 199, it may again be stressed, do not in any way determine year of assessability of profits and gains of business. They only deal with year in which TDS certificates have to be given credit to. In my humble opinion, decision of Hon ble Supreme Court in case of Tuticorin Alkali Chemicals & Fertilizers Ltd. (supra) relied upon by learned JM, does not in any way alter year of assessability of income, which is governed under ss. 28, 29 and 145 as has been interpreted by apex Court and as discussed by me above. 9. For above reasons, I am in agreement with view expressed by learned AM. matter will now be placed before regular Bench to dispose of appeal in accordance with opinion of majority. There having been difference of opinion between Members who originally heard this appeal, following question was referred under s. 255(4) to Hon ble President for nominating Third Member to resolve controversy therein : "Whether, in facts and circumstances of case, learned CIT(A) is justified in confirming addition of Rs. 2,96,460.92 made by AO in respect of 3 TDS certificates pertaining to period 1st April, 1996 to 31st March, 1997 issued to assessee by RCF ?" 2. Hon ble President has nominated Shri G.E. Veerabhadrappa, Vice President (Mumbai Benches) as Third Member to resolve controversy. Shri G.E. Veerabhadrappa, Vice President, has since vide his order dt. 27th Sept., 2005, has agreed with view expressed by learned AM, in his proposed order on this issue. Accordingly, inconformity with majority view, we hold that addition of Rs. 2,96,460.92 is deleted and it is further held that assessee was not be allowed to claim credit in respect of TDS certificates for which income has not been returned by her as result of method of accounting employed. credit shall be carried forward and assessee will get credit for present TDS certificates in year in which she offers income taxed on basis of method of accounting regularly employed. 3. assessing authority is, therefore, directed to modify assessment accordingly. 4. In result, this appeal filed by assessee is partly allowed. *** SMT. VARSHA G. SALUNKE v. DEPUTY COMMISSIONER OF INCOME TAX