Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2011 (12) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2011 (12) TMI 114 - HC - Income TaxDis-allowance of provision of liability made for expenditure to be incurred in removal of encroachments in and around the technical area of the Airport - capital expenditure or revenue expenditure - Treatment of the proforma invoices issued on government agencies for space provided in Airport as income – Mercantile system of accounting - Held that:- It is not in dispute that the land belongs to the assessee. In the schemes formulated by the Government for removal of these encroachers and rehabilitate them at other places, if the assessee had paid the amount that amount is not for acquisition of new assets. The payment was made to facilitate its smooth functioning of the business. Therefor, expenditure is revenue in nature. See Bikaner Gypsums Ltd vs CIT (1990 - TMI - 5308 - Supreme Court).-Decided in favor of assessee. In respect of the Government Agencies on the application of “real income” theory and taking a realistic view, it is held that no income has accrued merely because proforma advices were raised, that too, at the instance of the CAG of India since these departments have their offices to facilitate the functioning of the assessee and they do not agree to pay any licence fee of the space occupied by them. The matter is restored back to A.O. determine the taxability of proforma invoices in respect of those parties who have been remitting part payments and have accepted their liability and not in respect of those Government Agencies who have never paid any amount.-Decided partly in favor of assessee.
|