Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2012 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (7) TMI 651 - ITAT, CHENNAIBusiness of selling time share units - accrual of income - mercantile-system of accounting. - holiday facilities to its members for a specified period each year, over a number of years, for which membership fees is collected either in full or in installments. - held that:- there is a definite liability cast on the assessee to fulfil its promise and, therefore, it cannot be said that the entire fee received by it has accrued as income. - the peculiar nature of the activity along with the complexity attached to it as a result of which no reasonable provision for the liability can be made. Therefore, recognizing the entire receipt as income in the year of receipt can lead to distortion. The entire amount of timeshare membership fee receivable by the assessee up front at the time of enrolment of a member is not the income chargeable to tax in the initial year on account of contractual obligation that is fastened to the receipt to provide services in future over the term of contract. - Decision of Special Bench of the Tribunal in assessee’s own case ACIT Versus Mahindra Holidays & Resorts (India) Ltd. (2010 (5) TMI 524 - ITAT, CHENNAI) followed. Expenditure on salary, rent, interest, repairs and furniture. - there is no material on record to show the entire amount of Rs. 1.6 crores are on account of revenue expenditure like salaries, interest, rent etc. and no part of the expenditure under the head ‘construction expenses pending allocation’ includes any expenditure incurred for acquiring new capital asset. In the above circumstances, in our considered view, the CIT(A) was justified in directing the Assessing Officer to allow revenue expenditure after verifying if the amounts were for salaries, rent, interest etc. Therefore, this ground of appeal of the assessee is dismissed.
|