TMI Blog2015 (4) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer. Therefore, the assessee was justified to content that income accrues only in subsequent year when the assessee gets an enforceable right to receive the same. The similar view has been taken in the case of CIT Vs Lucas Indian Services Ltd. (2008 (11) TMI 217 - MADRAS HIGH COURT). In view of above factual and legal discussion, the addition made by Assessing Officer was rightly deleted by CIT(A). This reasoned finding of CIT(A) needs no interference from our side. - Decided in favour of assessee. - ITA No.2363/PN/2012 - - - Dated:- 29-4-2014 - SHRI VIJAY PAL RAO AND SHRI RAJENDRA, JJ. For the Appellant : Shri P.L. Pathade For the Respondent : Shri Kishor Phadke ORDER Per: Shailendra Kumar Yadav: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer observed that in the balance sheet under current liabilities in Schedule 'D' there was a heading 'Contingent income' shown at ₹ 32,72,500/-. The Assessing Officer sought the explanation with respect to the taxability of the aforesaid amount. The explanation furnished by the assessee that revenue was recognized on raising of the invoice as against receipt of money as mercantile system of accounting was being followed and, therefore, the commission credited by deducting TDS was not considered as income but treated as 'contingent income'. The Assessing Officer, however, did not accept the explanation furnished by the assessee as credit for the TDS for the said income had been claimed, and treated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of installation only after the receipt of equipment from Daikin. After the installation is done and collection of money against the goods is completed the principal i.e. Daikin advices the assessee to raise an invoice. On its advice the assessee i.e. dealer raises the invoice along with service tax. The principal, thereafter, makes the payment by way of cheque adjusting the commission against his account for supply of goods. The Assessing Officer has observed that the TDS made on the amount which has been shown as contingent income and its claim being made during the year under consideration though the receipts not offered for taxation. Mere tax deduction at source is not a test for determining income for the reason that the responsibility ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33 1701 28- Apr -10 34 29- Sep- 07 323 24- Mar -10 SC/DAIPL/09 - 10/BAS/549 63000 6489 69489 30 7138 28- Apr -10 31 31- Jan- 08 540 24- Mar -10 SC/DAIPL/09 - 10/BAS/551 97500 10043 107543 26 11048 28- Apr -10 27 31- Jan- 08 541 24- Mar -10 SC/DAIPL/09 - 10/BAS/552 19000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no income, it could not be said that income has accrued merely on the ground that the assessee had followed the mercantile system of accounting. Even if the assessee makes a debit entry to that effect no income could be said to have accrued to the assessee. In the case no income has accrued there can be no liability to tax on a hypothetical income. What is to be considered is whether the income has really accrued to the assessee. The question whether real income has materialized has to be examined in the context of commercial and business realities of the situation in which the assessee is placed and not with reference to system of accounting. The accrual of income does not depend on the accounts of assessee. Whatever the position of acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so that income in a legal sense could not be treated as accrued, so as to require inclusion in taxable income. Matching principle in accounting does not make legal sense in every case. The Pune ITAT Bench in the case of Dana India Pvt. Ltd. ITA No. 375/PN/09 A.Y. 2004-05 dated 09.02.2011 by referring to the decision in the case of E.D. Sasson and Co. Ltd. Vs. (1972) 86 ITR 757 (SC) on similar set of facts held that the Assessing Officer was not justified in preponing the amount and deleted the addition to income. 4.2 In the case before us, work relate to the installation and erection of the equipment has been completed in subsequent years as the time taken varies between 1 month to 21 months. Therefore, the accrual of income earned happ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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