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2013 (7) TMI 914 - HC - Income TaxReceipts on sale of electricity energy to A.P. TRANSCO - accrual of income - ITAT deleted the addition - whether the Tribunal is correct in law in relying on the Accounting Standard-9 issued by the ICAI which has not been approved by the Central Government? - Held that:- Certain amount payable by the A.P. TRANSCO to the respondent - assessee is in dispute and such dispute is yet to be resolved by arbitration. Merely because the assessee has raised a bill for recovery of certain amount, it does not partake the character of 'income'. If the amount is disputed and the same is pending adjudication in arbitration, there is no crystallization and quantification of the amount due and payable by the debtor. Unless the debtor accepts the amount due and paid, the question of accrual of income even in mercantile system of accounting does not and cannot arise. Tribunal has followed the principle of law laid down in Godhra Electricity Company Ltd. v. C.I.T. [ 1997 (4) TMI 4 - SUPREME Court] wherein held Income tax is a levy on income. No doubt, the Income Tax Act take into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt. But the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in book-keeping, an entry is made about a hypothetical income which does not materialize. - Tribunal has deleted the said income and we think that it has correctly done so. - Decided in favour of assessee.
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