Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2008 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2008 (3) TMI 715 - AT - Income TaxTaxability of income - Mercantile System of Accounting - In the year the assessee got the right to receive the income or the year of accrual as per the system of accounting followed by the assessee - interest payable under ss. 234B and 234C - HELD THAT:- We conclude that payment of royalty to the assessee by GGL was fixed by the IDBI, for which assessee had also consented, and the same was dependent on the terms and conditions of no overdue debt to the financial institution and there being availability of sufficient cash flow in the hands of GGL, at the time of payment of instalment, can be considered as sufficient riders for postponing the assessee's rights to receive the royalty and the same was to be received only when GGL was having sufficient cash flow and no overdue to any financial institution. Both these conditions could be complied only at the time of payment of instalments of royalty and prior to the said date there existed uncertainty as to the ultimate payment of the royalty amount. Therefore, notwithstanding the mercantile system of accounting being followed by the assessee, royalty income accrued in favour of assessee only in the years the right to receive such royalty income accrued in favour of assessee as per the terms of consent letter. Accordingly, royalty accrued in favour of the assessee in the AY 2003-04 and AY 2004-05. As the assessee was in receipt of royalty of from GGL for the period 1st April, 1993 to 31st March, 1995 during the relevant assessment year under consideration, the same is liable to be taxed accordingly in the AY 2002-03 under consideration. We direct accordingly. Charging of interest under ss. 234B and 234C is consequential in nature, the AO is directed to give due credit for the TDS pertaining to the income received by the assessee and recompute the interest chargeable under ss. 234B and 234C of the Act. In the result, the appeal of the assessee is allowed in terms indicated hereinabove.
|