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2012 (7) TMI 149 - AT - Income TaxIncome recognition - income accrued - assessee received consultancy fees from UG Hospitals Pvt. Ltd.for the term of five years - lower authorities treated the entire fee receipt in the year of appeal - Held that:- In service contract the income has to be recognized in proportion to the services rendered in a particular year. In the present case, admittedly the assessee has not rendered services for the period of 5 years, thus there is no point of recognizing the entire amount as income of the assessee in the year of receipt. It cannot be said that assessee has created such a debt or right against the M/s UG Hospital that the income for the entire 5 years had accrued to the assessee - as decided in CIT Versus. Dinesh Kumar Goel [2010 (10) TMI 287 (HC)]that though fees for full course of package is received in advance and service is to be rendered in next financial year income will not be not recognized unless service rendered - assessee’s reliance of AS-9 issued by the ICAI is also relevant which states that revenue from service transactions is usually recognized as the service is performed, either by proportionate completion method or by the completed service contract method - in favour of assessee.
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