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2012 (10) TMI 512 - AT - Income TaxProvision for Rehabilitation and eviction of illegal encroachments - Capital v/s Revenue - Held that:- The question as to whether there is a 'real income which has accrued to the assessee is dealt in State Bank of Travancore Vs. CIT, (1986 (1) TMI 1 - SUPREME COURT) that the concept of real income is applicable in judging whether there has been income or not. 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 materialized. This principle is applicable whether the accounts are maintained on cash system or under mercantile system. If the accounts are maintained under the mercantile system, what has to be seen whether income can be said to have been really accrued to the assessee company. Tribunal is not correct that merely because a meager sum is received, the entire amount is to be treated as income and same treatment is to be given in other assessment years. What was to be seen as to which Government Department is remitting the amount. From the details furnished, it is obvious that some of the Departments have never made any payment on the application of “real income” theory and taking a realistic view, it is held that no income has accrued merely because proforma advices were raised, that too, at the instance of the CAG of India - restore this issue back to the Assessing Officer to examine the matter afresh - in favour of assessee for statistical purposes. Disallowance of retired medical benefit scheme - Held that:- CIT (A) rejected the additional evidence filed by the assessee which comprised an actuarial valuation report. The CIT (A) rejected this evidence, even though it was held that the provision for rehabilitation and eviction of illegal encroachments, as claimed by the assessee, needed to be allowed in view of various judicial pronouncements. In his remand report, AO himself agreed that the expenditure was an allowable expenditure. Thus remit this issue to the file of the Assessing Officer to examine the actuarial report and to re-decide the issue on the basis thereof. Disallowance of u/s 40 (a)(ia) - Held that:- As decided in Deputy Commissioner of Income-tax - 11(2) Versus Chandabhoy & Jassobhoy [2011 (7) TMI 956 - ITAT MUMBAI] the provisions of Section 40(a)(ia) can be invoked only in the event of non-deduction of tax, but not for lesser deduction of tax - in favour of assessee. Prior period income - expenditure netted off against prior income - Held that:- Though the assessee has disclosed much more income of the prior period & the prior period income offered by the assessee was more than the prior period expenses claimed in the year under consideration AO has assessed the prior period income and disallowed prior period expenses. He cannot adopt different yardstick for assessing the income and allowing the expenditure - in favour of assessee.
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