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2017 (11) TMI 575 - HC - Income TaxConsideration received on non-competition obligation - accrual of income - Method of accounting - Memorandum of Understanding cast an obligation upon the appellant not to compete with the business for a period of two years - Tribunal held that the provisions of section 145(1) are not applicable - Held that:- As relying on decision of Gujarat High Court in Commissioner of Income Tax vs. Winner Business Link Pvt. Ltd. [2015 (1) TMI 829 - GUJARAT HIGH COURT] no infirmity in the order passed by the Tribunal. The Tribunal has rightly considered that the method of accounting should be such from which the correct profit of each year can be deducted and that as per the method adopted by the Revenue, the profit in the year in which the card is issued would be more resulting in loss/less profit in the year in which the services will be rendered by the assesseee. We are of the opinion that when the services are rendered partially, revenue is to be shown proportionate to the degree of completion of the service and therefore the assessee was justified in spreading over the amount of membership fee and expenses.
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