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2021 (1) TMI 913 - AT - Income TaxAssessment of trust - eligibility for any type of depreciation as the entire expenditure for the purchase of capital assets - HELD THAT:- This issue is covered in favour of the assessee by the judgment of Hon’ble Delhi High Court in the appeal for the Assessment Year 2008-09, wherein in the appeal preferred by the assessee in [2013 (9) TMI 451 - DELHI HIGH COURT] has allowed both the expenditure, i.e., capital expenditure and depreciation as application of income. This order of the Hon’ble High Court has been followed by the ITAT in assessee’s own case in the Assessment Yea₹ 2009-10, 2010- 11 and 2011-12. Addition of space rent income on the basis of disclosure in Notes to Accounts of the assessee - Rental income has not accounted in the books - assessee is following mercantile system of accounting - HELD THAT:- Long standing dispute between the Government Departments who are in possession of the Space in Pragati Maidan and assessee made endeavours for recovery of space rent - One of the organization viz. National Science Centre (NSC) had paid space rent to the ' assessee company @ ₹ 200/- per sq. mtr. p.a. in an earlier year. Subsequently, the rate of space rent was enhanced by the assessee company on year to year basis which was contested by the NSC. Accordingly, the assessee company has accounted for income @ ₹ 200/- per sq. mtr. per year in the Income & Expenditure Account as NSC had paid @ ₹ 200/- per sq. mtr. p.a., but contested the increase in rates. The element of enhanced space rent over ₹ 200/- per sq. mtr. p.a. (disputed amount) was kept out of books as "Contested dues not accounted for" and disclosed in the Notes to the Accounts. The assessee is essentially relying on the Accounting Standard 9 issued by the Institute of Chartered Accountants of India relating to Recognition of Income in accordance with para 10 which states that if at the time of raising any claim, it is unreasonable to expect ultimate collection, revenue recognition should be postponed. As regards the other department viz. Crafts Museum, they have not paid any space rent to the assessee company and are maintaining that they were in possession of the space even prior to the formation of the assessee company. On the same analogy of NSC and following AS 9, the assessee company has not raised any invoice for the space rent on Craft Museum any disclosed the disputed amount of space rent relating to the Assessment Year under reference, in the Notes to Accounts. Assessee has not recognised the licence fee pertaining to these departments as income in the books in accordance with para 10 of the Accounting Standard 9 As decided in earlier years when income on account of space rent has not been accrued, as in the instant case due to dispute, there cannot be any rent even though entry in the books of account have been made on account of notional income. So, when the income would be received its taxability can be examined by the Revenue. Ld. DR for the Revenue has not brought on record any document if the dispute between the parties qua the space rent has been resolved. So, in these circumstances, we are of the considered view that there is no illegality or perversity in the findings returned by the ld. CIT (A) in deleting the addition - Decided in favour of assessee.
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