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2022 (2) TMI 273 - AT - Income TaxDetermination of income - Accrual of income - profits & gains of the assessee's cold storage business keeping of the accounts of the said business by it on mercantile basis - whether income in the nature of interest, rent, etc., i.e., period income, which is principally a function of time and, thus, inures with it, would accrue to the service provider with the lapse of time or only in terms of the underlying contract? - HELD THAT:- Context of cold storage charges, which are essentially charges for storing goods (agriculture produce) under defined (controlled) conditions, as to temperature, etc., the contours of the contract, largely oral, as well as the conduct of the parties, which were in agreement, were examined to find that the right to receive the charges, and thus the accrual of income in its respect, is only on the cold storage fully performing its' part of the contract, i.e., where it delivers, or is in a position to deliver the agriculture produce (potatoes) stored to the farmer in a good, marketable condition at the end of the period for which it is contracted to be stored. Of course, it stands clarified that this does not give rise to any general proposition, being essentially a question of fact as to the accrual or the vesting of the right to receive in the given, undisputed facts and circumstances, and it was well open to the parties to, independent of the time set for the payment of charges, agree differently on the terms of the accrual or the vesting of the right to receive. It stands accordingly held that in the given facts and circumstances of the case no part of the cold storage charges for the business cycle Feb. - Nov. accrues on the part performance of the contract by the cold storage upto March-end. That being the case, the direct, input cost on the said part performance of the contract for the months of February & March shall be set aside as 'closing stock' for being adjusted on the accrual of the corresponding income, with a similar adjustment being made for the opening stock, and for the same reason, altering thus the returned income to the extent of a difference between the two. Not so doing, it is explained, would result in the profit of one period being transferred to another; that being the premise of stock accounting for a going concern. There had been no statement of the general principle/s of law nor indeed of the issue or the legal problem arising, with even the relevant facts, material to the decision, being not as presented before the Tribunal - which can only decide on the basis of the facts brought forth based on the material on record, on the earlier occasions, which orders were thus sub silentio the relevant aspects/issues. Why, even in the instant appeals, the appellant's case, as presented, was not with reference to the accrual or otherwise of rental income in the given facts and circumstances of the case, i.e., as presently discerned by the Tribunal, resulting, consequently, in the statement of a different issue or legal problem arising for adjudication, i.e., from that presented before it. In fact, as found, the issue arises; the law being well-settled, only in view of the income under reference being a period income. - Decided in favour of assessee.
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