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2022 (9) TMI 705 - Income Tax
Addition being amount of unreconciled TDS and income not offered for taxation - real or hypothetical Income - method of accounting for revenue recognition - As argued deductors have accounted the same in its books of account and have also subjected it to TDS, which has been remitted to the Government Treasury - CIT-A deleted the addition - assessee enforces that the income distributed to the concerned members has to be taxed in the hands of the members only and not on the assessee - HELD THAT:- It is observed that the assessee company is a mere step through entity, which collected royalties and licence fees on behalf of its members and distributed the said amount to the concerned member after duly deducting the related expenses on actuals. It is pertinent to consider the submission of the assessee with regard to the method of accounting followed by the assessee company and how the receipts are accounted for.
Assessee has also tried to reconcile the TDS amount which were not taken credit.
it is essential to consider whether any income is real or hypothetical and that whether there is a corresponding liability of the other party to pay the amount to the assessee and that the probability of realization of income by the assessee are the factors that are to be considered to determine whether an income has accrued or not. We would also like to place reliance on the decision of CIT vs Neon Solutions Pvt Ltd [2016 (4) TMI 1162 - BOMBAY HIGH COURT] which was also relied on by the Ld.CIT(A) for the fact that even in accrual method of accounting, income which cannot be realized and the collection of the same is uncertain, the same cannot be accounted.
No infirmity in the decision of the Ld.CIT(A) and we hereby uphold the order of the Ld.CIT(A). Resultantly, the appeal filed by the Revenue is dismissed.