2010 (5) TMI 524 - ITAT, CHENNAI

Income escaping assessment - Reopening of assessments with regard to assessment years 1999-2000 to 2001-02 - The view taken in a particular assessment year cannot bind the Assessing Officer for subsequent assessment years - Supreme Court in the case of CIT vs. Kelvinator of India Ltd. (2010 -TMI - 35201 - SUPREME COURT OF INDIA ) - Held that the tangible material available with the Assessing Officer is that the assessee has received certain subscription from customers only a portion of which has been declared as income - Therefore, it can be said that the Assessing Officer had reason to believe about the escapement of income - It is valid ground for reopening of assessment

reopening for assessment year 1998-99 - On the merits of the re-opening of the assessment, here also as in other assessment years, the main contention is that all the relevant material was on the record of the department furnished at the time of the assessment of the previous year - Each issue has to be weighed on its own merits and legal principles cannot be sacrificed on the altar of consistency - the assessment for 1998-99, though re-opened after four years, is validly re-opened - In the result, the cross objections of the assessee for all the years are dismissed

Accrual of income - Thousands of litres of ink have been consumed lavishly over the past more than hundred years in discussing the concept of accrual and yet there is no end to it, and rightly so as it indicates the ever changing dynamics of business and commerce. Hospitality business, though in existence since more than hundred years, it has come into limelight recently with several variants and sale of timeshare unit is one such variant with which are concerned in the present group of appeals.

Membership Fees - Addition - The entire membership fee received by the assessee is treated as revenue receipt, but the entire amount collected is not recognised as revenue and offered for taxation in the year of its receipt -Regarding ratio of revenue receipt - Supreme Court in the case of Madras Industrial Investment Corporation Ltd. v. CIT (1997 -TMI - 5591 - SUPREME Court) - Accordingly, to answer the question posed to the Special Bench, the entire amount of timeshare membership fee receivable by the assessee up front at the time of enrolment of a member is not the income chargeable to tax in the initial year on account of contractual obligation that is fastened to the receipt to provide services in future over the term of contract - Appeals are dismissed