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2015 (7) TMI 932 - AT - Income TaxAccrual of income - Contribution received from the members - whether is to be assessed in the year of receipt or assessee is to be permitted to spread over, over a period of five years? - whether CIT(A) has erred in confirming the addition received as capital contribution from members for discharge through effluent channel constructed by the assessee? - Held that:- As decided in earlier years of assessee's own case [2010 (10) TMI 717 - ITAT, Ahmedabad] a clear right is given by the assessee-company to the members to utilise its capital facilities for a period of 99 years for discharge of agreed quantities of effluent. Thus the one-time membership fee is not in fact in return for any obligation or services rendered by the assessee in one year. It is a receipt in advance for an obligation to be rendered in future. Thus it cannot be said that income has actually accrued to the assessee in one year even though it might have received it in one year. Mere receipt does not ensure accrual unless an equivalent part of the agreed services by the receiver is rendered. - Following the decision of Asst. CIT v. Mahindra Holidays and Resorts (India) Ltd. (2010 (5) TMI 524 - ITAT, CHENNAI) we hold that the assessee was justified in deferring the revenue for taxation for four years. Respectfully following the above order of the ITAT, we set aside the issue as far as determination of taxability of the receipts received in this year to the file of the AO. The ld. AO shall re-work the amount out of the contribution received in this year on the basis of the Tribunal’s findings in the Asst.Year 2001-02. In other words, the receipt received by the assessee during the accounting period relevant for this assessment year is also to be spread over, over a period of five years. The total receipt cannot be assessed in this year. Enhancement made by the ld.CIT(A) is concerned, we do not find any error in the order of the ld.CIT(A), because, the assessee ought to have shown that the amount as income on the basis of claim made in earlier years, i.e. whatever amount representing the alleged 1/5th ought to be offered for taxation in this year. The ld.First Appellate Authority has rightly made the enhancement. - Decided partly in favour of assessee for statistical purposes.
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