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2018 (2) TMI 190 - HC - Income TaxLicense fees - method of accounting followed by the Respondent has been consistently accepted by the Revenue - Held that:- There is no dispute that in the subsequent accounting year, the assessee did make imports and did derive benefits under the advance licence and the duty entitlement pass book and paid tax thereon. Therefore, it is not as if the Revenue has been deprived of any tax. We are told that the rate of tax remained the same in the present assessment year as well as in the subsequent assessment year. Therefore, the dispute raised by the Revenue is entirely academic or at best may have a minor tax-effect. Therefore, no need for the Revenue to continue with this litigation when it was quite clear that not only was it fruitless (on merits) but also that it may not have added anything much to the public coffers. The manner in which the Respondent – Assessee has reflected his income by following mercantile system of accounting cannot be found fault with as the amounts attributable to the period post 31st March is income which has not accrued during the previous year relevant the subject Assessment Year. This is so as it is not due during the period for which the Revenue seeks to bring it to tax. Appellant has not been able to show that the method followed by the Respondent does not correctly bring out the income chargeable to the tax. The obligation in respect of the license fees billed for the entire calender year is yet to be discharged at the end of the previous year related to the subject Assessment Year and would be due only in the next previous year related to the next Assessment Year.
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