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2020 (10) TMI 613 - AT - Income TaxTaxation in the hands of the trust/AOP - Revenue recognition - quantification of the income of the assessee - section 167B applicable on the assessee or section 164 (1) - in this case investors/ contributors are also the beneficiaries and at the date of creation of trust, beneficiaries were not identifiable - assessee was created under the guidelines of the Reserve Bank of India for fast recovery of Non-Performing Assets of the Banks/FIs and principally derived income from Asset Reconstruction Activity and handling of Non-Performing Assets of Banks/financial institutions. As the assessee had receipts on account of sales made during the year on which no tax was paid - HELD THAT:- A.O ought to have been guided by the RBI Circular No. RBI/2013-14/571 DNBS (PD) CC No. 38/SERC/26.03.002/2013-14, dated 23.04.2014, which though was issued after the relevant financial year, but could be referred for understanding the guiding principles laid down for recognition of revenue by ARCs. As observed by the CIT(A), and rightly so, the ARCs are supposed to recognize upside income only after full redemption of Security Receipts (SRs), except for the Management fees which is to be recognized on accrual basis. Redemption of the relevant SRs had not taken place till 31.03.2012, therefore, the CIT(A) had rightly concluded that no upside income/surplus could have been recognized in the hands of the assessee for the year under consideration. As for the management fees, we find, that no income on the said count had accrued to the assessee during the captioned year. We thus in the backdrop of our aforesaid observations concur with the view taken by the CIT(A), that as neither any upside income nor any management fess had accrued to the assessee during the year in question, therefore, its income was to be assessed at Rs. Nil. We uphold the view taken by the CIT(A), to the extent he had concluded that as there was a shortfall of recovery over purchase consideration till 31.03.2013 of ₹ 24.26 crores, and there was also no receipt of management fees as per the profit and loss account, hence no upside income could have been recognized in the hands of the assessee in terms of the guidelines laid down in the Circular No. RBI/2013-14/571 DNBS (PD) CC No.38/SERC/26.03.002/2013-14,dated 23.04.2014, issued by the RBI, therin providing the Uniform Accounting Standard for revenue recognition for ARCs, and also in the backdrop of the view taken by his predecessor while disposing off the appeal in the case of the ISARC SIDBI-2, a sister concern, for A.Y.2012-13, vide his order dated 08.02.2017 passed in Appeal No. CIT(A)-32/IT-211/23(1)(2)/15- 16. Accordingly, finding no infirmity in the view taken by the CIT(A), we uphold his order.
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