Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2020 (11) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (11) TMI 180 - HC - Income TaxAccrual of income - Revenue recognition - real or hypothetical income - addition on account of wheeling charges - assessee is following mercantile system of accounting - HELD THAT:- The Karnataka Electricity Board which owned transmission lines in Karnataka decided to recover wheeling charges from State Electricity Board's of Tamil Nadu, Andhra Pradesh and Kerala to the tune of ₹ 52.89 Crores. The assessee therefore, did not raise any demand on account of wheeling charges and since, there was uncertainty with regard to recovery / collection of the outstanding amount, the assessee for the AY in question decided not to recognize revenue of ₹ 52.89 Crores for wheeling charges. In the meeting held on 04.11.2000 and the same was approved by the board of the assessee. Aforesaid income never accrued to the assessee and was in fact, an hypothetical income and not a real income. Subsequently, on 16.03.2004 in 134th meeting of Southern Regional Electricity Board, the arrangement of cost sharing of wheeling charges by the constituent States itself was scrapped and on the date when the Assessing Officer passed an order i.e., on 31.12.2008, the aforesaid decision was already in existence. Income did not accrue to the assessee but was a hypothetical income, which could not have been subjected to tax and in view of Accounting Standard-9, the assessee rightly decided not to recognize the revenue of ₹ 52.89 Crores for wheeling charges for the relevant assessment year. - Decided in favour of the assessee
|