TMI Blog2012 (7) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounting year 2002-03 and not for 2001-02 - Held that:- As the assessee was allotted a site by KIADS against a sum deposited, assessee further deposited a charge for delay in not utilizing the said land for the purpose for which it was allotted and subsequently decided to surrender the land to the KIADB as the project could not be commenced - Considering the terms of the contract once the assessee surrendered the land in terms of the contract between the parties, the amount paid towards allotment of site land and the penalty is liable to be forfeited by the KIADB that accrued in the financial year 2001-02 for the assessment year 2002-03 - Merely because the actual order of forfeiture was passed on 18th April 2002, that date has no relevance insofar as the date of accrual is to be considered - in favour of assessee. Brought forward business loss and unabsorbed depreciation - Revenue contested that it should be adjusted before computing deduction u/s 10A - Held that:- The loss incurred by the assessee under the head profits and gains of business of profession has to be set off against the profits and gains if any, of any business or profession carried on by such assessee. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 23,65.207/-, out of export proceeds has not been brought into the country within the stipulated time under Section 10(A)(3) i.e. within six months. By a letter dated 29.09.2004, the assessee stated that they had made an application to the Reserve Bank of India seeking extension of time to receive the proceeds but no approval had been granted. Since the entire proceeds has been subsequently realized, they contended that they would be entitled to the full benefit of Section 10A. The Assessing Authority did not extend the benefit of Section 10A of the Act on the ground that the export proceeds was brought in after the stipulated time. The Appellate Commissioner upheld the said order. However, the Tribunal took note of the relevant letters in the paper compilation filed before them, at pages 1 to 17. They also noticed a letter issued by the Reserve Bank of India dated 19.11.2002, which showed that the assessee was directed to approach the authorised dealer HSBC. Thereafter by a letter dated 05.05.2006, the assessee requested for renewal. The authorised dealer informed the assessee as under:- "Realisation of Export Proceeds With reference to your letter dated 22nd October 2002 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year. However, the legislature has consciously in express words has vested the power to extend the time-limit for the said benefit, if the competent authority chooses to allow the said benefit. Therefore, the six months' period prescribed is not mandatory.: A discretion is vested with the competent authority to extend the said benefit of the Section even in cases where the sale proceeds are received beyond the period of time prescribed under the said provision. The only condition is that the sale proceeds would have to be received. If the sale proceeds are not received within 6 months period, all that the assessee has to do is to make a request to the competent authority for extension of time. Of course, he has to make all efforts to receive the sale proceeds from the foreign buyer expeditiously. Granting of extension of time is the discretion of the competent authority. But once such a discretion is exercised and the time is extended, the assessee would be entitled to the benefit of the same. 9a. The statute does not prescribe any time-limit within which the application is to be made for such an extension of time and the period within which the competent authority has to pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e accounting standards, which is extracted in the order of the Appellate Tribunal and supported the impugned order. 13. The Apex Court in the case of Morvi Industries Ltd. v. Commissioner of Income-tax reported in [1971] 82 ITR 835 (SC) has held at Para 11 as under:- "** ** ** The dictionary meaning of the word "accrue" is "to come as an accession increment, or produce: to fall to one by way of advantage: to fall due". The income can thus be said to accrue when it becomes due. The postponement of the date of payment has a bearing only insofar as the time of payment is concerned, but it does not affect the accrual of income. The moment the income accrues, the assessee gets vested with the right to claim that amount even though it may not be immediately. There also arises a corresponding liability of the other party from whom the income becomes due to pay that amount. The further fact that the amount of income is not subsequently received by the assessee would also not detract from or efface the accrual of the income, although the non-receipt may, in appropriate cases, be a valid ground for claiming deductions. The accrual of an income is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustified in the English law, it has no place under the Indian IT Act. When an ITO proceeds to include a particular income in the assessment, he should ask himself, inter alia , two questions, namely : (i) what is the system of accountancy adopted by the assessee? and (ii) if it is mercantile system of accountancy, subject to the deemed provisions, when has the right to receive that amount accrued? If he comes to the conclusion that such a right accrued or arose to the assessee in a particular accounting year, he shall include the said income in the assessment of the succeeding assessment year. No power is conferred on the ITO under the Act, to relate back an income that accrued or arose in a subsequent year to another earlier year on the ground that the said income arose out of an earlier transaction. Nor is the question of reopening of accounts relevant in the matter of ascertaining when a particular income accrued or arose. Section 34 of the Act empowers the ITO to assess the income which escaped assessment or was under-assessed in the relevant assessment year. Subject to the provisions of the section and following the procedure prescribed thereunder, he can include the escaped ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial statements." 17. In the instant case, the assessee was allotted a site by KIADS and he deposited Rs. 29,40,000/- towards the said allotment. As he could not construct the building within the stipulated time, on 31.07.2001, the assessee deposited a sum of Rs. 29,43,717/- as the charges for delay in not utilizing the said land for the purpose for which it was allotted. Subsequently, the assessee decided to surrender the land to the KIADB as the project could not be commenced. As per the terms of the contract between the assessee and the KIADB, if the assessee were to commit breach, the amount deposited by the assessee is liable to be forfeited. Therefore, the KIADB forfeited the amount of Rs. 58,83,717/- holding the same as non-refundable. According to the Income-tax Officer, the land having been forfeited on 18.04.2002, the said amount cannot be claimed as loss in the financial year 2001-02 for the assessment year 2002-03. From the aforesaid facts, it is clear that the surrender of the land was before March 2002. Once, the assessee surrendered the land in terms of the contract between the parties, the amount paid towards allotment of site land and the penalty is liable to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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