TMI Blog2014 (11) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... fundamentally a levy on income and though the Act may prescribe different points in time at which liability to taxation enures still remains a tax on receipt of income - A hypothetical income that may or may not materialise should not be made subject matter of tax merely because of an entry in the accounts books maintained by an assessee - in Commissioner of Income-tax Vs. Shoorji Vallabhdas and Co.[1962 (3) TMI 6 - SUPREME Court] it has been held that where the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income, even though an entry to that effect might, in certain circumstances, have been made in the books of account – thus, the order of the Tribunal is upheld – Decided against revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT and the CIT(Appeals) have, therefore, erred in deleting the addition made by the Assessing Officer. We have heard counsel for the revenue, appraised the impugned order as well as orders passed by the CIT(Appeals), Rohtak and the Assessing Officer, Hisar. The question that calls for an answer, in the facts of this case, is whether surcharge for delayed payment reflected in the bills raised by the assessee and its accounts, would invite payment of a tax dehors recovery/payment/receipt of surcharge. The Assessing Officer, took a view that as surcharge levied upon delayed payments of bills is reflected in the bills and the accounts of the assessee, the fact that the surcharge may or may not be paid or recovered or may eventually be wai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t materialize. Where income has, in fact, been received and is subsequently given up, in such circumstances that it remains the income of the recipient, even though given up, the tax may be payable. Where, however, the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income, even though an entry to that effect might, in certain circumstances, have been made in the books of account . In view of the aforesaid and the Accounting Standard (AS)-I and Accounting Standard (AS)-9, issued by the institute of Chartered Accountant of India the addition made by the Assessing Officer is deleted. The revenue thereafter filed an appeal before the ITAT, which affirmed the order passed by the CIT (Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aived and, therefore, despite the fact that the assessee maintains a mercantile system of accounting, the ITAT and the CIT (Appeals) have rightly set aside the order passed by the assessing officer adding surcharge to the income of the assessee. It would be appropriate to point out that income tax is fundamentally a levy on income and though the Act may prescribe different points in time at which liability to taxation enures still remains a tax on receipt of income. A hypothetical income that may or may not materialise should not be made subject matter of tax merely because of an entry in the accounts books maintained by an assessee. A reference in this regard may be made to a judgment of the Hon'ble Supreme Court in Commissioner of In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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