TMI Blog2015 (1) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 With TAX APPEAL NO. 1472 of 2005 With TAX APPEAL NO. 1473 of 2005 With TAX APPEAL NO. 1475 of 2005 With TAX APPEAL NO. 1476 of 2005 With TAX APPEAL NO. 1477 of 2005 With TAX APPEAL NO. 1478 of 2005 - - - Dated:- 18-12-2014 - MR. KS JHAVERI AND MR. K.J.THAKER, JJ. FOR THE APPELLANT : MR NITIN K MEHTA, ADVOCATE FOR THE RESPONDENT : MR BS SOPARKAR WITH MRS SWATI SOPARKAR, ADVOCATE JUDGEMENT Per: K S Jhaveri: 1. Being aggrieved and dissatisfied with the impugned judgment and order passed by the Income Tax Appellate Tribunal, Ahmedabad Bench (hereinafter referred to as 'the Tribunal'), the revenue has preferred the present Tax Appeals assailing the following orders Tax Appeal No. Date of Tribunal's order ITA (SS) No. Assessment Year 1471/2005 04/11/04 98/Ahd/2003 1989-90 to 1998-99 1472/2005 04/11/04 347/Ahd/2002 1997-98 1473/2005 04/11/04 240/Ahd/2004 01.04.88 to 17.09.199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also set aside. Being aggrieved by the said order, the revenue is in appeal before us. 3. Mr. Nitin Mehta, learned advocate appearing for the revenue submitted that the Tribunal has committed an error in quashing the order u/s 263 of the Act passed by the CIT and in reaching the conclusion that the assessment order passed by the A.O by accepting the assessee's method of accounting was neither erroneous nor prejudicial to the interests of revenue. He submitted that the Tribunal has ignored the fact that the A.O had not followed the assessment order passed by his predecessor for A.Y 1997-98 wherein the method of accounting followed by the assessee was rejected. 3.1 Mr. Mehta has drawn our attention to the decision of ITAT, Hyderabad Bench which was relied upon by the Tribunal in the case of Treasure Island Resorts (P) Ltd vs. DCIT reported in 84 TTJ 820 considering the facts in both the cases to be similar. He submitted that the facts in both the cases are not identical but altogether different and therefore the decision reached by the Tribunal is factually as well as legally incorrect. 3.2 Mr. Mehta submitted that since discount is given by the shop keepers and insuran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey is received or paid) and recorded in the financial statements of the periods to which they relate; 5.2 The assessee has accordingly recorded the revenue as well as expenditure in the financial statement of period to which they relate. We find that the Tribunal has rightly observed as under in para 8 as under: ... When the assessee issued facility cards for number of years,t he assessee has received entrance fee as well as membership fee. Entrance fee is recorded in the year of receipt while the membership fee is spread over to the period to whichthe membership relates. Similarly, the assessee pays insurance premium for the number of years for which the card is issued because the assessee has to provide the accidental insurance for the entire period of the card. Such expenditure is also spread over to the period for which the card is issued. The Revenue has claimed that the receipt of membership fee as well as the expenditure on the commission and the insurance premium is to be recorded in the year in which they are received and paid. The stand of the Revenue is contrary to the definition of accrual as provided in the Accounting Standard specified by the Central Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly employed by the assessee and if the system adopted by the assessee does not result in ascertainment of proper profits then, it is the duty of the assessing officer to make appropriate adjustments and deduce true profits. 6.1 The Apex Court in the case of Rakesh Shantilal Mardia vs. Deputy Commissioner of Income-tax reported in [2012] 210 Taxman 565 (SC) considering the decision of the Bombay High Court in the case of Taparia Tools Ltd. (supra) has held that matching principle is required to be followed in order of arrive at the real income of the assessee. 6.2 Similarly, in the case of the Delhi High Court has held as under: ... even when the income accrues or arises or is deemed to accrue or arise to the assessee in India during previous year, that is to be taxed in that year. It is important, therefore, that receipt of a particular amount in the relevant year should be an income under the aforesaid provision. What is the relevant yardstick is the time of accrual or arisal for the purpose of its taxation, viz., in order to be chargeable, the income should accrue or arise to the assessee during the previous year. If income has accrued or arisen, even if actu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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