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ADVANCES NOT ASSESSABLE AS INCOME

Income Tax - Direct Tax Code - DTC - By: - Mr.M. GOVINDARAJAN - Dated:- 10-11-2015 - Section 4 and 5 of the Income Tax Act, 1961 ( Act for short) deals with the scope of income and its charge to income tax. The Act takes into account two points of time on which the liability to tax is attracted, namely- Accrual of income; or Receipt of income. It is accrual of income or receipt of income that can become the subject matter of tax and it is the income which has to be recorded as per the system of .....

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o be performed over a period of time. The amount relatable to the services rendered in the year under consideration was shown as income, the reason being that the assessee became entitled to receive that amount from the client in respect of the services rendered. In other words, the High Court held that debt to the extent of the amount pertaining to services rendered only got vested in the assessee. The rest of the amount was taken as liability to be adjusted in subsequent years as and when the .....

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was not declared as income in the year of the receipt of the amount. In R.S. Suriya V. Deputy Commissioner of Income Tax - 2010 (1) TMI 969 - ITAT CHENNAI the Commissioner (Appeals) has confirmed the advance professional fee of ₹ 55 lakhs as income for the impugned assessment year 2006 - 07 relying on his own decision for the assessment years 2004 - 05 and 2005 - 06. The Tribunal found that it is clear from the assessment order itself that the amounts received by the assessee from M/s Phot .....

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sessee s own case for the earlier years that it would not be proper and appropriate to treat professional advance received as income, unless and until proposed assignments had materialized. The Tribunal held that the amount of ₹ 55 lakhs received by the assessee as advance could not have been treated as his income for the impugned assessment year. Such addition stands deleted. In R.S. Suriya V. Assistant Commissioner of Income Tax - 2015 (11) TMI 339 - ITAT CHENNAI the appellant is a cine .....

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me of the appellant and it should be taxed in the year in which film shooting/production commenced as income of the assessee. The Commissioner (Appeals) upheld the additions treating the said amount as income of the appellant for the reason that the appellant is following cash system of accounting and therefore they have to be considered as income of the assessee. Before the Tribunal, in appeal, the appellant submitted the following: The advances brought to tax in the hands of the assessee were .....

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ssments are the same amounts, where the Tribunal deleted in the proceedings completed under Section 143(3) of the Act; All these additions are to be deleted following the decisions of the Tribunal in R.S. Suriya V. Deputy Commissioner of Income Tax - 2010 (1) TMI 969 - ITAT CHENNAI The Revenue supported the orders of the lower authorities and relied on the decision of the Tribunal in D. Meena V. Deputy Commissioner of Income Tax in I.T.A. Nos. 1624 and 1625/Mds/2000, 19.07.2005 and the decision .....

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ribunal was produced before the Commissioner (Appeals). The Tribunal held that the Commissioner (Appeals) failed to follow these orders stating that the appellant has not produced the written agreements and therefore it was of the view that unless written agreements are produced the orders cannot be followed and he tried to distinguish the orders passed by the Tribunal. The Tribunal also found that the co-ordinate bench specifically stated that no written agreement between the assessee and the p .....

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