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2016 (6) TMI 796 - ITAT DELHI

2016 (6) TMI 796 - ITAT DELHI - TMI - Accrual of income - Addition to rent receivable from the Railways for use of STM 4 Bandwidth on accrual basis - the income was not booked as per Accounting Standard-9(AS-9) issued by the ICAI - Assessee submitted that since the tax rates applicable to the company both in assessment year 2008-09 (i.e. the year under appeal) and assessment year 2009-10 (i.e. the year in which the company had included the impugned amount in its income) were the same, the adjust .....

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ction is allowable may be material when the rate of tax chargeable on the assessee in two different years is different; but in the case of income of a company, tax is attracted at a uniform rate, and whether the deduction in respect of bonus was granted in the assessment year 1952-53 or in the assessment year corresponding to the accounting year 1952, that is in the assessment year 1953-54, should be a matter of no consequence to the Department; and one should have thought that the Department wo .....

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NT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For The Appellant : Dr. Rakesh Gupta, Adv. For The Respondent : Shri R.B. Meena, CIT DR ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER The present appeal has been preferred by the assessee against order dated 2.11.2011 passed by the Ld. CIT(A)-XVIII, New Delhi and pertains to assessment year 2008-09. The assessee has raised as many as five grounds of appeal. The only issue in dispute is the addition of ₹ 16,19,80,000/- to the income .....

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income had been booked for ₹ 1619.80 lacs for the year and for ₹ 3630.07 lacs for earlier years on account of lease rent payable/claimed by the Railways for the use of STM 4 Bandwidth. The Assessing Officer refused to accept the assessee s contention that the approval of the Railways for the payment was received only on 19.12.2008 and therefore the revenue was to be recognized only in financial year 2008-09. The Assessing Officer was also of the opinion that since the assessee compa .....

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ar of chargeability. 3. On appeal before the First Appellate Authority, the addition was confirmed. The issue has been discussed by the Ld. CIT (A) in paras 4.3 and 4.4 of the impugned order which are being reproduced hereunder for ready reference:- 4.3 The Auditor s note 3(vii) of the Audit Report of the appellant company clearly states that no income has been booked for ₹ 1619.80 lac for the year and for ₹ 3630.07 lacs for earlier years on account of leased rent payable by/claimed .....

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02.2011 is being filed at page. 1.... In response to the letter of Ministry of Railway dated 30.01.2008 appearing at page 39 of my paper book dated 17.02.2011, a letter dated 23.05.2008 was written by Director/N.P.M. of the appellant Company, which contain a list of approx date of handed over of STM 4 bandwidth to Railway (the same is further enclosed herewith for your kind perusal at page 2 to 5), the Auditors calculated the income of earlier years by his own assumptions that the Routes which h .....

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er to the Railway was only the information to the Railway. As per page 1 of this letter the computation of 3630 lacs has been done as under: The total kilometers handed over are 5409 and the date of handing over is 01.04.2004. Further, as per pages 4 to 5b of this letter 22438 RKM have been handed over in F.Y. 2005-06 and another 22438 RKM in F.Y. 2006-07. The valuation of RKM has been done @7219 per RKM. On this basis the computation of income not reported by the appellant company has been done .....

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ch the lease charges are payable from the date on which the actual route handing over of the STM 4 capacity takes place. The auditor of the appellant company for computation of income and for purpose of comments in notes of accounts on income not shown has relied upon letter dated 23.05.2008. This letter dated 23.05.2008 has been written by the Director/NPM of the appellant company specifying the date on which actual handing over has taken place. As per the annexures to this letter, written to t .....

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is the same as adopted by the appellant company and is not under dispute. The only cause for dispute is the date on which the RKM have been handed over by the appellant company to the railways. The date of handing over has been clearly depicted in this communication and as already discussed there is no reason to doubt the dates mentioned by a competent officer of the appellant company itself especially when dates of individual handing over of each route has been mentioned. It is not a case of t .....

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ration. Thus the addition of ₹ 1619.80 lacs made by the AO is confirmed. 4. Aggrieved, the assessee is now in appeal before us. The Ld. AR submitted that the assessee company had entered into an agreement with the Railways and the former had to receive lease charges on the basis of this agreement. It was submitted that as per letter dated 30.6.2008, lease charges per payable to the assessee @Rs. 7219 per km per annum. It was further submitted that the lease charges were payable by the Zona .....

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to the assessee during the year under appeal but had accrued in subsequent years upon happening of certain event. It was emphasized that the assessee had not acquired the right to receive the income because the right was subject to the satisfaction of the Zonal Railway authorities which did not happen till the conclusion of the year under appeal. The Ld. AR also referred to and drew the attention of the Bench to the following evidences/documents in the paper book:- PB 73-114 is agreement between .....

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assessee that lease charges will be ₹ 7219 per K.M. to be paid by Zonal Railways based on actual route KMs of STM 4 capacity handed over to them and the date from which handover has taken place. PB 40-41 is letter from the assessee to railways dated 23.05.2008 intimating the list of sections along with the date of handing over for STM 4 Bandwidth. PB-42 is letter dated 26.05.2008 from railways to Telecom Engineers of Indian Railways seeking handing over the STM 4 Bandwidth to Zonal Railway .....

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12.03.2009 showing the lease charges receivable by the assessee. PB -48 is letter dated 17.03.2009 from the assessee to regional general manager of the assessee. PB 49-50 is letter dated 11.06.2009 from railway to railway board seeking clarification for the resolution of the matter. PB 53-54 is letter from railways dated 13.08.2009 advising to release payment wherever the same has been provision. PB -59 is physical verification of STM 4 Bandwidth provided by assessee for railways dated 28.03.20 .....

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of the Zonal Railway authorities till the end of the year under appeal. He submitted that even if STM 4 had been set up but the satisfaction of the Zonal authorities was not received, no income could be said to accrue to the assessee and therefore, the addition deserves to be deleted. 6. The Ld. AR also submitted that since the tax rates applicable to the company both in assessment year 2008-09 (i.e. the year under appeal) and assessment year 2009-10 (i.e. the year in which the company had inclu .....

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f company, tax is attracted at a uniform rate, and, therefore, the year of chargeability of income should be of no consequence to the Department. The Ld. AR also placed reliance on the judgment of the Hon'ble Punjab & Haryana High Court in the case of CIT vs Vee Gee Industrial Enterprises (I.T.A. No. 187 of 2014) for the same proposition and submitted that in light of these judgements, the addition ought to be deleted. 7. The Ld. DR submitted that when the basis of accounting is mercanti .....

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e no difference in view of the judgements of the Hon'ble Apex Court, the Hon'ble Bombay High, the Hon ble Punjab and Haryana High Court and the Hon'ble Delhi High Court. In CIT, Delhi, Ajmer, Rajasthan and Madhya Bharat v. Nagri Mills Co. Ltd. (1958) ITR 681, the Hon ble Bombay High Court has held, We have often wondered why the Income-tax authorities, in a matter such as this where the deduction is obviously a permissible deduction under the Income- Tax Act, raise disputes as to the .....

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ter of no consequence to the Department; and one should have thought that the Department would not fritter away its energies in fighting matters of this kind. But, obviously, judging from the references that come up to us every now and then, the Department appears to delight in raising points of this character which do not affect the taxability of the assessee or the tax that the Department is likely to collect from him whether in one year or the other. This judgment was followed by the Hon ble .....

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