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DEEP INDUSTRIES LIMITED Versus ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -1

2016 (8) TMI 225 - GUJARAT HIGH COURT

Accrual of income - whether that disputed income is exigible to tax even when the same has not accrued to the assessee as held by ITAT - Held that:- In view of the fact that ONGC had disputed the liability, it cannot be said that there was any corresponding liability on the ONGC to pay the accrued amount to the assessee. Only when a corresponding liability arises on the ONGC to pay up the accrued amount, the income will become taxable. Thus, the authorities below as also the Tribunal seriously e .....

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order dated 23.11.2006 passed by the Incometax Appellate Tribunal, Ahmedabad in ITA No.2665/Ahd/2005 raising the following substantial question of law; Whether, in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that disputed income is exigible to tax even when the same has not accrued to the assessee? 2. The facts in brief are that the assessee was awarded contract for hiring services for compression of natural gas at Ankleshwar by ONGC. Th .....

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ing aggrieved by the same, the assessee filed second appeal before the Tribunal. However, the Tribunal dismissed the appeal filed by assessee, by impugned order dated 23.11.2006. Hence, this appeal. 3. We have heard learned counsel for both the sides and perused the documents on record. 4. Mr.S.N. Soparkar, learned Senior Advocate appearing for the assessee, submitted that the revenue authorities as also the Tribunal committed serious error in law in taxing income which had never accrued to the .....

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return and therefore, the Tribunal was justified in confirming the orders passed by the authorities below. 6. It transpires from the record that assessee was following the mercantile system of accounting. The revenue authorities made the addition of accrued income on the ground that assessee had carried out work according to the satisfaction of ONGC and had raised the bill at the agreed rate. Therefore, it is not a case where the assessee had not carried out the contractual work. In fact, the ON .....

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