TMI Blog2017 (6) TMI 487X X X X Extracts X X X X X X X X Extracts X X X X ..... be said not to have resulted at all, there is obviously neither accrual nor receipt of income, even though an, entry to that effect may, in certain circumstances, have been made in the books of accounts. In the instant case the assessee raised the debit notes to the allottee's and booked the income in the books of accounts. The entry which was initially made as interest was reversed in the next year because in fact the nature of the transaction was changed and the assessee did not receive any real income. Therefore, the addition made by the Assessing Officer was rightly deleted, which does not need any interference on our part - Decided against revenue - I.T.A. No. 3867/DEL/2014 - - - Dated:- 7-6-2017 - SHRI H.S. SIDHU, JUDICIAL MEMBER, AND SHRI O.P. KANT, ACCOUNTANT MEMBER For The Department : Sh. Anil Kr. Sharma, Sr. DR For The Assessee : None ORDER PER H.S. SIDHU, JM : This appeal by the Revenue is directed against the Order of the Ld. Commissioner of Income Tax (Appeals)-XIII, New Delhi dated 30.4.2014 pertaining to Assessment Year 2010-11 on the following grounds:- 1. On the facts and circumstances of the case and in law, the CIT(A) has erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment u/s 143(3) of the IT Act vide order dated 25.01.2013 at ₹ 88,23,020/-. Aggrieved by the assessment order dated 25.1.2013, the assessee appealed before the Ld. CIT(A), who vide his impugned order dated 30.4.2014 has deleted the addition and partly allowed the appeal of the assessee 3. Aggrieved with the impugned order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal. 4. Ld. DR relied upon the order of the AO and reiterated the contentions raised in the grounds of appeal. 5. In this case, Notice of hearing to the assessee was sent by the Registered AD post, in spite of the same, assessee, nor its authorized representative appeared to prosecute the matter in dispute, nor filed any application for adjournment. Keeping in view the facts and circumstances of the present case and the issue involved in the present Appeal, we are of the view that no useful purpose would be served to issue notice again and again to the assessee, therefore, we are deciding the present appeal exparte qua assessee, after hearing the Ld. DR and perusing the records. 6. We have heard both the parties and perused the records, especially the order of the Ld. CIT(A). We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntered in the books of account. A mere book-keeping entry cannot be income, unless income has actually resulted, and in the present case, by the change of the terms the income which accrued and was received consisted of the lesser amounts and not the larger. This was not a gift by the assessee firm to the managed companies. The reduction was a part of the agreement entered into by the assessee firm to secure a long-term managing agency arrangement for the two companies which it had floated.-CIT vs. Shoorji Vallabhdas Co.(1959) 36 ITR 25 (80m) : TC39R.740 affirmed; CIT vs. Chamanlal Mangaldas Co.(1960) 39 ITR 8 (SC) : TC39R.745 applied. In CIT vs Bokaro Steel Ltd. 2361TR 315 {SC} held as under: The assessee had shown in its books of accounts a sum of ₹ 7,39,232 as income from interest received from H. Ltd. for the eight locomotives supplied by the assessee-company to them. The entry was reversed in the next year since H Ltd. had replaced the eight locomotives lent by the assesseecompany to it by new ones. The entire nature of the transaction was changed between the parties. There was a resolution of the assessee-company in this regard and the income from int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee calculated the interest on the delayed payments and served the debit notes to the allottee s for not making the payment in time as stipulated in the agreements. The assessee booked the income of ₹ 1,09,64,450/-on account of interest in the Financial Year 200'8-09 to be realised from the allottee's. The customers refused to pay the interest and threatened to cancel the bookings in the event the company charges the interest. The company cancelled the recovery of the interest in order to realise the principal amounts under the circumstances, the company had to reverse the income by debiting the profit and loss account in the Financial Year 2009-10. 7.1 We further find that the Hon ble Supreme Court of India in the case of CIT vs. Shoorji Vallabhdas Co. reported in 46 ITR 144 (SC) held as under:- Income-tax is a levy on income. No doubt, the IT Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in bookkeeping, an entry is made about a hypothetical income , whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and hence not exigible to income-tax.-Bokaro Steel Ltd. vs. CIT (1988) 67 CTR (Pat) 281 : (1988) 170 ITR 545 (Pat) : TC 38R.1012 and CIT vs. Bokaro Steel Ltd. (1988) 67 CTR (Pat) 138 : (1988) 170 ITR 522 (Pat) : TC 38R.1011 affirmed; Godhra Electricity Co. Ltd. vs. CIT (1997) 139 CTR (sq 564 : (1997) 225 ITR 746 (SC) applied. 7.3 We further observe that the Income Tax Act takes into account two points of time at which the liability to tax is attracted, the accrual of income or its receipt, but the substance of the matter is the income. If the income does not result at all, there cannot be a tax, even though in accounts, an entry is made about the hypothetical income which does not materialise. Where income has, infact, been received and is subsequently given up, in such circumstances 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 may, in certain circumstances, have been made in the books of accounts. In the instant case the assessee raised the debit notes to the allottee's ..... X X X X Extracts X X X X X X X X Extracts X X X X
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