TMI Blog2017 (11) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... f each year can be deducted and that as per the method adopted by the Revenue, the profit in the year in which the card is issued would be more resulting in loss/less profit in the year in which the services will be rendered by the assesseee. We are of the opinion that when the services are rendered partially, revenue is to be shown proportionate to the degree of completion of the service and therefore the assessee was justified in spreading over the amount of membership fee and expenses. - D. B. Income Tax Appeal No. 611 / 2011 - - - Dated:- 30-8-2017 - K. S. Jhaveri And Inderjeet Singh, JJ. For the Appellant : Mr. Sandeep Taneja For the Respondent : Mr. Daksh Pareek for Mr. Sameer Jain JUDGMENT 1. By way of this appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t then he will pay a sum equal to ₹ 4,00,000/- per month to the other party. 3.1 Accordingly, the assessee shown proportionate amount of the total amount received of ₹ 1,00,00,000/- during the year under consideration which was equivalent to ₹ 29,26,667/-. 4. Counsel for the appellant relied upon of the decision of Gujarat High Court in Commissioner of Income Tax vs. Winner Business Link Pvt. Ltd. ITA No.1159/2006 decided on 18.12.2014 which was referred in the order dt. 31.7.2017 reads as under: 5. We have heard learned advocates for both the sides and perused the materials on record. The main dispute in all these appeals is with regard to the correctness of the method of accounting of the assessee company for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 Government which is mandatory to be followed by the income tax assessee. 5.3 We find that the Tribunal has rightly relied upon the decision of Hyderabad Bench in the case of Treasure Island ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Accounting, this Matching is required to be done on accrual basis. Under this Matching concept, revenue and income earned during an Accounting Period, irrespective of actual cash in-flow, is required to be compared with expenses incurred during the same period, irrespective of actual outflow of cash. It has been further held that the Income Tax Act makes no provision with regard to valuation. It charges for payment of tax, the income which is to be computed in the manner provided by the Act and that it is the duty of the Assessing Officer to deduce a proper taxable income. It is held that the Assessing Officer is required to compute the income in accordance with the method of accounting regularly employed by the assessee and if the syste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oment. From this, it follows that there must be the right to receive the income on a particular date, so as to bring about a creditor and debtor relationship on the relevant date . The Court further explained that a right to receive a particular sum under the agreement would not be sufficient unless the right accrued by rendering of services and not by promising for services and where the right to receive is interior to rendering of service, the income, therefore, would accrue on rendering of services. 6.3 This Court has also taken the same view in a recent decision in the case of Snesh Resort Pvt. Ltd vs. Dy. CIT rendered in Tax Appeal No. 113 of 2004 on 18.11.2014. This Court has observed as under: 6.2 Similarly in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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