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TMI Blog2018 (2) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... of Assessment Years 2004-05, 2006- 07 and 2008-09. 2. The Revenue urges the following question of law for our consideration: (1) "Whether, on the facts and in circumstances of the case, the Tribunal was right in holding that license fees although billed in the previous years relevant to the subject Assessment Year yet income has partly accrued to the assessee in the previous year relevant to the next Assessment Year, inspite of the Assessee following a mercantile system of accounting"? 3. The Respondent Assessee is engaged in the business of quality control / inspection / survey relating to agricultural products. The Respondent had income on account of license fees. This license fees were billed in January, for the calender year i.e. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ependent orders the CIT (A) held that as the Respondents are following the mercantile system of accounting and license fees billed have been regularly accounted as income to the extent it is attributable for the period January to March in the year in which the amounts were received as license fee, while for the balance of the period of the calender year was brought to tax in the subsequent Assessment Year. This method of accounting is being followed by the Respondent assessee consistently and also accepted by the Revenue. Accordingly, the Appeals of the Respondent for the three Assessment Years were allowed. 6. Being aggrieved, the Revenue carried the issue in further Appeals to the Tribunal. By the common impugned order, the Tribunal uphe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted position that the tax which is sought to be collected for the subject Assessment Year have been already been paid and collected in the next year. In the above view the following observations of this Court in CIT Vs. Nagri Mills Co. Ltd. Vol. XXXIII ITR 681 are pertinent :- 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 Incometax Act, raise disputes as to the year in which the deduction should be allowed. The question as to the year in which a deduction 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 rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was, therefore, no need for the Revenue to continue with this litigation when it was quite clear that not only was it fruitless (on merits) but also that it may not have added anything much to the public coffers. 10. Further the manner in which the Respondent - Assessee has reflected his income by following mercantile system of accounting cannot be found fault with as the amounts attributable to the period post 31st March is income which has not accrued during the previous year relevant the subject Assessment Year. This is so as it is not due during the period for which the Revenue seeks to bring it to tax. The Appellant has not been able to show that the method followed by the Respondent does not correctly bring out the income chargeab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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