TMI Blog2017 (1) TMI 1588X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee - partly allowed in favor of assessee. - ITA No.3289/Mum/2015 - - - Dated:- 11-1-2017 - SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER Appellant by : Shri K. Shivram Respondent by : Shri N.K.Chand ORDER G.S. Pannu, Accountant Member The captioned appeal filed by the assessee pertaining to A.Y. 2006-07 are directed against the order of the DCIT, Cen. Cir.6(1), (in short the Assessing Officer ) passed under section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 ( in short the Act) dated 06/04/2015 , which is in conformity with the direction of the Dispute Resolution Pannel-2, Mumbai dated 20/03/2015. 2. The Grounds of appeal raised by the assessee read as under:- (1) The learned Dy. Commissioner of Income Tax (LTU) Mumbai erred in treating ₹ 207.80 lacs being refund receivable from Andhra Pradesh Govt on account of entry tax as income u/s 41(1) of the Income Tax Act,1961. Without prejudice, if this amount is held as taxable in AY 2006 - 07, then the amount that needs to be taxed in AY 2006 - 07 needs to be ₹ 154.79 lacs [i.e. ₹ 207.80 lacs minus ₹ 53.00 lacs (already offered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see is in appeal before us. 4. In so far as, Ground of appeal No.1 is concerned, the same relates to action of the income tax authorities in bringing to tax a sum of ₹ 2,07,80,623/- stated to be refund of entry tax receivable from the Government of Andhra Pradesh by treating it as an amount assessable in the instant year in terms of section 41(1) of the Act. In this context, the relevant facts can be summarized as follows. In the previous year, corresponding to the preceding assessment year of 2005-06 assessee had purchased Mineral Turpentine (MTO) and the Commercial Tax Office of Government of Andhra Pradesh held such purchase liable for levy of entry tax @10%. Accordingly, assessee paid entry tax of ₹ 2,07,80,623/- under protest. The said sum was claimed as an expenditure by way of debit to the P L account in the previous year relevant to the assessment year 2005-06 and in the ensuing assessment, such deduction stood allowed. In the previous year relevant to the instant assessment year i.e. 2006-07 assessee credited the said sum of ₹ 2,07,80,623/- to its P L account and debited the same to 'Refund receivable account' shown in the Balance sheet. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that unilateral act of the assessee in crediting such amount to the P L account cannot be construed as a remission or cessation of liability so as to be taxed under section 41(1) of the Act. 4.3 On the other hand, Ld. Departmental Representative has defended the action of the lower authorities by pointing out that it is the assessee who had credited the impugned sum in the P L account and that even the Auditors have not qualified the Annual Accounts to say that such sum is not in the nature of income. 4.4 We have carefully considered the rival submissions. The factual matrix in the instant case has already been noted by us in the earlier paras and the only issue arising for our consideration is as to whether the amount of ₹ 2,07,80,623/- lying credited in the P L account is liable to be assessed as income or not. It is a well settled proposition, which does not need much elaboration, that the levy of income tax is on real income. Whether the income is taxed on accrual basis or on a receipt basis, the substance of the matter is the income which is to be taxed. In fact, if in a given case, it can be shown that there does not arise any income at all, such an event would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. It is clearly a unilateral perception of the assessee and is a mere claim which has not been accepted by the relevant statutory authorities in the instant year. Therefore, under these circumstances, the crediting of amount in the P L account itself would not be conclusive to say that the corresponding income has accrued to the assessee, so as to be liable for taxation. Therefore, in our view, the action of the assessee by reducing its taxable income by a sum of ₹ 18,76,561/- in its computation of income for the purposes of income tax return in the instant assessment year is quite justified. At the time of hearing, the Ld. Representative for the assessee had relied upon the judgment of the Hon'ble Punjab Haryana High Court in the case of CIT v. Nuchem Ltd 55 DTR 14 (PH), wherein in somewhat similar circumstances, the claim of the assessee has been upheld. In the case before the Hon'ble Punjab Haryana High Court, assessee sought claim for refund of excise duty based on judgment of the Hon'ble Supreme Court in some other case and such amount was credited in the P L account. The Hon'ble High Court upheld the decision of the Tribunal, which had deleted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded by the Tribunal vide its order dated 29/10/2013. Therefore, as per the DRP the said was a fresh plea, which was beyond its jurisdiction. 6.2 Before us, Ld. Representative for the assessee pointed out that though in the original proceedings such an issue was not raised but the factum of the assessee having earned such royalty income from its overseas subsidiary based in Egypt is very much a part of record. In this context, our attention was also invited to page 294 of the Paper Book, wherein in the course of submissions to the Transfer Pricing Officer in the original assessment proceedings, the fact of the assessee earning royalty income from overseas subsidiary has been brought out. The Ld. Representative for the assessee pointed out that even in the order of the Transfer Pricing Officer dated 30/10/2009 passed under section 92CA(3) of the Act, the receipt of income by way of royalty has been noted as an international transaction. It was, therefore, contended that the plea of the assessee for the income being exempt in terms of Article -13 of the India-Egypt Double Taxation Avoidance Agreement, is a claim where the relevant facts are on record and it can be adjudicated appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... points other than those remanded by the Tribunal. The powers of the authorities to admit Additional Grounds of appeal involving fresh claims can be exercised under given circumstances. One such instance is of a claim which involves a point of law with necessary facts being on record. In such a situation, even if, the claim has not been made at an earlier stage, income-tax authorities are entitled to admit such a claim, an aspect which clearly emerges from the ratio of the judgments of the Hon'ble Supreme Court in the cases of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 and Jute Corpn. of India Ltd. v. CIT 1991] 187 ITR 688(SC). In any case, a fresh claim can be admitted by the Tribunal, which we do so. As a consequence, we deem it fit and proper to admit the claim of the assessee and restore it to the file of the Assessing Officer for adjudication on merits. Needless to say, the Assessing Officer shall allow the assessee a reasonable opportunity of being heard and thereafter pass an order afresh on the aforesaid limited aspect as per law. Thus, for statistical purposes assessee succeeds on this aspect also. 7. In the result, appeal of the assessee is partly all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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