TMI Blog2018 (9) TMI 1250X X X X Extracts X X X X X X X X Extracts X X X X ..... e, we do not find that the questions of law as proposed by Mr. Sheth, the learned counsel appearing on behalf of the appellant, raise any substantial question of law that require any consideration by us. Applicability of matching concept - whether appellant was entitled in law to spread over this income of ₹ 1.69 crores over a period from years 2002 to 2004 - Held that:- Whether the “matching concept” ought to have been applied in the present case is a mixed question of fact and law, the foundation of which has never been laid by the appellant – assessee before the authorities below. If the factual foundation for this argument has not been laid before the authorities below, no substantial question of law can arise therefrom. We, therefore, reject this argument at the very outset on this ground alone. - INCOME TAX APPEAL (IT) NO. 256 OF 2016 and INCOME TAX APPEAL (IT) NO. 267 OF 2016 - - - Dated:- 17-9-2018 - S. C. DHARMADHIKARI B.P. COLABAWALLA, JJ. Mr. Niraj Sheth a/w Mr. Atul K. Jasani for the appellant in both appeals. Mr. P.C.Chhotaray for the Respondent in both appeals. JUDGMENT [Per B. P. Colabawalla J.]: 1. By these two appeals filed under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies Act and is registered as a non-banking Finance Company with the Reserve Bank of India inter alia engaged in the business of leasing, hire purchase and other financial activities. According to the appellant, for the financial years 2001-02 ( i.e. Assessment Year 2002-03) the appellant securitized rent receivables from April-2002 to March-2004. The total amount receivable during the aforesaid period was ₹ 10.39 Crores which was securitized at the rate of 10.50% for the net present value at ₹ 9.33 Crores. This amount of ₹ 9.33 Crores was received by the appellant in financial year 2001-02 (A.Y. 2002-03) but which related to the financial years 2002-03 and 2003-04. According to the appellant, this amount of ₹ 9.33 Crores received on securitization, was adjusted against the outstanding rent receivable of ₹ 7.64 Crores in the books of accounts of the appellant and the balance amount of ₹ 1.69 Crores was recognized as a profit on securitization of lease receivables in the profit and loss account of the appellant. The appellant, accordingly, filed its return of income for the A.Y. 2002-03 on 29th October, 2002. 5. Thereafter, the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was asked a question by the A.O., why the same amount should not be taxed treating it as a revenue receipt. To this the assessee's reply was that this amount represents a notional gain arising on account of an accounting entry and not real income. It further contended that income tax can be levied only on the amount of real income and not on hypothetical income. In support of this proposition, the assessee relied upon several judgments before the A.O. Over and above this, the assessee also contended that this notional income was in the nature of a capital receipt, and therefore, could not be subjected to tax. 9. After considering the submissions of the assessee, the A.O. held that this gain of ₹ 1.69 Crores related to the business of the assessee and also arose in the normal course of its business. This gain arose to the assessee in view of its contractual right with the banking company with whom transaction was entered into. Furthermore, the assessee himself had credited the receipt of this amount to its profit and loss account. Taking all this factual material into consideration, the A.O. came to the conclusion that the receipt of ₹ 1.69 crores was tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) and the ITAT are purely based on the factual aspects of the matter. As noted by the authorities below, the appellant assessee itself treated the receipt of ₹ 1.69 Crores as an income in their profit and loss account. It was their contention before the authorities below that this receipt was a capital receipt and hence not taxable. This was answered by the authorities below, and in our view correctly so by relying upon the decision of the Supreme Court in the case of the Commissioner of Income Tax Vs. T.V. Sunderam Iyanger Sons Ltd. reported in 222 ITR 344 . This being the case, we do not find that the questions of law as proposed by Mr. Sheth, the learned counsel appearing on behalf of the appellant, raise any substantial question of law that require any consideration by us. 13. Faced with this situation, Mr Sheth sought to argue before us, for the first time, that the appellant was entitled in law to spread over this income of ₹ 1.69 crores over a period from years 2002 to 2004 on the basis of the Matching Concept . He submitted that notwithstanding that the entire amount was received in the current year, this spread over could be allowed and should be al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, we find that the decision of this Court in Taparia Tools Ltd. (supra) being subsequently set aside by the Supreme Court, no reliance can be placed on the said Judgment by Mr. Sheth. As mentioned earlier, whether the 'matching concept' would also apply to income is wholly a different matter and which would be considered in an appropriate case, as and when it so arises, provided the factual foundation is laid for the same. 16. In the facts of the present case, there was no factual foundation laid by the appellant assessee for contending that the matching concept was not applied by the authorities below. In fact, on going through the orders passed by the authorities below, the matching concept was never even argued or raised before them. We, therefore, find that this argument can never give rise to a substantial question of law in the facts and circumstances of the present case. 17. In view of the foregoing discussion, we find that the present appeals do not give rise to any substantial question of law. They are accordingly dismissed. However, in the facts and circumstances of the case, there shall be no order as to costs. - - TaxTMI - TMITax - In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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