TMI Blog2019 (2) TMI 1465X X X X Extracts X X X X X X X X Extracts X X X X ..... nhancement. See EFFLUENT CHANNEL PROJECTS LTD., VADODARA AND OTHERS VERSUS DCIT, CIR. 1 (2) , VADODARA AND OTHERS [2015 (7) TMI 932 - ITAT AHMEDABAD] - decided against revenue. - I.T.A. No.766/Ahd/2016 - - - Dated:- 19-2-2019 - Shri Rajpal Yadav, Judicial Member And Shri Amarjit Singh, Accountant Member For the Appellant : Shri M.S.A. Khan, CIT-DR For the Respondent : Shri Manish Shah, AR ORDER PER SHRI RAJPAL YADAV, JUDICIAL MEMBER : The Revenue is in appeal before us against the order of Ld.Commissioner of Income Tax(Appeals)-1, Vadodara [ CIT(A) in short] dated 20/01/2016 passed for Assessment Year (AY) 2012-13. 2. The Revenue has raised following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Ld.CIT(Appeals) erred in allowing the assessee to spread the capital contribution received over a period of five years beginning from the year in which such contributions were received initially treating the same as deferred revenue income without appreciating the provisions of section 4(1), section 5(1)(a) and section 5(1)(b) and section 9(1)(i) of the Income-tax Act, 1961. 2. The appellant craves leave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed, the appellant has accepted that 1/5th portion of contribution of AY 2008-09 to AY 2011-12 had not been offered by the appellant as its income in the return of income for AY 2012-13. Since, the appellant has failed to disclose this amount of ₹ 1,70,25,850/- as its income in the current year and the income of the current year has already been directed to be enhanced by this amount, hence, I am satisfied that the appellant had concealed the particulars of such income while filing its return of income for the current assessment year. Therefore, penalty proceedings u/s.271(1)(c) rws 274 of the Act for concealment of particulars of income are also initiated separately in respect of the above enhanced income of ₹ 1,70,25,850/-. 6. The Revenue is of the view that whole receipt deserves to be taxed in this assessment year. The ld.counsel for the assessee contended that identical issue was considered in AY 2008-09. He placed on record copy of Tribunal s order in the case of Effluent Channel Projects Ltd. vs. DCIT in ITA Nos.1945 1948/Ahd/2011 (cross-appeals) dated 24/07/2015 passed for AY 2008-09. 7. We have duly considered the rival contentions and gone through th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) had issued notice for enhancement of the income. The ld.First Appellate Authority after hearing the assessee, and following the order of the ITAT in earlier years as well as Special Bench order in the case of Mahindra Holidays and Resort (I) Ltd., (2010) 131 TTJ (Chennai) (SB), made the addition of ₹ 23,95,082/-. 7. With the assistance of the learned representative, we have gone through the record carefully. We find that in the first assessment year i.e. Asstt.Year 2001-02, the Tribunal has considered this issue in detail and rejected the contentions of the assessee. The issue in dispute is clearly covered by the order of the ITAT. The discussion made by the Tribunal in ITA No.4280/Ahd/2007 reads as under: 10. We have considered the rival submissions and perused the material on record. So far as the facts are concerned there is no dispute. The assessee company is entirely set up for enabling member industries to discharge their effluents in the Gulf of Cambay. On the basis of quantity of annual effluent emission, a member pays capital contribution to the assessee company which is treated by the assessee company as Revenue receipt but is deferred for being taxed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it cannot be said that any income has accrued to the agents. From this observation of Hon. Apex Court the Special Bench of the Tribunal observed that two conditions are necessary to be satisfied to say that income has accrued or earned by the assessee. They are (i) it is necessary that the assessee must have contributed to its accruing or arising by rendering services or otherwise, and (ii) a debt must have come into existence and assessee must have acquired a right to receive the payment. Another point which was made out by the Special Bench was that the income does not accrue merely on signing of the agreement for enrolling as a member. There is a continuing liability on the part of the assessee not only to provide accommodation but also to provide other incidental services attached with the accommodation. Hon. Special Bench then referred to the decision of Hon. Supreme Court in the case of Rotork Controls India (P) Ltd. vs. CIT 314 ITR 62 (SC) wherein it is observed that liability is defined as a present obligation arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits. It was further o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the entire income being accounted in the year of receipt. Earlier, we have also discussed as to how difficult it is to estimate the liability which is likely to be incurred in future, more so in the absence of any scientific basis or historical data. Therefore, the only way to minimize the distortion is to spread over a part of the income over the ensuing years. At this juncture, we may deal with one of the arguments made on behalf of the assessee and the intervener. It was argued that accounting for the whole of the income in one year would give a distorted view of the profits of the company which will be against the true and fair principle required for the annual accounts. Well, the distortion the learned counsel talked about was vis- -vis the presentation of published accounts whereas the distortion the Supreme Court talked about and which we are inclined to follow, is vis- -vis the real taxable income for a particular year. Therefore, in view of the foregoing discussion, we accept the proposition of the assessee that it is not justifiable to tax the entire income in a single year as is the case of the Department. Thus the above judgment clearly lays down a principle th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll get the consent from the Gujarat Pollution Control Board directing the PARTICIPANT to send its TREATED EFFLUENT to the EFFLUENT CHANNEL OF EFFLUENT CHANNEL PROJECT LIMITED for safe disposal. (17) The PATICIPANT shall not send in any case any EFFLUENT containing any pollutant beyond permissible limits from his Company or his Sister Company or any other Company for short or long duration. The treated EFFLUENT of PARTICIPANT shall conform to the GPCB consent conditions. The PARTICIPANT shall not discharge effluent exceeding his (18) The discharge of treated effluent into EFFLUENT CHANNEL of the EFFLUENT CHANNEL PROJECT LIMITED shall be as per committed quantity as in Application by the participant to company. (19) The PARTICIPANT shall be bound to pay M R charges calculated on its committed quantity and in the event of discharge being less than [he committed quantity, the PARTICIPANT will have to pay M R/ Capital/ Other charges as per committed effluent quantity, within stipulated time limit. (20) The PARTICIPANT shall be bound to pay M R/ Other charges calculated on its committed effluent quantity and in the event of high (more than committed) discharge, part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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