TMI Blog2020 (1) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... peal is filed under Section 260A of the Income Act, 1961 (for short the Act ) at the instance of revenue and it is directed against the order dated 10.05.2019 passed by the Income Tax Appellate Tribunal, Ahmedabad C Bench, Ahmedabad in ITA No.1462/Ahd/2016 for the assessment year 2010-2011. 2. The revenue has proposed solitary substantial question of law in its Memorandum of Appeal. The question formulated reads thus: 2(A) Whether the Appellate Tribunal has erred in the facts and circumstances of the case and in law, in upholding the order of the CIT(A) for deleting the addition of ₹ 4,42,72,610/in holding carbon receipts as capital receipts? 3. We take notice of the fact that the similar issue had arose in the case of very same assessee, so far as the assessment for the year 2009-10 is concerned, we refer to the order passed by this Court in the Tax Appeal No.141 of 2017 dated 02.03.2017. The relevant observations made in the said order reads thus: [ 1.0] Feeling aggrieved and dissatisfied with the impugned judgment and order dated 18.03.2016 passed by the learned Income Tax Appellate Tribunal, Ahmedabad (hereinafter referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf of the assessee. We have perused and considered the order passed by the AO as well as the orders passed by the learned AO as well as the orders passed by the learned CIT(A) as well as the impugned judgment and order passed by the learned Tribunal. [4.1] Considering the order passed by the learned AO it appears that the AO made the addition of ₹ 5,78,28,058/on the ground that the amount of ₹ 5,78,28,058/was receivable and/or can be said to have been accrued in the year under consideration and therefore, the same is required to be included in the income of the assessee in the year under consideration. However, learned CIT(A) as well as the learned Tribunal have held that the carbon receipts were neither sold nor transferred by the assessee during the year under consideration and therefore, the same cannot be said to have been included in the income of the assessee in the year under consideration. As such whether when the amount can be said to have been accrued and/or is required to be included in the income of the assessee and in which year, is now not resintegra in view of the decision of the Hon ble Supreme Court in the case of Commissioner of Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax, even though in bookkeeping, an entry is made about a hypothetical income , which does not materialise. Where income has, in fact, been received and is subsequently given up in such circumstances that it remains the income of the recipient, even though given up, the tax may be payable. Where, however, the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income, even though an entry to that effect might, in certain circumstances, have been made in the books of account. 18. The above passage was cited with approval in Morvi Industries Ltd. vs. Commissioner of Incometax (Central), [1971] 82 ITR 835 (SC) in which this Court also considered the dictionary meaning of the word accrue and held that income can be said to accrue when it becomes due. It was then observed that: ........ the date of payment ....... does not affect the accrual of income. The moment the income accrues, the assessee gets vested with the right to claim that amount even though it may not be immediately. 19. This Court further held, and in our opinion more importantly, that income accrues when there arises a corresponding liability o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accrual of income must be real, taking into account the actuality of the situation; whether the accrual had taken place or not must, in appropriate cases, be judged on the principles of real income theory. The majority opinion went on to say: What has really accrued to the assessee has to be found out and what has accrued must be considered from the point of view of real income taking the probability or improbability of realisation in a realistic manner and dovetailing of these factors together but once the accrual takes place, on the conduct of the parties subsequent to the year of closing an income which has accrued cannot be made no income . 26. This Court then considered the facts of the case and came to the conclusion (in Godhra Electricity) that no real income had accrued to the assessee in respect of the enhanced charges for a variety of reasons. One of the reasons so considered was a letter addressed by the Under Secretary to the Government of Gujarat, to the assessee whereby the assessee was advised to maintain status quo in respect of enhanced charges for at least six months. This Court took the view that though the letter had no legal binding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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