TMI Blog2024 (2) TMI 785X X X X Extracts X X X X X X X X Extracts X X X X ..... a tax, even though in book-keeping, an entry is made about a hypothetical income, which does not materialize. Similarly, in the case of Surya Agroil [ 2006 (4) TMI 554 - SC ORDER] certain dispute arose and the dispute was referred to the Arbitration Tribunal and the Tribunal passed order in favour of the assessee, and the award was challenged in the Hon'ble Delhi High Court, which was dismissed wherein as mentioned elsewhere, the fact of uncertainty has to be considered while recognizing the revenue and in our considered opinion, considering the peculiar facts of the case of uncertainty and keeping in mind the decision of the Hon'ble Supreme Court [supra], we do not find any merit in recognizing the revenue for the year under consideration since in the case of KJI, the assessee has subsequently recognized the revenue as and when it received as mentioned in the chart elsewhere. No addition is called for during the year under consideration and in so far as Surya Agroil is concerned, there is not even an iota of chance to recover the arbitral award. No addition is called for. Ground Nos. 3 and 4 taken together are allowed. - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e strait jacket formula prescribed in sub section (3) of section 80HHC. It was submitted that the Assessing Officer has fallen in error while holding the deduction u/s 80HHC of the Act is to be restricted to business income forming part of the gross total income and therefore assessee is not entitled to deduction u/s 80HHC. It was submitted that as per sub section (1) of section 80HHC of the Act an exporter is entitled to deduction in respect of profits derived from export and in case of an exporter like present assessee who is engaged in both export of trading goods i.e. goods other than, one manufactured by the assessee and also goods manufactured by the assessee, then the profits derived from export which formed the basis for deduction under the said section is computed in accordance with formula prescribed in sub-section (3) of sub section 80HHC of the Act. It was submitted that Chapter VI-A of the Act deals with deduction to be made in computing total income. According to section 80A of the Act, in computing the total income of assessee deductions specified in section 80C to 80U are allowed from gross total income. It was submitted that the only limitation contained in sub sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice for reading a limitation of deduction under sub-section (1) only to business income. 27. Ld DR however endorsed the findings of Ld Tax authorities below. It was submitted that in assessee s own case relying IPCA Case, findings have been given against the assessee and matter is pending before Hon ble High Court. 28. In regard to these grounds it can be observed that the assessee had reported profit of the business at Rs. 2,47,088,375/- while profits from export of trading goods at 33,78,35,239/-. The Gross Total Income (Revised) was submitted at Rs. 19,13,55,170 and the ld AO arrived at Business income of (-) 913479702/- after reducing the interest income and dividend and in alternative the adjusted business profit is calculated at (-)Rs. 313591737/ after reducing the interest income and 90% of other income including dividend income. 29. Now, in regard to manner of treating interest income of assessee the issue has been restored to the files of Ld AO. Therefore, the effect giving order has to passed by the ld AO and the Business income has to be re-calculated. Similarly on determination of ground no 3 as above and also the interest income issue as determined by previous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns to determination of the quantum of deductible income in the gross total income . Section 80AB cannot be read to be curtailing the width of Section 80-IA. It is relevant to take note of Section 80A(1) which stipulates that in computation of the total income of an assessee, deductions specified in Section 80C to Section 80U of the Act shall be allowed from his gross total income . Sub-section (2) of Section 80A of the Act provides that the aggregate amount of the deductions under Chapter VI-A shall not exceed the gross total income of the Assessee. We are in agreement with the Appellate Authority that Section 80AB of the Act which deals with determination of deductions under Part C of Chapter VI-A is with respect only to computation of deduction on the basis of net income . 30. Therefore, these grounds no 4 to 6 are allowed for statistical purpose while directing the Ld. AO to recompute the deduction u/s 80HHC, while giving effect to the judgment of Hon ble Supreme court in Commissioner of Income Tax-1 versus Reliance Energy Ltd.( Supra). 7. We find that vide order dated 22.12.2017, framed u/s 254/143(3) of the Act, the Assessing Officer has given the appeal effect as u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , revenue recognition is postponed to the extent of uncertainty involved. In such cases, it may be appropriate to recognize the revenue only when it is reasonably certain that the ultimate collection will be made. Where there is no uncertainty as to ultimate collection, revenue is recognized at the time of sale or rendering of service even though payments are made by installments. 15. The aforementioned legal battle shows the uncertainty of recovering the interest amount and also the principal. 16. The Hon'ble Supreme Court in the case of Shoorji Vallabhji 46 ITR 144 and in the case of Godara Electricity 225 ITR 746 has laid down the ratio that the substance of the matter is the income which has to be recognized as per the system of accounting followed by the assessee in view of section 145 of the Act if the income does not result at all, there cannot be a tax, even though in book-keeping, an entry is made about a hypothetical income, which does not materialize. 17. The Hon'ble Supreme Court in the case of Godara Electricity [supra] has further laid down as under: The question whether real accrual of income to the assessee company in respect of those enhanc ..... 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