9911796707
TMI Blog1996 (1) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee was running as many as 5 branches in the previous year concerning to assessment year 1990-91 in which as stated by the ld. counsel for assessee, there were five thousand students. The modus operandi of the assessee is that any student who desires to get coaching in Science/Mathematics subject or in any other subject, approaches the assessee and fills up admission form (copy of admission form is appearing on paper book) giving out his name, address and details of the subjects in which he wants to be coached in Rs. 100 is charged as provisional admission fees and before classes start and mostly in the vacation period of students, the assessee-company calculates the amount of fees to be charged from that student and whole of the fees is realised before he is allowed to join the classes. It is also the case of the assessee that some students are not in a position to pay the whole of the amount of the fees at one time and then they are allowed the payment through instalments after making such prayer through application for instalments and after result of the scrutiny that prayer is reasonable one. 4. In the year under consideration, the assessee filed a return of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e institute. He had also rejected the plea of the assessee that students sometime failed to turn up after depositing of Rs.100 as fee or quit classes in the middle of the session on the same ground that amount of entire fees became due to the assessee, the moment the students filled up the admission form. Ultimately the assessee's appeal was rejected confirming the said addition. The assessee came in appeal before the Tribunal. 6. The ld. counsel for the assessee had taken us through the working of the assessee institute and tried to point out that main basis for Assessing officer for making the addition was that the assessee company was not maintaining any attendance register or any other record so as to reveal as to which student did not attend the classes for whole or part of the year. In this connection it was pointed out that taking attendance is not mandatory as in the schools where it is statutory requirement. Secondly, coaching classes are conducted for 2 - 2.30 hours consisting of 3-4 periods being attended by 60-75 students and if each of the coach starts taking attendance, he will waste 10-15 minutes of the students in each classes. It will also be wastage of time of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; as per subjects received selected Rs. Rs. Rs. ---------------------------------------------------------------------------- Rs.100 fees paid at the time of provisional booking/ advance booking 1,13,410 15,800 97,610 Fees paid in instalments and remaining uncollected 1,17,469 & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of H.M. Kashiparekh & Co. Ltd. v. CIT [1960] 39 ITR 706 in which their lordships have laid down the true test regarding the principles of real income in the following words :--- " The two rules that income-tax is annual in its structure, meaning thereby that for computation each year is a distinct self-contained unit, and the other that the income to be taxed is the real income of the assessee are not incompatible or irreconcilable; they permit of harmonious application. The principle of real income to be so subordinated as to amount virtually to a negation of it when a surrender or concession or rebate in respect of managing agency commission is made, agreed to or given on grounds of commercial expediency, simply because it takes place some time after the close of an accounting year. In examining any transaction and situation of this nature the court would have more regard to the reality and speciality of the situation rather than the purely theoretical or doctrinaire aspect of it. It will lay greater emphasis on the business aspect of the matter viewed as a whole when that can be done without disregarding statutory language. " The contention of the ld. counsel is that this d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. " 10. The ld. counsel on the basis of above, argued that there was no income resulted in favour of the assessee company and no addition was warranted. 11. About accrual of income, the ld. counsel also pointed out that no services were rendered by the assessee then question of accrual of income does not arise. Mere filling up of form will not show that assessee had rendered any services to the student(s). Further the Assessing Officer has also not made any effort to find out from any student who had quit the session in the middle of the session and did not pay the installment or from that student who simply filled in the admission form and paid Rs. 100 whether he has paid any amount, to verify the correctness of the entries of the assessee. Accordingly the case of the assessee was that no accrual had taken place nor it was the income of the assessee if the principles of real income are applied to the facts of the case. 12. As against it, the ld. D.R. placed heavy reliance on the order of Assessing Officer as well as that of CIT(A). He pointed out that assessee is following mercantile system of accounting and once the assessee gets duly filled in admission form from any studen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. counsel was that the appeal is to be allowed. 14. We have carefully considered the submissions of the parties and gone through the material placed before us as well as perused the case laws relied by both the parties. We are of the considered opinion that the theory of real income as propounded by Hon'ble Bombay High Court in the case of H.M. Kashiparekh & Co. Ltd. do apply to the facts of the case as well as the ratio of the decision of Hon'ble Supreme Court in the case of Shoorji Vallabhdas & Co. force us to conclude that there resulted no income at all to the assessee. Undisputedly some of the students had filled in admission forms and deposited Rs. 100 only in each case and later on failed to attend classes for so many reasons as given out by the learned counsel. If any student had failed in the previous examination or he had decided to change the Science stream to Arts or Commerce or moved out of Ahmedabad or joined any other institute in the city, then the assessee company cannot be expected to pursue that case and force the student to join the institute and pay the amount which was calculated by its office staff at the body of the admission form because that calcula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for assessee, as many as approximately 5 thousand students are enrolled each year by the assessee company for coaching purposes. The assessee has also furnished the list of such defaulters/drop-out students who had failed to turn up after depositing Rs. 100 or had failed to complete the coaching in the installment scheme; and failed to pay the remaining alleged due amount and out of them these numbers come to 311 only which is not challenged by the revenue. If out of approximately 5 thousand students taking coaching, such defaulters are 311, this will be a very negligible percentage which can be overlooked. The assessee has also furnished before us that this is not only feature of this year or in the institute of assessee company but in all such institutions this type of defaulters/drop-outs occur. The ld. counsel has pointed out that the details of such amount for assessment year 1989-90 which was Rs. 1,40,102 and even in subsequent assessment year 1991-92 where this amount on identical ground was Rs. 1,38,209 nothing was done by the department for assessment year 1989-90 on the similar facts. This fact again is relevant that this type of happening is not a new feature for this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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