2016 (10) TMI 1263 - HC - Income Tax

Accrual of income - demurrage/wharfage charges accrued to the assessee particularly when the assessee followed mercantile system of accounting - HELD THAT - Taking into consideration the evidence on record, we are of the opinion that the Tribunal while considering the issue has rightly appreciated and has rightly allowed the appeal preferred by the assessee. Assessee was a Government Corporation and has shown the liability in spite of stay order granted by the Court and in our view, the view taken by the Tribunal is just and proper. The issues are required to be answered in favour of the assessee and against the Department.

Summary

Issues:
1. Tribunal's decision in favor of the assessee.
2. Accrual of demurrage/wharfage charges.
3. Deletion of rental income.

Analysis:
1. The Department appealed the Tribunal's decision favoring the assessee, challenging the reversal of the CIT and Assessing Officer's orders. The High Court framed questions regarding the accrual of disputed income, demurrage/wharfage charges, and deletion of rental income. The appellant argued that the assessee's accounting procedure was incorrect, citing relevant case law. However, the respondent supported the Tribunal's decision, emphasizing the liability shown by the Government Corporation despite a court stay order.

2. The High Court analyzed the evidence and concluded that the Tribunal correctly appreciated the issues and rightfully allowed the assessee's appeal. Despite the stay order, the assessee, a Government Corporation, had shown the liability, leading to the Court's decision in favor of the assessee. The Court dismissed the appeals, affirming the Tribunal's decision and directing a copy of the judgment to be placed in the connected appeal.

3. The judgment highlighted the importance of the system of accounting followed by the assessee, emphasizing the accrual of income in the relevant year. The Court referenced relevant case law to support its decision, ultimately ruling in favor of the assessee and against the Department. The detailed analysis considered the factual and legal aspects of the case, leading to the dismissal of the appeals and upholding the Tribunal's decision.