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2019 (6) TMI 145 - AT - Income TaxIncome recognition - year of taxability - Addition of advisor s fees received from India Value Investment Ltd. (INVIL) - there was uncertainty with regard to receipt of investment advisory fee due to dispute between the parties, as per AS 9, assessee recognized the revenue when the dispute was settled and the assessee received the amount - CIT(A) deleted the addition - HELD THAT - It is an undisputed fact that the assessee has received rupee equivalent of GBP 12,14,022 in the financial year relevant to the assessment year 2010 11 and has also offered it for taxation in the said assessment year. It is also a fact on record that the said income has been assessed at the hands of the assessee in the assessment year 2010 11 vide assessment order passed u/s 143(3) on 10th January 2013. Since, the income actually accruing to the assessee has been assessed in the assessment year in which it was received, it cannot be taxed again in the impugned assessment year as it will amount to double assessment of the same income. Therefore, in these circumstances, since the income has been assessed in assessment year 2010 11, there is no need to tax it in the impugned assessment year as per the decision of the Hon'ble Supreme Court in Excel Industries Ltd. 2013 (10) TMI 324 - SUPREME COURT Therefore, we do not find any need to interfere with the decision of learned CIT(A) on the issue. Violation of rule 46A - HELD THAT - This issue was raised for the first time by learned CIT(A) during the appeal proceeding before him. While restoring the issue back to the file of the learned CIT(A), the Tribunal had given specific direction to verify the actual amount of investment advisory fee received by the assessee from INVIL on settlement of dispute and further, to examine the assessment year in which the said income is taxable. From the impugned order of learned CIT(A) it is evident, she has fully complied with the directions of the Tribunal by factually verifying the amount received by the assessee from INVIL on settlement of dispute and further, on the basis of material on record she has also formed an opinion with regard to the assessment year in which the income is taxable. That being the case, there was no need to refer the issue to the Assessing Officer for verification. Therefore, in our considered opinion, there is no violation of rule 46A in the instant case. Penalty u/s 271(1)(c) - addition of investment advisory fees in the impugned assessment year - HELD THAT - We have concurred with the view expressed by the learned CIT(A) that investment advisory fee received from INVIL is not taxable in the impugned assessment year. Therefore, the penalty imposed u/s 271(1)(c) was rightly deleted by the learned CIT(A). - Revenue appeal dismissed. Reopening of assessment u/s 147 - to tax the investment advisory receivable from INVIL - HELD THAT - While deciding the appeal of the Revenue for the assessment year 2009 10 in the earlier part of the order, we have upheld the decision of learned CIT(A) that the investment advisory fees received by the assessee from INVIL on settlement of dispute is assessable in the assessment year 2010 11. Therefore, the income has already been assessed in the assessment year 2010 11. That being the case, learned CIT(A) was justified in holding that in the absence of any escapement of income, there cannot be any re opening of assessment u/s 147 . Grounds are dismissed.
Issues Involved:
1. Deletion of addition of advisor's fees received from India Value Investment Ltd. (INVIL). 2. Violation of Rule 46A. 3. Deletion of penalty imposed under section 271(1)(c) of the Income Tax Act. 4. Reopening of assessments for the assessment years 2007-08 and 2008-09. Issue-wise Detailed Analysis: 1. Deletion of Addition of Advisor's Fees Received from INVIL: The Revenue challenged the deletion of the addition of advisor's fees received from INVIL. The assessee, an Indian company engaged in investment advisory and financial services, did not credit the advisory fees from INVIL to the Profit & Loss Account due to an ongoing dispute. The Commissioner (Appeals) found that the fees receivable pertained to the assessment years 2006-07 to 2009-10 but were only settled and received in the financial year 2009-10, which was offered to tax in the assessment year 2010-11. The Tribunal had previously restored the issue to the Commissioner (Appeals) for fresh adjudication. The Commissioner (Appeals) concluded that the fees accrued as income in the assessment year 2010-11 based on the settlement agreement and AS-9, which states that income can only be recognized when there is certainty over receivability. The Tribunal upheld this view, noting that the income had already been assessed in the assessment year 2010-11, preventing double taxation. 2. Violation of Rule 46A: The Revenue argued that the Commissioner (Appeals) violated Rule 46A by not referring the issue back to the Assessing Officer for verification. However, the Tribunal found this ground to be misconceived. The Commissioner (Appeals) had complied with the Tribunal's directions by verifying the amount received from INVIL and determining the correct assessment year for taxation. There was no need to refer the issue to the Assessing Officer, and thus, no violation of Rule 46A occurred. 3. Deletion of Penalty Imposed Under Section 271(1)(c): The penalty under section 271(1)(c) was imposed based on the addition of the investment advisory fees in the impugned assessment year. Since the Commissioner (Appeals) held that the fees were taxable in the assessment year 2010-11, the penalty was deleted. The Tribunal concurred with this decision, noting that the income had been correctly assessed in the assessment year 2010-11, and thus, the penalty was rightly deleted. 4. Reopening of Assessments for the Assessment Years 2007-08 and 2008-09: The Assessing Officer reopened the assessments for these years to tax the investment advisory fees from INVIL. The Commissioner (Appeals) held the assessment orders void ab initio, noting that the income had already been assessed in the assessment year 2010-11. The Tribunal upheld this decision, stating that in the absence of any escapement of income, there could be no reopening of assessments under section 147 of the Act. Conclusion: The Tribunal dismissed all the appeals, upholding the decisions of the Commissioner (Appeals) that the investment advisory fees were taxable in the assessment year 2010-11, and there was no violation of Rule 46A or grounds for reopening assessments for the years 2007-08 and 2008-09. The penalty under section 271(1)(c) was also rightly deleted.
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