2015 (9) TMI 539 - AT - Income Tax

Membership fee receipt - accrual of income on proportionate basis - CIT(Appeals) s action in allowing the assessee s claim offering only 1/8th of membership receipts received during the relevant previous year as its income - Held that - The Revenue had sought to tax the similar membership advances in the relevant year of receipt in earlier assessment years as well. The assessee produces copy of the co-ordinate bench decision (supra) rejecting this course of action. The Revenue only submits that the issue has not attained finality as its appeals are pending before the hon ble jurisdictional high court. We observe that this plea does not form a valid ground to adopt a different action in the present case. The CIT(Appeals) s findings are affirmed. - Decided against revenue Disallowance of safety bonus claim - CIT(A) deleted disallowance - Held that - CIT(Appeals) has followed the tribunal s decision for the assessment years 2001-02 to 2007-08 in deleting the impugned disallowance of safety bonuses written off as per Actuarial valuation. The Revenue neither draws any distinction on facts nor does it quote any case law to the contrary directly covering the issue. We follow consistency in these circumstances and reject the Revenue s arguments. - Decided against revenue.

Summary

Issues:
- Assessment of 1/8th membership receipt amounts as income
- Disallowance of safety bonus claim

Assessment of 1/8th Membership Receipt Amounts as Income:
The case involved the Revenue's appeal challenging the CIT(Appeals)'s decision to allow the assessee's claim of treating only 1/8th of membership receipts as income for the relevant assessment years. The assessee, a company promoting safety among vehicle owners through insurance, recognized 1/8th of the membership fees as income, a practice upheld in earlier assessment years. The Assessing Officer disagreed, wanting to assess the entire membership fees in the impugned assessment year. The CIT(Appeals) followed the tribunal's decision, which upheld the method of recognizing income as per the 1/8th rule. The tribunal affirmed the CIT(Appeals)'s findings, rejecting the Revenue's argument that the issue was pending before a higher court and thus not finalized.

Disallowance of Safety Bonus Claim:
The second issue revolved around the disallowance of a safety bonus claim of Rs. 1,24,76,016 by the Assessing Officer, which the lower appellate authority deleted. The assessee credited this amount as an excess provision of safe bonus written back in its profit & loss account, claiming it was already taxed in a previous assessment year. The CIT(Appeals) directed the Assessing Officer to allow the safety bonus liability as per actuarial valuation, a method consistently followed in earlier years. The tribunal upheld the CIT(Appeals)'s decision, emphasizing the consistency in treatment and the absence of any new facts or legal arguments presented by the Revenue. The tribunal dismissed the Revenue's appeal, affirming the deletion of the disallowance.

In conclusion, both appeals by the Revenue were dismissed, with the tribunal upholding the CIT(Appeals)'s decisions regarding the assessment of membership receipt amounts and the disallowance of the safety bonus claim. The judgment emphasized the importance of consistency in applying legal principles and following established practices in tax assessments.