2019 (7) TMI 1044 - HC - Income Tax

Accrual of income - Revenue declaration in respect of expired pre-paid cards - Rendering of Services - Income recognition - HELD THAT - Assessee has no objection to this Court reiterating, as in para 20 of the above order in Shyam Telelink Ltd. 2018 (12) TMI 585 - DELHI HIGH COURT that while passing the appeal effect order the AO would ensure that the the unutilised talk time has been accounted for and included in the receipt of the year in which the amount had lapsed and has forgone. While reiterating the above direction for the AY in question i.e. 2010- 2011, this Court also directs the AO to verify whether the Assessee has declared the revenue in respect of the expired pre-paid cards or not .

Summary

Issues:
1. Appeal against ITAT order for AY 2010-2011.
2. Dismissal of Revenue's appeals for AYs 2003-2004, 2004-2005, 2009-2010.
3. Verification of revenue declaration for expired pre-paid cards.
4. Direction to AO for appeal effect order.

Analysis:

1. The High Court heard an appeal against an ITAT order for the Assessment Year (AY) 2010-2011. The ITAT had previously dismissed the Revenue's appeals for AYs 2003-2004, 2004-2005, and 2009-2010 concerning the same Assessee. The ITAT held that there was no reason to interfere with its order, ruling in favor of the respondent-assessee and against the Revenue. The Court clarified that the Assessing Officer should account for unutilized talk time and include it in the receipt of the relevant year. No costs were awarded in this case.

2. The Revenue pointed out discrepancies in the direction issued by the ITAT for AY 2010-2011 compared to previous years. The ITAT had directed the Assessing Officer to verify if the Assessee declared revenue for expired pre-paid cards in subsequent years. The Revenue requested a similar direction for the present AY. The Court agreed to reiterate the direction for AY 2010-2011, ensuring the proper accounting of unutilized talk time and revenue from expired pre-paid cards.

3. The Court directed the Assessing Officer to verify whether the Assessee declared revenue for expired pre-paid cards for the AY 2010-2011. This verification was crucial to ensure accurate revenue recognition and compliance with previous directions. The Assessee's counsel had no objections to this verification process, emphasizing the importance of accounting for all revenue sources correctly.

4. In conclusion, the appeal was dismissed with the above directions. The Court upheld the ITAT's decision for AY 2010-2011 and reiterated the need for the Assessing Officer to verify the revenue declaration related to expired pre-paid cards. This comprehensive analysis of the judgment highlights the key issues addressed by the High Court in this legal matter.