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TMI Blog2013 (4) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... m other sources sustained. - Decided against the assessee. - ITA No.1615 & 1659/Hyd/2010 - - - Dated:- 31-8-2012 - Chandra Poojari and Asha Vijayaraghavan, JJ. Appellant Rep by: Sri S. Rama Rao Respondent Rep by: Smt Alka R Jain ORDER Per: Chandra Poojari: These are cross appeals directed against the order of the CIT(A)-V, Hyderabad dated 15.10.2010 for A.Y. 2007-08. 2. The assessee raised the following grounds: 1. The order of the learned Commissioner of Income-tax (appeals) is erroneous to the extent the said order is prejudicial to the appellant. 2. The learned CIT (appeals) erred in holding that the amount of Rs. 7,21,16,000 billed against AP Tranco being the Advance tax payable represents the income accruing to the appellant during the Previous year under consideration. 3. The learned CIT (appeals) ought to have seen the fact that though a bill was raised by the appellant against the AP Tranco claiming the said amount towards Advance tax, AP Tranco did not accept the claim and the amount was written off during the year itself. 4. The learned CIT (appeals) ought to have considered the fact that AP Tranco did not appoint the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounting, the Assessing Officer added the aforesaid amount to the income of the assessee. 6. On appeal, the CIT(A) confirmed order of the Assessing Officer. Against this the assessee is in appeal before us. However, he held that reimbursement of advance tax is income from business instead of income from other sources. Against this, the Revenue is in appeal before us. 7. We have heard both the parties and perused the material on record. It is fairly conceded by both the parties that this issue is covered by the order of the Tribunal dated 18th May, 2012 in assessee s own case in ITA Nos. 798/Hyd/2009, 1500/ Hyd/2011, ITA No. 767/Hyd/09 and 1435 to 1438/Hyd/2011 for A.Ys. 2001-02, 2003-04 to 2006-07 more specifically for A.Y. 2001-02 in ITA No. 767/Hyd/09 (assessee's appeal) and in ITA No. 798/Hyd/2009 (Revenue appeal) in para 11 of the order which reads as under; 11. We heard both sides and perused the material on record. Undisputed facts emerging from the orders of the CIT(A) as well as the Assessing Officer are that though the Assessing Officer has raised the bill on APTRANSCO for energy supplied by it amounting to Rs. 329,39,89,958 after commencement of combined cycle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt has recognized whatever amount has been received from APTRANSCO and has not recognised the disputed amount, since the same is subject matter of litigation. The procedure adopted by the assessee for recognition of revenue is in conformity with the Accounting Standard 9, relevant portion of which has been extracted above. What the income-tax authorities are required to tax is the real income of the assessee, and not any hypothetical income or any income under litigation, there being no certainty of the assessee receiving such income until the litigation reaches finality. The Hon ble Supreme Court in the case of Godhra Electricity Company Ltd V/s. CIT (225 ITR 746), vide head note on page 746, has held as follows- Income-tax is a levy on income. No doubt, the Income-tax Act takes into account two points of time at which the liability to tax is attracted, viz. the accrual of the income or its receipt. But the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in bookkeeping, an entry is made about a hypothetical income, which does not materialise. The Hon ble Supreme Court, after analyzing its earlier decision, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no corresponding debt in respect of the differential amount stood created in the books of the purchaser, i.e. APTRANSCO. Merely based on the invoices raised, income cannot be deemed to accrue to the assessee, when the differential income was subject matter of litigation, and there is no certainty of the assessee being entitled to such income, unless it succeeds in such litigation. Even if an assessee succeeds ultimately in the litigation, a debt enforceable against the other party does not get created, unless a claim in that behalf was raised before the same being barred by limitation. It is for this reason that an assessee, to keep the issue alive, has to raise the claim against the other party within the period of limitation, which in its view is due to it according to the terms of the contract, so as to get an enforceable right for the recovery of the amount as and when it succeeds in the litigation. In this view of the matter, though invoices raised constitute fundamental record for maintenance of accounts in the normal course, as observed by the Assessing Officer, that logic does not hold good when the subject matter was under dispute and was under litigation before the judic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decide the issue in favour of the assessee. The grounds raised by the assessee are allowed and the ground raised by the Revenue is dismissed. 10. Now, we will consider the second issue i.e., ground No. 6 in assessee's appeal is with regard to the CIT(A)'s observations that the profit of Rs. 3,00,09,300 represents income from other sources and not from business of power generation. Brief facts of the issue are that the company availed foreign currency loans for setting up of a power plant at Libor Plus Fix Rate. In order to hedge the risk on account of exchange rate fluctuations, the company entered into an interest rate swap contract with State Bank of India, Koti, Hyderabad fixing the LIBOR rate. As the interest rates grew during the year, the assessee sold the above contract and made a profit of Rs 3,00,09,300. This profit was disclosed as income from business. The Assessing Officer held that the aforementioned income was to be assessed as income from other sources. On appeal, the CIT(A) held that the income from exchange fluctuations has to be considered as income from other sources and not as income from business. Against this, the assessee is in appeal before us. 11. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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