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TMI Blog2015 (8) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... considered as income from the year the business of the assessee commenced. See Commissioner of Income-tax vs. Bilahari Investment P. Ltd reported in [2008 (2) TMI 23 - SUPREME COURT] and in the Commissioner of Income Tax vs. Excel Industries Ltd & Mafatlal Industries P. Ltd reported in [2013 (10) TMI 324 - SUPREME COURT]. - Decided against the revenue and in favour of the assessee. - TAX APPEAL No. 113 of 2004 - - - Dated:- 18-11-2014 - MR. KS JHAVERI and MR. K.J.THAKER , JJ. MRS SWATI SOPARKAR, ADVOCATE for the Appellant MR KM PARIKH, ADVOCATE for the Respondent JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. Being aggrieved and dissatisfied with the impugned order dated 15.12.2003 passed by the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant submitted that both the authorities below have erred in holding that membership fees is required to be treated as revenue receipt. He submitted that the amount collected as membership fees was not an income of the assessee but the same was collected as receipt or advance for giving services to members over a period of time. He submitted that the amount received by way of such membership fees could have been taxed over a period of time when the amount was actually spent over the services of the members. 3.1 Mr. Soparkar, in support of his submissions has relied upon the case of Commissioner of Income-tax vs. Bilahari Investment P. Ltd reported in [2008] 299 ITR 1(SC) and in the case of Commissioner of Income Tax vs. Excel Industri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bership fees is nothing but a revenue receipt and such income has to be brought in profit and loss account of the company. Therefore, our interference is not required with the order of the CITA(). Hence, the appeal is dismissed on this ground. 6.1 The Apex Court in the case of Excel Industries Ltd (supra) has observed as under: This Court further held, and in our opinion more importantly, that income accrues when there arises a corresponding liability of the other party from whom the income becomes due to pay that amount. It follows from these decisions that income accrues when it becomes due but it must also be accompanied by a corresponding liability of the other party to pay the amount. Only then can it be said that for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 89 ITR 266 (SC) wherein it was held, after referring to Morvi Industries that real accrual of income and not a hypothetical accrual of income ought to be taken into consideration. For a similar conclusion, reference was made to Poona Electric Supply Co. Ltd. v. Commissioner of Income Tax, [1965] 57 ITR 521 (SC) wherein it was held that income tax is a tax on real income. Finally a reference was made to State Bank of Travancore v. Commissioner of Income Tax, [1986] 158 ITR 102 (SC) wherein the majority view was that accrual of income must be real, taking into account the actuality of the situation; whether the accrual had taken place or not must, in appropriate cases, be judged on the principles of real income theory. The majority opin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Court, namely, whether the income accrued to the assessee is real or hypothetical; whether there is a corresponding liability of the other party to pass on the benefits of duty free import to the assessee even without any imports having been made; and the probability or improbability of realisation of the benefits by the assessee considered from a realistic and practical point of view (the assessee may not have made imports), it is quite clear that in fact no real income but only hypothetical income had accrued to the assessee and Section 28(iv) of the Act would be inapplicable to the facts and circumstances of the case. Essentially, the Assessing Officer is required to be pragmatic and not pedantic. Secondly, as noted by the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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