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TMI Blog2016 (4) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... S, he brought the entire amount for taxation in assessment year 2008-09. On appeal, the Ld.CIT(A) deleted the addition on the reason that the amount was subject to tax for assessment year 2010-11. It was only an advance received in assessment year 2008-09. Against this the Revenue was in appeal before us. 4. After hearing both the parties, we are of the opinion that similar issue came consideration before this Tribunal in the case of Shri Mr.R.S.Suriya Vs. ACIT, Chennai in ITA No.1944 to 1946/Mds./2014 vide order dated 30th June, 2015 wherein it was held that:- "5. Heard both sides. Perused orders of lower authorities and the decisions relied on. In this case, search was conducted in the premises of the assessee on 19.01.2010 and assessments were completed for the assessment years 2004-05 to 2006-07 on 30.12.2011 and while completing assessments, the Assessing Officer assessed various amounts received by the assessee as advances from producers. On going through the assessment orders, we find that no incriminating materials were found so as to bring these amounts to tax in search assessments. We also find that similar advances were brought to tax while completing assessments under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdictional High Court in the case of Lakshminarayana Films Vs. CIT (supra), wherein the amounts were to be received by the assessee as per the written agreement and on completion of certain formalities in future. Therefore, the Hon'ble High Court has held that the amounts would be income of the assessee in the year in which the said amounts were received on completion of the conditions as per the agreement and cannot be said as accrued at the time of execution of agreement. In our view, the facts of the case in hand are distinguishable and the decision of the Hon'ble jurisdictional High Court relied upon by the CIT(A) is not directly applicable because in the present case there is no written agreement as well as there is no dates on which the amounts to be paid on fulfillment of certain conditions. 6. From the facts of the present case, we find that these token amounts were received by the assessee for giving preference to the parties for making himself available for future assignments, if finalized after deliberations and consideration of various factors and criteria. Which means that by receiving these advances as token amounts, the assessee is binding not to take up any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 145 deals with the method of accounting in respect of "profits and gains of business or profession" or "income from other sources". Thus, while sections 4 and 5 deal with the scope of income and its charge to income tax, section 1.45 is a procedural section regarding the method to be followed for recording of income in the books of account. It is no doubt true that for the assessment year 1997-1998 and onwards, the assessee can follow either the cash or the mercantile system of accounting and the hybrid system of accounting is prohibited. However, what is to be taxed is income and receipt of an amount is not be the basis for the levy of the tax. In the case of Messrs. Shoorji Vallabhdas and Company [1962] 46 ITR 144, the Hon'ble Supreme Court pointed out that the Income Tax Act takes into account two points of time on which the liability to tax is attracted namely - (i) accrual of income or (ii) receipt of income. It is further mentioned that the substance of the matter is "income". It may be emphasized that it is accrual of income or receipt of income that can become the subject matter of tax and it is the income which has to be recorded as per the system of accounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iple of the cash system of accounting. Since the assessee succeeds on merits on this aspect, there is no need for us to give a finding that the Assessing Officer was bound in this year to follow the past or future assessment 1/ 8. Since, the facts and circumstances of the case in hand are similar to the case relied upon by the assessee. Therefore, following the decision of this Tribunal as well as the Delhi Benches of this Tribunal; we hold that when the assessee has shown as these advance receipt as liability in his balance sheet and tile advances were not on the finalization of any agreement but were received as a token amount for giving a priority to the parties to negotiate for future assignment without finalizing the terms and conditions. When the future assignments were not materialized and the amounts were returned, then the said advances cannot be treated as income of the assessee. Accordingly, we aside the orders of lower authorities, qua this issue and delete the addition in this respect." 7. Similarly, the co-ordinate Bench for the assessment year 2006- 07 in ITA No.1329/Mds/2009 by order dated 19.01.2010 held as under:- "7. We have perused the orders of the auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or other aspens of the proposed film. Hence, we are of the opinion that D. Meena' s case (supra) is not applicable here on facts. In any event, since this Tribunal had taken a view in favour of the assessee in assessee's own case for earlier years on similar fact situation, we find no compelling reasons to depart from the view taken earlier. Therefore, we find that amount of Rs. 55 lakhs received by the assessee as advance could not have been treated as his income for the impugned assessment year. Such addition stands deleted. Grounds number 2 to 9 of the assessee are allowed." We also find that the co-ordinate Bench has distinguished the decisions relied on by the Departmental Representative in the case of Ms. D.Meena (supra) and the jurisdictional High Court decision in the case of Lakshminarayana Films Vs. CIT (supra),while arriving at the conclusion that advances received by the assessee cannot be taxed as income of the assessee for the respective assessment years. 8. It is also further noticed that in assessee's own case, the Tribunal for the assessment year 2009-10 in ITA No.1241/Mds/2013 by order dated 8.4.2015 has taken a similar view holding that income has not cr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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