9911796707
TMI Blog2002 (12) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee-Corporation the Tribunal has referred the following common question of law for the decision of this court: "Whether, on the facts and circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the HUDCO administration service charges collected and retained by the assessee at the time of disbursal of the loans to the urban local bodies had accrued due to the assessee at that stage itself, and therefore, assessable to tax in the year in which the loan amount was disbursed?" The brief facts are as follows. The assessee is a company set up by the Government of Kerala. The said company, inter alia, used to act as a nodal agency for implementation of the schemes evolved by the Central Government, such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has to be treated as income of the assessee of the year of receipt itself. He accordingly included the entire A & S charges deducted from the loans disbursed to the municipalities and local bodies. In other words, the Assessing Officer did not accept the spread over method adopted by the assessee. This was confirmed by both the appellate authorities. The first appellate authority has taken the view that the entire amount received by way of A & S charges has to be treated as the income of the assessee of the year of receipt itself. The Tribunal has also endorsed the said view. The Tribunal while confirming the orders of the authorities below observed that since the deduction of three per cent. A & S charges at the time of disbursement of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court in E.D. Sassoon and Co. Ltd. v. CIT [1954] 26 TIR 27 as also the decisions in CIT v. ChuniIal V. Mehta and Sons P. Ltd. [1971] 82 ITR 54 (SC) and Madras Industrial Investment Corporation Ltd. v. CIT [1997] 225 ITR 802 (SC) for the proposition that it is not the date of receipt of the income that is relevant for the purpose of assessment in a case where the assessee is following the mercantile system of accounting and that what is relevant is the date of accrual. Learned counsel also submits that so far as the receipt of A & S charges are concerned, since it is in connection with the services to be rendered over a period of years depending on the number of instalments provided for repayment of the loan, only that portion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d received 3 per cent. A & S charges from the loans which are sanctioned by HUDCO and disbursed to various municipalities/local bodies. The assessee had also deducted the entire 3 per cent. A & S charges at the time of disbursal of the loan amount to the municipalities/local bodies in whose favour the loan is sanctioned. There were no special stipulations or condition regarding this deduction except that it is towards A & S charges. The contention of the assessee is that there are certain obligations on the part of the assessee in the matter of monitoring the loans and for ensuring the repayment of the loans. However, no agreement or correspondence between the parties were produced before the authorities. There is no dispute that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being ascertained. In this case as observed by the first appellate authority both the right to receive the commission and the actual receipt occurred during the accounting period relating to the assessment years concerned. Therefore, there is no question of any contention being raised based on the method of accounting followed by the assessee. The Tribunal in paragraph 8 of the appellate order has clearly noted that the deduction of 3 per cent. at the time of disbursement of the loan to the municipal and local bodies by the assessee is a final deduction and that there are no conditions for the said deduction and therefore this is a final receipt and it has to be brought to tax in the year of deduction itself. In spite of the persuasive arg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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