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TMI Blog2019 (6) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... ces, since the income has been assessed in assessment year 2010 11, there is no need to tax it in the impugned assessment year as per the decision of the Hon'ble Supreme Court in Excel Industries Ltd. [ 2013 (10) TMI 324 - SUPREME COURT] Therefore, we do not find any need to interfere with the decision of learned CIT(A) on the issue. Violation of rule 46A - HELD THAT:- This issue was raised for the first time by learned CIT(A) during the appeal proceeding before him. While restoring the issue back to the file of the learned CIT(A), the Tribunal had given specific direction to verify the actual amount of investment advisory fee received by the assessee from INVIL on settlement of dispute and further, to examine the assessment year in which the said income is taxable. From the impugned order of learned CIT(A) it is evident, she has fully complied with the directions of the Tribunal by factually verifying the amount received by the assessee from INVIL on settlement of dispute and further, on the basis of material on record she has also formed an opinion with regard to the assessment year in which the income is taxable. That being the case, there was no need to refer the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 143(3) of the Income Tax Act, 1961 (for short the Act ), vide order dated 29th December 2011. While completing the assessment, the Assessing Officer made certain additions/disallowance aggregating to ₹ 2,51,22,895. Against the additions/disallowances made by the Assessing Officer, the assessee preferred appeal before learned Commissioner (Appeals). During the appeal proceedings, learned Commissioner (Appeals), while going through the audited financial statement of the assessee noticed that as per Note 16 to the Notes of Account forming part of audited financial statements, it was stated that the assessee was to receive advisory fees of GBP 14,78,484, from INVIL. However, the aforesaid amount was not credited to the Profit Loss Account. Being of the view that the Assessing Officer failed to examine the taxability of the aforesaid income during the assessment proceedings, learned Commissioner (Appeals) called upon the assessee to explain why income should not be enhanced by bringing to tax the advisory fee receivable from INVIL. As alleged by the Assessing Officer, except submitting that the amount pertains to the assessment year 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Shri Anadi Verma, learned Departmental Representative in addition to submissions made orally in course of hearing has also submitted a written note. He submitted, in the financial statements, the assessee has accepted that GBP 14,78,484, was due from INVIL towards advisory fee. Therefore, income to that extent has accrued to the assessee in the impugned assessment year. He submitted,as per AS 9 issued by the Institute of Chartered Accountants of India (ICAI), revenue has to be recognized if it is measurable with reasonable certainty and there is certainty with regard to ultimately collection. He submitted, neither before the Assessing Officer nor before the first appellate authority the assessee furnished any documentary evidences to demonstrate that there was dispute between the parties leading to uncertainty in receiving the advisory fees. He submitted, the settlement agreement was admittedly not placed before the first appellate authority in the first round and in the second round, the first appellate authority has not discussed in detail the effect of the settlement agreement. He submitted, the settlement agreement has also not been placed before the Tribunal. Thus, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Accounting Standard makes it clear that when there is uncertainty with regard to collectability of the amount receivable towards sale or service rendered, the revenue can be recognized when the amount is actually received by the assessee on settlement of dispute. The learned Sr. Counsel submitted, the amount receivable by the assessee did not arise because of a statutory liability but from a contractual liability. Therefore, until the dispute with regard to the amount receivable is settled, there was no scope of recognizing revenue with certainty. Hence, the assessee was justified in offering the income when it was actually received by it on settlement of dispute. In support of his contention, learned Sr. Counsel relied upon the following decisions: i) Deep Industries Ltd. v/s ACIT, Tax Appeal no.671/2007, dated 01.07.2016; ii) CIT v/s Oriental Motor Car Co. Pvt. Ltd., [1980] 124 ITR 74 (All.); iii) CIT v/s Phalton Sugar Works Ltd., [1986] 162 ITR 622; iv) CIT v/s Raj Motors, [2006] 284 ITR 489 (All.); and v) CIT v/s Swadeshi Cotton Flower Mills Pvt. Ltd., [1964] 53 ITR 134; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examining the facts. 8. It is evident, in the fresh proceedings in pursuance to the aforesaid directions of the Tribunal, learned Commissioner (Appeals) had called for necessary details from the assessee and in pursuance to the query raised by the first appellate authority, the assessee furnished documentary evidence relating to the dispute with INVIL and subsequent settlement of dispute. This fact has been clearly discussed by the first appellate authority in Page 2 of the impugned assessment order. The fact that there was a dispute between the parties with regard to the amount receivable towards investment advisory fee is further evident from the fact that though the fees receivable pertained to the assessment years 2006 07 to 2009 10 but the assessee never received such payment during these years. Therefore, in the financial statements for the aforesaid years, the assessee appended a note stating that the amount is receivable from INVIL without offering it as income. It is further evident that the dispute between the parties was ultimately settled on 9th April 2009 and the assessee received GBP 12,14,022, which was offered as income in the assessment year 2010 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no need to tax it in the impugned assessment year as per the decision of the Hon'ble Supreme Court in Excel Industries Ltd. (supra). Therefore, we do not find any need to interfere with the decision of learned Commissioner (Appeals) on the issue. 10. It is relevant to observe, in ground no.2, the Revenue has raised the issue of violation of rule 46A. In our view, the aforesaid ground raised by the Revenue is wholly misconceived. As could be seen, this issue was raised for the first time by learned Commissioner (Appeals) during the appeal proceeding before him. While restoring the issue back to the file of the learned Commissioner (Appeals), the Tribunal had given specific direction to verify the actual amount of investment advisory fee received by the assessee from INVIL on settlement of dispute and further, to examine the assessment year in which the said income is taxable. From the impugned order of learned Commissioner (Appeals) it is evident, she has fully complied with the directions of the Tribunal by factually verifying the amount received by the assessee from INVIL on settlement of dispute and further, on the basis of material on record she has also for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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