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TMI Blog2019 (12) TMI 963X X X X Extracts X X X X X X X X Extracts X X X X ..... roportion over a period for which the holiday facilities are provided to the member commencing from the year in which the member is entitled to benefits of membership under the scheme. Accordingly, the assessee offers 45% as membership fee as income and defers the balance 55% to subsequent years. This method of revenue recognition is being followed by the assessee consistently from past several years. It is also evident, whether the deferred income is to be treated as income of the assessee in the year of receipt, is a subject matter of dispute in the past years and the Tribunal while deciding the issue in AYs. 2002-03, 2006-07, has deleted the addition made by the A.O. on account of time share income. A.O. has made the addition by not appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of addition made on account of deferred income. 2. Briefly the facts are, the assessee, a resident company, is engaged in the business of running resorts and hotels. The assessee has devised the concept of time shares wherein a person acquiring membership of such time share is assured of stay facility in the resorts/hotels over the period of membership. In this regard, the company enters into a contract with the member on receipt of membership fee and as per the terms of the contract renders various services and incurs expenditure for fulfilling the obligations as per the terms of the contract. To fulfill its obligation under the terms of the contract, the assessee is required to maintain resorts as per committed quality level which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived during the year should not be treated as income. Though, the assessee furnished its reply objecting to the proposed addition, however, the A.O. rejecting the submission of the assessee proceeded to treat the entire amount of ₹ 10,79,94,361/- as income of the assessee for the year under consideration. While doing so, the A.O. also did not follow the decision of the Tribunal on identical issue in assessee's own case in A.Ys. 2002-03, 2006-07 and 2008-09 on the plea that the department has contested the decision of the Tribunal by filing appeals before the Hon'ble High Court. The assessee having offered the amount of ₹ 4,98,23,061/- as income, the balance amount of ₹ 6,08,94,861/- was added back to the income of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal while deciding the issue in AYs. 2002-03, 2006-07, 2007-08 and 2008-09 in ITA No. 471/Mds/2012 and others vide order dated 30.08.2012, after following that the decision of Chennai Special Bench in the case of M/s. Mahindra Holiday & Resorts (India) Limited (supra) in ITA No. 2412 to 2416/Mum/2005 dated 26.05.2010 has deleted the addition made by the A.O. on account of time share income. Same view was expressed by the Tribunal while deciding Revenue's appeal in assessee's own case in A.Y. 2010-11 in ITA No. 2956/Mds/2016 dated 05.05.2017. As could be seen, the A.O. has made the addition by not applying the decisions of the Tribunal simply on the plea that the department has not accepted the decision of the Tribunal. In our view, this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not result in incurring of any expenditure. Rather it results in short receipt of premium which the assessee is otherwise entitled to. Accordingly, he disallowed the ESOP expenses debited to profit and loss account. 7. Being aggrieved, the assessee preferred appeals before ld. CIT(A). 8. Having found that the issue is covered by the decision of Hon'ble Madras High Court in the case of PVP Ventures (supra), ld. CIT(A) deleted the disallowances made by the A.O. 9. We have considered rival submissions and perused the materials on record. It is evident, the ESOP expenditure debited to the profit and loss account represents the difference between the fair market value and the issue price of the stocks. It is also evident that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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