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TMI Blog1991 (7) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... e the said fees from the said foreign company due to continuous financial crisis of the company and at the instance of IMTB and foreign financial institutions. The amount as such was not taken as profit by the assessee for the year. In the Notes appearing at Schedule 'F' in item No. 40(a) submitted by the assessee, it showed that such action of writing off the claim required the permission of the Reserve Bank of India. The assessee in this case did not obtain any such permission from the Reserve Bank of India. In view of this fact, the Income-tax Officer did not entertain the assessee's claim and added the sum to the income of the assessee. Against such addition, the assessee filed an appeal before the Commissioner of Income-tax (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 978-79 and 1979-80. An identical question came up for consideration for the assessment year 1976-77. It appears that, being aggrieved, the Department filed a reference application under section 256(i) of the Act and that application was rejected by the Tribunal. Thereupon, the Department came before this court for the assessment year 1978-79 in Matter No. 246 of 1986 where the rule was made absolute under section 256(2) of the Income-tax Act, 1961, on February 9, 1987, but the statement of case, we are told, has not yet been drafted presumably because the rule has not yet been served upon the Tribunal. Similar is the case for the assessment year 1979-80, where the rule was made absolute in Matter No. 245 of 1986 on February 9, 1987. For th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant-company, a sum of Rs. 10,29,072 as remuneration due from India Malaysia Textiles, Berhad. The appellant-company argues in this connection that on account of the poor financial position of the Malaysian company, the appellant-company treats the remuneration receivable from such company as the income of the appellant-company on cash basis only, as and when the said remuneration is actually received. It is contended that the appellant-company did not account for the said remuneration in its books during this year. It is found that the claim of the appellant relating to the treatment of the remuneration from the Malaysian company on cash basis, was allowed finally by the Income-tax Appellate Tribunal for all the years from the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. " Pursuant to the aforesaid order, the Assessing Officer re-examined the issue for the assessment years 1982-83 and 1983-84 and held as follows : " On going through all the facts of the case, I am of the view that, although the assessee is maintaining accounts on cash basis, so far as income from India Malaysia Textiles is concerned, there is no denial of the fact that that income has accrued to the assessee and, once income accrues, it is the duty of the Department to assess it to tax. The Commissioner of Income-tax (Appeals), by his order dated June 24, 1991, disposed of the said matter with the following observations and allowed the appeal of the assessee : " On going through all the facts and order of the Income-tax Appellate Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee in the past. The Tribunal held as follows : " The Tribunal considered the issue for the assessment years 1976-77 to 1981-82 . The Tribunal accepted the view of the assessee that the income did not accrue because it had forgone its claim in view of the bad financial position of IMTB. The factual position during the year under appeal was different from the earlier years. The assessee moved, in the earlier years, the Reserve Bank of India for permission to forgo the remuneration. The Reserve Bank of India, by its letter dated May 7, 1985, did not accept the request of the assessee. Therefore, it is clear that the assessee could not get permission to forgo the remuneration and hence, according to the terms of the agreement, the remuneratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en it cannot be said that the assessee was following a particular system of accounting for entering the remuneration in its books of account. Further, a note has been given in the balance-sheet wherein it has been indicated that remuneration receivable from IMTB would be entered as and when received. This favours the view that the assessee wanted to make an entry for the remuneration as and when it receives the same. " Having regard to the facts and circumstances of the case as mentioned hereinbefore, we are of the view that the question whether the assessee has changed the method of accounting and has been following the cash system so far as the technical fees receivable from the Malaysian company are concerned has to be decided by the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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