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TMI Blog2022 (4) TMI 894X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee follows the same treatment to input costs. The cardinal principal of taxing the income under mercantile basis of accounting is that the income should have accrued to the assessee. Mere advances could not be brought to tax. The amount lying in deferred income account , in assessee s case, is nothing but advances received for rendering services in future period. Unless these receipts are held to be taxable under the statute, the same could not be brought to tax since only those incomes could be taxed which has accrued to the assessee during the year. In assessee s case, these are unearned revenue and mere advances. The income would accrue to the assessee in future. To clothed the same as the income of the assessee during this year, is bereft of any merits. The argument that the money is never refunded to the subscribers, is not much germane to the issue since the subscription money paid by the subscribers is governed by the contractual terms between the assessee and the subscribers. Nevertheless, the said fact would not alter the position that this income was nothing but mere advances for rendering of services in future. Therefore, the impugned order could not be faulted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall apply to the other years also. Arguments before us 2. The Ld. CIT-DR, Shri M.Rajan, submitted that the assessee received money from the channels subscribers but considered the same as deferred revenue expenditure which was not correct in view of the fact that the was no obligation for assessee to refund the subscription money. Therefore, the receipts were to be taxed on receipt basis as rightly done by Ld. AO. The Ld. CIT(A) sought distinction in the case laws as relied upon by Ld. AR. The Ld. CIT(A) also submitted that the ratio of decision of this Tribunal in ACIT V/s M/s Sun TV Network Ltd. (ITA Nos.1515 ors/Mds/2013 dated 31.10.2013) as relied on by Ld. CIT(A) was not applicable to this assessee. The Ld. AR, on the other hand, submitted that the assessee was following consistent method of revenue recognition and similar factual matrix stood covered in assessee s favor by the decision of this Tribunal in the case of its sister concern i.e., ACIT V/s M/s Sun TV Network Ltd. (ITA Nos.1515 ors/Mds/2013 dated 31.10.2013) as rightly relied upon by Ld. CIT(A). The Ld. AR also filed written submissions which were duly confronted to Ld. CIT-DR. Having heard ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue Recognition issued by The Institute of Chartered Accountants of India. This standard provide that the revenue received or billed should be deferred and recognized over a period of time where the items delivered vary in value from period to period. 3.3 Another plea was that the deferred income was unearned revenue. To offer the income, the income should have been accrued to the assessee during the previous year itself. The company s right to receive the revenue arises only when the company is able to provide uninterrupted DTH signal. To ensure the same, the assessee would incur various costs such as content, entertainment, commissions, royalty, WPC licensing charges, NOCC charges and transponder fees to various agencies without which the assessee could not provide these services. These expenditures are booked and recognized only to the extent of that period for which the services are recognized and provided to the customers. Thus, the deferred revenue would accrue only when the assessee incurs the related input costs. 3.4 However, rejecting the same, Ld. AO held that there was no liability for the assessee to refund the amount to the customers / subscribers and therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time slot has been sold, bill raised and monies received. This at the best is an advance received for future sale. This is not the case where expenditure related to that income has been debited. In this case the assessee is selling the time slot to air advertisements for which there is no direct identifiable expenditure. Hence the ratio relied upon by the learned AO cannot be accepted here. It is also to be noted here that the said monies were offered as income in the subsequent year and also monies which are shown as deferred revenues in the earlier year were also offered as income in this year, at the beginning. Hence for these reasons this addition is directed to be deleted in both the AYs. 4.3.3 Respectfully following the above decision of the Hon'ble ITAT and in line with my predecessor's decision, the AO is directed to delete the addition made towards Deferred Revenue''. This ground of appeal is allowed. 3.3.2 In view of the above decision of Hon'ble ITAT, Chennai, followed by the CIT(A), in the case of M/s Sun TV Network Ltd., the appellant's grounds are allowed and the AO's additions are deleted in all four assessment years mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar of telecast. This decision has been followed by another coordinate bench in ITA No.1309/Mds/2017 dated 14.08.2017 for AY 2012-13 in the case of same assessee. The same has subsequently been followed in another order for AY 2013-14 also (ITA No.1243/Chny/2018 dated 20.11.2018). The copies of all these orders are on record. We find that same principal, as followed by us, has been followed by various benches of Tribunal in those cases. The Ld. CIT-DR has sought distinction in the facts of the assessee as well as in the case of its sister concern. However, upon perusal of para- 11 of Tribunal s decision in ITA No.1515 ors/Mds/2013 dated 31.10.2013, we find that in that case the assessee was collecting fees towards sale of time slots in advance and recognized revenue only when the programs were broadcasted. It was the submissions of the revenue that the bills were raised and the monies were received by the assessee and therefore the receipts should have been offered to tax under mercantile system of accounting. However, rejecting the same, the bench held that the income generated by the assessee was offered as income in the year of broadcasting / airing the programs. The monies ..... X X X X Extracts X X X X X X X X Extracts X X X X
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