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TMI Blog2022 (12) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... upfront premium which non refundable. Therefore the matter requires reconsideration in the hands of the Assessing Officer referring to relevant facts and law. According to Shri.A.Shankar, if the accounting is as per AS-19 and even as per general principles of accounting, the upfront premium can be amortized on the principles of matching concept because the assessee has to provide various services. We have also noticed that Comptroller And Auditor General in his report has held that premium can be amortized. In our considered opinion, the matter requires reconsideration in the hands of the Assessing Officer. Hence, matter is remitted to the file of the Assessing Officer for fresh consideration in accordance with law after providing an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs.5,81,08,700/- constituted the income of the current year as against Rs.19,36,956/-(1/30th) which is accounted as income in the books of account and offered to tax by the appellant on the facts and circumstances of the case? 3. Whether the Tribunal is justified in law in holding that the entire upfront premium received by the appellant on the execution of the lease deed with Ambuja Cements Ltd of Rs.10,34,16,282/- constituted the income of the current year as against Rs.34,47,209/- (1/30th) which is accounted as income in the books of account and offered to tax by the appellant on the facts and circumstances of the case? 4. Whether the Tribunal is justified in law in holding that the upfront premium from Udupi power Corporatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observations of the Comptroller And Auditor General, as the upfront lease rent received for 30 years has been amortized, assessee can offer the income on proportionate basis namely 1/30th. Though this aspect has been recorded in the para B.4 in the audit report dated 2008-09 (Annexure-G), AO has rejected the said contention. 6. The CIT(A) vide order dated 05.02.2012 without proper appreciation of facts and law has confirmed the order passed by Assessing Officer. The ITAT has accepted that lease is for 30 years as per the respective concession agreements, but held that assessee was not required to perform any further obligation under the agreement. According to the ITAT assessee has received the consideration for grant of lease from the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich mandates the assesse to provide services. Therefore, the assessee is getting income in the relevant financial year. In support of this contention, he placed reliance on the judgment of Hon'ble Apex court in the case of Commissioner of Income Tax ANR Vs. H.S. Ramachandra Rao (2011) 330 ITR 0322 . 10. We have carefully considered the rival contentions and perused records. 11. In the first three questions, the issue involved is whether the assessee is entitled to amortize and offer 1/30th of the amount received as income every year?. The fourth question is whether tribunal is justified in holding that the entire upfront premium constituted the income for the current year?. 12. Shri. Shankar s contention is that the land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounting standard 19. However, when there is no corresponding liability or obligation to be discharged by the assessee after receipt of this amount as upfront, then this argument of the assessee of matching concept goes against the claim of the assessee. Even as per the matching concept of recognizing the income the amout received by the assessee is required to be considered as income of the current year when the assessee has completed and discharged all its obligation by executing the agreement and no further liability was to be discharged by the assessee for next 30 years under the concession agreement. The consideration received by the assessee during the year matches with the discharge of liability or obligation by execution of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is upfront premium which non refundable. Therefore the matter requires reconsideration in the hands of the Assessing Officer referring to relevant facts and law. 15. According to Shri.A.Shankar, if the accounting is as per AS-19 and even as per general principles of accounting, the upfront premium can be amortized on the principles of matching concept because the assessee has to provide various services. We have also noticed that Comptroller And Auditor General in his report has held that premium can be amortized. 16. In view of the above, in our considered opinion, the matter requires reconsideration in the hands of the Assessing Officer. Hence, the following; ORDER (a) The assessment order dated 29.12.2011 (Annexure B) p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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