9911796707
TMI Blog2024 (5) TMI 1294X X X X Extracts X X X X X X X X Extracts X X X X ..... time of payment of electricity consumption bill; was not an accrued receipt in view of the accounting policy accepted by the revenue. Therefore, such amount of surcharge cannot be held to be taxable as it is not the real income of the assessee and is hypothetical by nature in given facts and circumstances. Thus as AO has to verify the fact as to when the surcharge was realized and offered as income. Thus while allowing the grounds in all the appeal covered by this issue, we direct the assessing officer to consider the claim of the assessee after verifying the year in which the surcharge income has been offered to tax. Addition u/s 14A r.w.r. 8D - Revenue is aggrieved with the findings of the learned first appellate authority wherein relief is granted to assessee by reducing the quantum of disallowances made by the assessing officer and the assessee is aggrieved with the additions sustained - Assessee requested that additional evidence i.e. the certificate of the CA issued with respect to the expenses incurred for the purpose of exempt income may kindly be taken on record - HELD THAT:- Considering the totality of the facts and circumstances, we admit the additional evidence filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... New Delhi date: 02.03.2015 - Do - 3120/Del/2016 CIT(A)-7, New Delhi, 629/CIT(A)-7/Del/15-16 date: 31.03.2016 DCIT, Cir.19(2), New Delhi. Date: 18.01.2016 - Do - 7432/Del/2017 CIT(A)-7, New Delhi, 10603/401/CIT(A)-7/Del/2016-17 date: 04.10.2017 DCIT, Cir.19(2), New Delhi. Date: 16.12.2016 - Do - 7605/Del/2018 CIT(A)-38, Delhi 230/2017-18 date: 26.09.2018 Addl.CIT, Spl. Range-7, New Delhi. Date: 31.12.2017 143(3) 2. Learned counsel appearing for the assessee mentioned that issues involved in all these appeals are common. The first being chargeability of income-tax attributable to surcharge income offered by the assessee on receipt basis. Second issue is disallowance of certain expenses by invoking the provisions of Rule 8D read with section 14A of the Income-Tax Act, 1961. Thus the appeals are decided by this common order and facts of AY 2011-12, are being considered as lead year case facts. 3. In regard to the first issue of chargeability of surcharge as income of the assessee it can be seen that the agreement for sale/purchase of energy with customers contains the clause for surcharge for delayed payment. Surcharge is to be calculated @ 15% per annum on all payments outstanding af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee filed an appeal. The CIT(Appeals) vide order dated 06.11.2009, set aside the addition made by the Assessing Officer by holding as follows:- The issue involved and the submissions made by the appellant have been considered. It is undisputed that the appellant is following mercantile system of accounting: it is levying surcharge on delayed payment of bills by the consumers; the surcharge is taken as income as and when it is collected, however a provision for charge is made as noted above under the head 'provision of surcharge not realized'. This method has been regularly followed by the appellant. During appeal proceedings before the undersigned the appellant has produced bills pertaining to as many as 50 parties of various places and has shown that the bills are accepted even without payment of surcharge by the consumers and that surcharge is shown in the books as income as and when it is collected/received. It is settled law that, Income-tax is a levy on income. No doubt, the Income-tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt, but the substance of the matter is the incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee maintains a mercantile system of accounting, the ITAT and the CIT (Appeals) have rightly set aside the order passed by the assessing officer adding surcharge to the income of the assessee. It would be appropriate to point out that income tax is fundamentally a levy on income and though the Act may prescribe different points in time at which liability to taxation enures still remains a tax on receipt of income. A hypothetical income that may or may not materialize should not be made subject matter of tax merely because of an entry in the accounts books maintained by an assessee. A reference in this regard may be made to a judgment of the Hon'ble Supreme Court in Commissioner of Income-tax Vs. Shoorji Vallabhdas and Co. [1962] 046 ITR 0144, wherein it has held as follows:- Income-tax is a levy on income. Though the Income-tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt, yet the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in book-keeping, an entry is made about a hypothetical income , which does not materialize. Where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee dated 01.02.2019 and requested that additional evidence i.e. the certificate of the CA issued with respect to the expenses incurred for the purpose of exempt income may kindly be taken on record. 10. Considering the totality of the facts and circumstances, we admit the additional evidence filed by the assessee i.e. the certificate of the CA and restore the issue to the assessing officer for examining it afresh. Needless to say that the Assessing Officer will grant sufficient opportunity to the assessee while giving effect to the directions of this order. 11. In Assessment Year 2014-15, Ld. Counsel has raised additional contention that the investments were made from the own funds of the assessee and not from the borrowed funds and hence no disallowances is permissible in view of the judgment of Hon'ble Punjab Haryana High Court in the case of CIT vs. HDFC Bank 366 Income Tax Return 505 (Bom.) . That being the settled position of law to which Ld. DR has not rebutted anything. We direct the assessing officer also to examine the position of own funds in the impugned years while deciding the disallowance made under Section 14A of the Act. 12. In view of the above, all the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
