Rajasthan High Court - Jaipur
Pr Commissioner Of I T Jaipur-Ii Jaipur vs Jaipur Stock Exchange Ltd on 28 March, 2017
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT
JAIPUR
D.B. Income Tax Appeal No. 121 / 2016
Pr Commissioner Of I T Jaipur-Ii Jaipur
----Appellant
Versus
Jaipur Stock Exchange Ltd
----Respondent
_____________________________________________________ For Appellant(s) : Mr. K.D. Mathur for Mr. R.B. Mathur _____________________________________________________ HON'BLE THE ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE GOVERDHAN BARDHAR Judgment 28/03/2017
1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal of the Department.
2. The learned counsel for the appellant has framed the following questions of law:
"Whether in the facts and circumstances of the case, the ITAT was justified in law in deleting the addition of Rs.69,42,600/- made by the Assessing Officer on account of annual listing fees received by the assessee from its members on accrual basis?"
3. However, the issue is covered by the decision of this Court in D.B. Income Tax Appeal No. 2/2016 (Pr. Commisioner of Income Tax Vs. Jaipur Stock Exchange Ltd.) decided on 27.5.2016 wherein it has been held as under:
"6. We have heard learned counsel for the Revenue. Admittedly, the assessee is following the method of accounting consistently followed by it and is most relevant for the accrual system of accounting and it is not open for (2 of 2) [ITA-121/2016] the authority to disturb the same. It has been a finding of fact recorded by the Tribunal that the other stock exchanges are also following the same system of accounting and consistency in this regard is required to be maintained. It is also a finding of fact recorded by the appellate authorities that consistently the respondent- assessee is following the same system of accounting regarding showing of such listing fee as income/receipt and under the similar circumstances in the earlier assessment years the said system was accepted.
7. The Apex Court in the case of CIT Vs. Shoorji Vallabhdas and co.: (1962) 46 ITR 144 (SC) has held that if any accrual system, the probability or improbability of realization has also to be considered in a realistic manner. The IT 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. Where income has in fact 4 been received and is subsequently given up in such circumstances, it remains the income of the recipient even though given up, the tax may be payable. Where income can be said not to have resulted at all, there is obviously neither income nor receipt of income, even though an entry to that effect might in certain circumstances have been made in the books of account.
8. Allahabad High Court in the case of CIT Vs. Girraj Udyog (P) Ltd. : (2005) 273 ITR 495 held that mercantile system only recognizes the income that has accrued and where there is no chance of recovery, the AO is not justified in bringing into tax such amount as accrued income because where there is no prospect of recovery of receipt/income, it cannot be considered to have accrued at all. The assessee cannot be compelled to account for the receipts and claim the same as bed debt in that regard when the said amount is not recoverable and good money cannot be wasted and spent for claiming of bad money i.e. by filing money suit in courts for recovery of the suit amount.
9. Delhi High Court in the case of CIT Vs. Consulting Engineering Services (India) Ltd.: (2001) 250 ITR 849 held that method of accounting consistently being followed by an assessee may be most relevant in the accrual system of accounting and it should normally not be disturbed unless occasion so arise."
4. In view of above, the appeal stands dismissed. (GOVERDHAN BARDHAR),J. (K.S. JHAVERI)ACTING C.J. /bm gandhi 139