SHASHI CABLES LIMITED,KOLKATA vs. DCIT, CIRCLE - 1(2), KOLKATA, KOLKATA

Assessment Year: 2011-12 Shashi Cables Limited...........…..…….……………………..…………………………………..……….……..Appellant 7, Chittaranjan Avenue 2nd Floor Laha Paint House Kolkata – 700 072 [PAN : AAECS 0433 Q] Deputy Commissioner of Income Tax, Circle-1(2), Kolkata.……...……...…………….......Respondent Appearances by: Shri Raj Kumar Agarwal, A/R, appeared on behalf of the assessee. Shri S.M. Das, Addl. CIT, D/R. appearing on behalf of the Revenue. Date of concluding the hearing : July 05th , 2018 Date of pronouncing the order : July 13th , 2018 ORDER Per J. Sudhakar Reddy, AM :-

This is an appeal filed by the assessee directed against the order of the Commissioner of Income Tax (Appeals)-I, Kolkata, (hereinafter the ‘Ld. CIT(A)’), dt. 05/12/2017, passed u/s 250 of the Income Tax Act, 1961 (hereinafter the ‘Act’), relating to Assessment Year 2012-13, on the following grounds:- “

1. For that Ld. CIT(A) erred in holding that the entire amount of Rs 25 lacs received from M/s Vijay Electricals Ltd. Was taxable in impugned assessment year and thus, upholding the addition of Rs.14,28,571/-.

2. For that Ld CIT(A) erred in upholding the disallowance of Rs.2,21,951/- under Proviso to Sec 36(1)(iii) out of interest expense

3. For that the appellant craves the right to put additional grounds at or before the time of hearing.”

2. After hearing rival contentions, we find that the assessee has offered to tax the entire amount of Rs.75 Lakhs received by him as license fee from M/s Vijay Electricals between the Assessment Year 2008-09 to the Assessment Year 2015-16 on time basis on the terms of the agreements.. The chart is extracted for ready reference:-

Assessment Year: 2011-12 Shashi Cables Limited 2.1. While so, the findings of the ld. Assessing Officer that, income has accrued and arisen during the year, and hence taxable during the year is not correct. The assessee has been, from the Financial Year 2008-09, consistently following a method of recognizing income from license fee under the agreement entered into with M/s Vijay Electricals Ltd. yearwise. There is no valid reason for deviating from this method of accounting. The entire amount of Rs.75 Lacs has been offered to tax over the period of 7 years. Though Rs.50 Lacs was received by the assessee, during the Financial Year 2008- 09, only Rs.9,39,335/-, was offered to tax in that year and the balance has been spread over the period of contract. This action of the assessee was accepted by the revenue. Under those circumstances, the addition made as sustained by the ld. CIT(A) are bad in law. Accordingly, I delete the same. In the result, Ground No. 1, is allowed.