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Income Tax Appellate Tribunal, BANGALORE BENCH ‘A’, BANGALORE
Before: SHRI A. K. GARODIA & SMT ASHA VIJAYARAGHAVAN
O R D E R PER SHRI A. K. GARODIA, AM:
This appeal is filed by the revenue directed against the order of the ld. CIT(A)(LTU), Bangalore dated 16-01-2014 for the assessment year 201011.
In this appeal, the Revenue has raised the following grounds ; “1. The order of the ld. CIT(A) is bad in law and opposed to the facts and circumstances of the present case
2. The CIT(A) erred in finding that the income of Rs.40 lakhs was not earned in the FY: 2009-10 when it is accepted in para-5 of the CIT(A)s own order that the bifurcation by the assessee was made on an estimate. 3. The CIT(A) erred in ignoring the fact that a credit in the mercantile system represents an earning and the assessee himself duly attempted to claim the TDS credit for the amount of Rs.40 lakhs. 4. The appellant prays for permission to add or delete the grounds of appeal at the time of herring of the case.
The ld. DR of the revenue supported the assessment order and the ld. AR of the assessee supported the order of the ld. CIT(A).
We have considered the rival submissions. We find that the decision of the ld.CIT(A) as per his order from para-5.1 to 6 which is reproduced below for the sake of ready reference.
“5.1 Before me the above treatment by the AO has been protested and a copy of the IPL playing contract between the appellant and RC was filed to substantiate the claim that the receipt of Rs.1.4 Crore was not in terms of the scheduled payment terms as per the contract, and had been paid by RC for their own advantage. It was explained that the appellant had played only a few matches in March 2010 for RC and payment of Rs.1.4 Crore was not commensurate with the appellant’s efforts nor in line with the agreement terms. The total fees received from M/s RC from 01.01.2010 to 31.12.2010 for the IPL contract was as follows; Received during the year 2009-10 from India 1,40,00,000 Received during the year 2010-11 from India 1,39,48,187 Received during the year 2010-11 from S..A 48,00,000 Total ….. 3,27,48,187 The appellant disclosed Rs.1.00 Crore of the above in AY: 2010-11 and the balance of Rs.2,27,48,187 was considered as income earned in AY: 2011-12.
On consideration of the appellant’s submission and evidences as above it is apparent that the payment by M/s RC was much higher than the contracted terms and the appellant had not performed services adequate to the earning thereof. It, therefore, clearly represents inflation of the debited claim in RC’s books of account by way of a provision/contingent liability which services had not been received by the company. It would be in the fitness of thing, therefore, to examine the matter and make the disallowance in the company’s return of income. As far as the appellant is concerned it is an axiom that the income that is taxed must be real income which has been actually earned. In the present case the amount of Rs.1.4 Crore had certainly not been earned in FY: 2009-10 by the appellant and hence, the treatment of portion of the receipt as income received in advance ‘ as a liability shown in the balance sheet was correctly done by the appellant. The appellant’s ground raised
in this matter is accordingly, allowed. The AO is directed to communicate the inflated/un-accrued claim of expenditure by M/s Royal Challengers Sports Pvt. Ltd., to the AO of the company for necessary action. The appellant’s claim of TDS for the impugned amount will only be restricted to TDS relatable to Rs.1 Crore will be allowed in the following year when Rs.40 Lakhs has been shown as income”.
6. From the above paras reproduced from the order of the ld. CIT(A) it is seen that a categorical finding has been given by the ld. CIT(A) in para 5.1 & 6 of his order that the assessee had played only a few matches in March 2010 for RC and payment of Rs.1.4 Crore was not commensurate with the appellant’s efforts nor in line with the agreement terms. He also has given finding that the total fees received from RC from 01-01-2010 to 31-12-2010 for the IPL contract was Rs.1.40 Crore received during the year 2009-10 from India and Rs.1.39,48,187/- received during the year 2010- 11 from India and Rs.48.00 Lakhs received during the year 2010-11 from South Africa and the total Rs.3,27,48,187/-and the assessee had disclosed Rs.1.00 Crore out of the above in assessment year 2010-11 and the balance of Rs.2,27,48,187/- was considered as income earned in assessment year 2011-12. Under these facts, it was held by the ld. CIT(A) that this amount of Rs.1.4 Crore had certainly not been earned in FY:
2009-10 by the assessee and hence, the treatment of portion of the receipt as ‘income received in advance’ as a liability shown in the balance sheet was correctly done by the assessee. He also directed he AO that eh assessee’s claim of TDS for the impugned amount will only be restricted to TDS relatable to Rs.1.00 Crore as income in the assessment year 2010-11 and the balance TDS credit will be allowed in the following year when Rs.40 Lakhs has been shown as income. Considering these facts of the present case in its entirety we find no infirmity in the order of the ld. CIT(A) and therefore, we decline to interfere with the impugned order of the ld.CIT(A).
In the result, the appeal of the revenue is dismissed.
Order pronounced in the open court on the date mentioned on the captioned page.