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| The Tax Publishers2021 TaxPub(DT) 0973 (Mad-HC) INCOME TAX ACT, 1961
Section 147
Where proceedings for re-assessment have been initiated beyond a period of four years from the end of the relevant financial year and assessee made a disclosure of revenue from all income streams, including processing fee and the portion of processing fee recognised as income for the purpose of taxation and balance was carried over to the subsequent year, further, assessee was following a consistent method of revenue recognition over the years, therefore, proposal for re-assessment was failed.
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Reassessment - Beyond four years - Fee collected for processing of service offered - Assessee was following consistent method of revenue recognition
Assessee was engaged in the business of stem cell research and storage of stem cells collected from the umbilical cord of a new born child. Revenue issued notice under section 148 for reassessment of processing fee. At the time of delivery, a fee was collected for processing of the services offered. The entirety of the processing fee is disclosed as revenue. There were certain other circumstances where the processing fee is returned such as cases where contracts between the expectant mother and assessee were not pursued. The accounts of assessee would reveal the receipt of processing fee in advance and recognition of the amount quantified in that year in relation to deliveries is that have taken place within the financial year in question as income. The remaining fee was carried over to the subsequent financial year. Held: Proceedings for re-assessment have been initiated beyond a period of four years from the end of the relevant financial year. Assessee made a disclosure of revenue from all income streams including processing fee and portion of processing fee recognised as income for the purpose of taxation and balance was carried over to the subsequent year. Assessee was following a consistent method of revenue recognition over the years and it is not the revenue's case that financials for the later years were more elaborate for the purposes of Explanation (1) when compared to the present year. Thus, applying the ratio of Supreme Court decision in the case of Calcutta Discount[(1961) 41 ITR 191 (SC) : 1961 TaxPub(DT) 0130 (SC)], disclosure made by assessee in regard to the assessment of processing fee was a full and true and proposal for re-assessment was failed.
Relied:CIT v. Woodward Governor India P. Ltd. (2009) 13 SCC 1 : 2009 TaxPub(DT) 1628 (SC), United Commercial Bank v. CIT (1999) 240 ITR 355 (SC) : 1999 TaxPub(DT) 1437 (SC), Calcutta Discount Company Ltd. v. ITO & Anr. (1961) 41 ITR 191 (SC) : 1961 TaxPub(DT) 130 (SC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2012-13
INCOME TAX ACT, 1961
Section 35(2AB)
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