| The Tax Publishers2023 TaxPub(DT) 450 (Del-Trib) INCOME TAX ACT, 1961
Section 4
Additional claims lodged by assessee with various parties were not admitted by the parties and in relation thereto, arbitration proceedings were going on. So unless and until those very parties accepted the claim of assessee, no income could be said to have accrued to assessee and, no right could be said to have vested in the assessee to recover the said amount and accordingly under the law no debt could be said to have created in favour of assessee by somebody. Therefore, such entries as made by assessee in the books of account remained only a hypothetical income, and not real income and, therefore, no addition was called for.
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Income - Real income v. Hypothetical income - Additional claims lodged by assessee not admitted by the concerned parties -
Assessee while crediting disputed hypothetical claim of Rs. 29 crores in the books of account, also made a corresponding debit entry of Rs. 29 crores in the profit and loss account in order to nullify the effect of book entries made in relation to disputed additional claims for the purpose of working out the real income accrued under the law chargeable to tax under section 4. AO, however, made addition to assessee's income. Held: Additional claims lodged by assessee with various parties were not admitted by the parties and in relation thereto, arbitration proceedings were going on. So unless and until those very parties accepted the claim of assessee, no income could be said to have accrued to assessee and, no right could be said to have vested in the assessee to recover the said amount and accordingly under the law no debt could be said to have created in favour of assessee by somebody. Therefore, such entries as made by assessee in the books of account remained only a hypothetical income and not real income and both the credit and debit entries of Rs.29 crores, being contra entries only were to be discarded while computing taxable income otherwise, it would give a distorted picture not permissible under law.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
IN THE ITAT, DELHI BENCH
ANIL CHATURVEDI, A.M. & CHANDRA MOHAN GARG, J.M.
DCIT v. S.T Constructions (P) Ltd.
ITA. No. 4149/Del./2019
20 January, 2023
Revenue by: Amaresh Singh , Sr. DR
Assessee by: M. P Rastogi , Advocate Shri P. N Shastry , CA
Anil Chaturvedi, A.M.
This appeal filed by the Revenue has been directed against the order of the leasrned Commissioner (Appeals)-8, New Delhi in Appeal No. 10505/17-18 dated 14-2-2019 relating to the 1 2015-16.
2. The relevant facts as culled out from the material on record are as under :
2.1. The assessee is a company stated to be engaged in the business of civil contractor work of road and building. The assessee electronically filed its return of income for assessment year 2015-16 on 12-10-2015 declaring total of income at Rs. 3,62,62,910. The case of the assessee was selected for scrutiny and thereafter assessment was framed under section 143(3) vide order dated 26-12-2017, and the total income was determined at Rs. 33,42,62,910.
2.2. Aggrieved by the order of the assessing officer, assessee carried the matter before the learned Commissioner (Appeals) who vide order dated 14.02.2019 in appeal no. 10505/17-18 allowed the appeal of the assessee.
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