Commissioner Of Income Tax, Jaipur v. The Rajasthan Small Industries Corporation Ltd

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH, JAIPUR------------------------------------------------------ (1) D.B. Income Tax Appeal No.37/2000 Commissioner of Income Tax, Jaipur Vs. The Rajasthan Small Industries Corporation Ltd. (2) D.B. Income Tax Appeal No.35/2000 Commissioner of Income Tax, Jaipur Vs. The Rajasthan Small Industries Corporation Ltd. Date of order : 18.10.2016 HON'BLE MR.K.S. JHAVERI,J.HON'BLE MR.MAHENDRA MAHESHWARI,J. Mr. R.B. Mathur, for the appellant.Mr. Sidharth Ranka, for respondent. JUDGMENT --------- 1.By way of these appeals, the Department has assailedthe judgment and order of the Tribunal whereby theTribunal has allowed the appeals preferred by theassessee and reversed the judgment and order of the CITand Assessing Officer. 2.While admitting the appeals, this Court framed thefollowing questions: Appeal No.37/2000 (i)Whether the Income Tax Appellate Tribunalwas justified in coming to the conclusion thatapart of the income which was disputed by theimporters had not accrued to the assessee inspite of the fact that the decision of theRajasthan High Court was in favour of theassessee?(ii) Whether on the proper appreciation of theprovisions of the Customs Act, import procedureetc. it could be said that the demurrage/wharfagecharges had not accrued to the assesseeparticularly when the assessee followedmercantile system of accounting and there wasexisting right in favour of the assessee toreceive the charges and the assessee accordinglybilled for the same? (iii)Whether the Income Tax AppellateTribunal was justified in deleting the rentalincome which was accounted for in the books ofaccount of the assessee and the premises were actually used by the tenant particularly when theassessee maintained account on mercantile basis?Appeal No.35/2000 (i) Whether on the proper appreciation of theprovisions of the Customs Act, import procedure,etc. it could be said that the demurrage/wharfagecharges had not accrued to the assesseeparticularly when the assessee followedmercantile system of accounting and there wasexisting right in favour of the assessee toreceive the charges and the assessee accordinglybilled for the same?” 3.Counsel for the appellant Mr. Mathur contended thatthe assessee has not followed the correct procedure. TheSupreme Court has held that it was their income andincome under the relevant year was on mercantile system.Learned counsel for the petitioner has tried to rely uponthe decision of this Court and also decision of theSupreme Court. Firstly, Commissioner of Income-Tax,Jaipur Vs. Vijay Laxmi Trading Co. Ltd., 147 ITR 372where financial position of the debtor was not sound andit was held that in previous years interest had not beenaccrued were not relevant. In view of the system ofaccounting adopted by the assessee and the facts andcircumstances of the case, interest had accrued to theassessee and was includible in its total income. 4.He has also relied upon the decision of the SupremeCourt in Income Tax Vs. Woodward Governor India P. Ltd.,(2009) 312 ITR 254 (SC) and contended that the system ofaccounting followed by the assessee is binding to boththe sides and the central income which was in the accountof the assessee is required to be assessed in therelevant year. Counsel for the respondent Mr. Ranka hassupported the order of the Tribunal and contended thatthe contingency was kept in case they fail they have tomake huge liability for the relevant year but after thatrelevant year is their income. 5.We have heard Mr. Mathur and Mr. Ranka. 4.He has also relied upon the decision of the SupremeCourt in Income Tax Vs. Woodward Governor India P. Ltd.,(2009) 312 ITR 254 (SC) and contended that the system ofaccounting followed by the assessee is binding to boththe sides and the central income which was in the accountof the assessee is required to be assessed in therelevant year. Counsel for the respondent Mr. Ranka hassupported the order of the Tribunal and contended thatthe contingency was kept in case they fail they have tomake huge liability for the relevant year but after thatrelevant year is their income. 5.We have heard Mr. Mathur and Mr. Ranka. 6.Taking into consideration the evidence on record, weare of the opinion that the Tribunal while consideringthe issue has rightly appreciated and has rightly allowedthe appeal preferred by the assessee. Assessee was aGovernment Corporation and has shown the liability inspite of stay order granted by the Court and in our view,the view taken by the Tribunal is just and proper. Theissues are required to be answered in favour of theassessee and against the Department.are of the opinion that the Tribunal while consideringthe issue has rightly appreciated and has rightly allowedthe appeal preferred by the assessee. Assessee was aGovernment Corporation and has shown the liability inspite of stay order granted by the Court and in our view,the view taken by the Tribunal is just and proper. Theissues are required to be answered in favour of theassessee and against the Department. The appeals are accordingly dismissed. A copy of this judgment be placed in the connectedappeal. (Mahendra Maheshwari),J. (K.S. Jhaveri),J. BM Gandhi/ 2,3