Pr. Commissioner Of Income Tax, Jaipur-Ii, Jaipur v. Jaipur Stock Exchange Ltd. Stock Exchange Building , Jln Marg, Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 62 / 2016 Pr. Commissioner of Income Tax, Jaipur-II, Jaipur ----Appellant Versus Jaipur Stock Exchange Ltd. Stock Exchange Building , JLN Marg, Jaipur ----Respondent _____________________________________________________ For Appellant(s) : Mr. K.D. Mathur for Mr. R.B. MathurFor Respondent(s) : _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH Order 24/07/2017 Now in view of the decision in the case of DB Income TaxAppeal No. 1/2016 (Pr. Commissioner of Income Tax vs. JaipurStock Exchange Ltd. ) decided on 27[th] May, 2016, which reads as under:- “1.Both these Income Tax Appeals underSection 260A of the Income Tax Act, 1961 (forshort, 'Act') are directed against the commonorder dt.11/08/2015 passed by the Income TaxAppellate Tribunal, Jaipur Bench, Jaipur (forshort, 'Tribunal'). It relates to the assessmentyears 2008-09 and 2009-10. 2.Brief facts noticed for disposal of theseappeals are that the respondent-assessee is arecognized stock exchange. The issue arises inthe instant appeals is only for listing fees paid bythe various listed companies. While claim of theappellant-Revenue was that the assessee isfollowing mercantile system of accounting, therefore, listing fee accrued, ought to havebeen shown as receipt on accrual basis. Thesecond claim put forth by the assessee was thatcertain listing fee was not recoverable/notrecovered and therefore, they were written offfrom the books of accounts. However, the AOwas not satisfied and not only added the annuallisting fee on accrual basis but also rejected theclaim of the listing fee having been written off inthe books of accounts. 3.The Commissioner of Income Tax(Appeals) [for short, “CIT(A)”] on an appeal bythe assessee, taking into consideration thenature of listing fee and the past history, allowedthe claim of the assessee. It also held that theassessee was correct and justified in writing offthe amount which was not recoverable/ notrecovered and thus accepted contention of theassessee. 4.The appeal filed by the Revenue for boththe assessment years before the Tribunalresulted into dismissal of appeals. 5.Learned counsel for the appellant stronglycontended that the the assessee having followedmercantile system of accounting, whateverannual listing fee was due from the respectivecompanies, was certainly required to be takeninto consideration as in mercantile system ofaccounting whether the amount is received ornot, it has to be shown. He contended that oncebill has been raised, then whether the amounthas been received or not, ought not to havebeen taken into consideration by the assessee.He thus contended that substantial question oflaw arise out of the order of the Tribunal. 6.We have heard learned counsel for theRevenue. Admittedly, the assessee is followingthe method of accounting consistently followedby it and is most relevant for the accrual systemof accounting and it is not open for the authorityto disturb the same. It has been a finding of factrecorded by the Tribunal that the other stockexchanges are also following the same system ofaccounting and consistency in this regard isrequired to be maintained. It is also a finding offact recorded by the appellate authorities thatconsistently therespondent-assessee isfollowing the same system of accountingregarding showing of such listing fee asincome/receipt and under the similarcircumstances in the earlier assessment yearsthe said system was accepted. 7.The Apex Court in the case of CIT Vs. 7.The Apex Court in the case of CIT Vs. Shoorji Vallabhdas and co.: (1962) 46 ITR 144(SC) has held that if any accrual system, theprobability or improbability of realization hasalso to be considered in a realistic manner. TheIT Act takes into account two points of time atwhich the liability to tax is attracted viz., theaccrual of the income or its receipt, yet thesubstance of the matter is the income. Whereincome has in fact been received and issubsequently given up in such circumstances, itremains the income of the recipient even thoughgiven up, the tax may be payable. Whereincome can be said not to have resulted at all,there is obviously neither income nor receipt ofincome, even though an entry to that effectmight in certain circumstances have been madein the books of account. 8.Allahabad High Court in the case of CITVs. Girraj Udyog (P) Ltd. : (2005) 273 ITR 495held that mercantile system only recognizes theincome that has accrued and where there is nochance of recovery, the AO is not justified inbringing into tax such amount as accruedincome because where there is no prospect ofrecovery of receipt/income, it cannot beconsidered to have accrued at all. The assesseecannot be compelled to account for the receiptsand claim the same as bed debt in that regardwhen the said amount is not recoverable andgood money cannot be wasted and spent forclaiming of bad money i.e. by filing money suitin courts for recovery of the suit amount. 9.Delhi High Court in the case of CIT Vs.Consulting Engineering Services (India) Ltd.:(2001) 250 ITR 849 held that method ofaccounting consistently being followed by anassessee may be most relevant in the accrualsystem of accounting and it should normally notbe disturbed unless occasion so arise. 10.Taking into consideration the above factsand circumstances, in our view, the Tribunal hascome to a finding that only the listing fee whichhas actually been received was required to betaken into consideration and this is a finding offact based on the evidence on records. 13.Accordingly, in our view, no question oflaw much less substantial question of law can besaid to arise out of the order passed by theTribunal and we find no apparent error,perversity or ambiguity in the order of theTribunal so as to call for our interference. 14.Consequently, both the appeals, beingdevoid of merit, are accordingly dismissed.” In view of the above, this appeal will not survive. The appeal stands dismissed. (INDERJEET SINGH),J. (K.S. JHAVERI),J. A.Sharma/5