Real accrual of income, not TDS entries alone, governs taxation where revenue recognition follows a consistent accounting method.

Income cannot be taxed merely because TDS appears in Form 26AS if real accrual to the assessee is not established. The ITAT Mumbai noted that the copyright society collected royalty and licence fees on behalf of members and recognised revenue only when usage logs were received, invoices were raised, and the relevant member was identified. As this consistent method of accounting was followed and the disputed receipts remained uncertain, the addition for unreconciled TDS and alleged income not offered to tax was held unsustainable, and the deletion by the first appellate authority was upheld.

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Issues: Whether the addition made on account of unreconciled TDS and alleged income not offered for taxation was sustainable when the assessee functioned as a copyright society and followed a consistent method of accounting.

Analysis: The assessee collected royalty and licence fees on behalf of its members and was obliged to distribute the net receipts after meeting administration expenses. The dispute centred on whether mere appearance of TDS in Form 26AS could, by itself, establish accrual of income in the assessee's hands. The Tribunal noted that income can be taxed only when it is real and has accrued, and that uncertain or unrealizable receipts do not become taxable merely because tax was deducted at source. It also accepted that the assessee's accounting method recognised revenue only when usage logs were received, invoices were raised, and the relevant member was identified, and that this method had been consistently followed.

Conclusion: The addition was not sustainable and the deletion by the first appellate authority was upheld; the issue was decided in favour of the assessee.

Final Conclusion: The revenue's challenge failed because the disputed amount was not shown to represent taxable income of the assessee under the governing accrual principles.

Ratio Decidendi: Income cannot be brought to tax merely on the basis of TDS entries if, on the facts, no real accrual of income to the assessee is established and the receipt remains uncertain or identifiable only for later recognition under the assessee's consistent method of accounting.

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