2023 (4) TMI 147 - AT - Income Tax

Booking advance deemed income in tax case, Supreme Court decision binding

Gautam Chadha (Late), L/h. Mrs. Ratna Chadha Versus ACIT, Circle 28 (1), New Delhi

The Delhi High Court upheld the Commissioner of Income-tax (Appeals)'s decision, ruling that 25% of the booking advance received should be treated as the ... Procedure when assessee claims identical question of law is pending before High Court or Supreme Court - filing declaration u/s. 158A(1) of the Act in Form No. 8 - assessment of income - as decided in Gautam R. Chadha [2011 (7) TMI 514 - DELHI HIGH COURT] 25% of the booking advance received should be treated as the income of the Assessee assuming that there are no cancellations and Assessee shall be entitled to 10% of the travel agents commission after ascertaining the actual outgoings in this regard - aforesaid order passed by the Hon’ble Delhi High court was challenged by the legal heirs of Mr. Gautam R. Chadha by filing Civil Appeal before the Hon’ble Apex Court as pending - HELD THAT:- As not refuted by the Revenue Department that the issues involved in the instant appeal are similar to the issues involved pending for adjudication before the Hon’ble Apex Court and decision of the Supreme Court would be binding on the parties and the Assessee shall not file any reference and/or any statutory appeal either before the Hon’ble High Court or before the Hon’ble Apex Court qua the issues involved in the instant appeal. Hence, considering the fact that as on today decision on the issues under consideration raised by the Assessee is against the Assessee and therefore in view of the provisions of section 158A(1) of the Act, declaration in Form No. 8 filed by the Assessee u/s. 158A(1) of the Act and certificate issued by the AO u/s 158A(3) of the Act, the instant appeal is liable to be dismissed, with liberty to the Assessee to seek modification of this order, as per outcome of the decision by the Hon’ble Apex Court on the identical issues as involved in this case. Assessee’s Appeal stands dismissed Issues involved: The issues involved in this case are: 1. Whether the ITAT was correct in law in deleting the addition made by the Assessing Officer, which had been restricted by the CIT(A) to the extent of 15% of the advances treating the same as income of the AssesseeRs. 2. Whether the receipts on account of booking of cruise tickets assumed the character of income in the hands of the Assessee when the amount was received from the customers or when the cruise departedRs. 3. Whether the ITAT was correct in law in allowing the Assessee to adjust the losses incurred on share transactions against the profit of commission agency business under the name and style of M/s. Tirun Travel MarketingRs.Details of the Judgment:Issue 1: The Assessee filed an appeal against the order passed by the Commissioner of Income-tax (Appeals) for the assessment year 2012-13. The Hon'ble Delhi High Court upheld the CIT(A)'s decision, stating that 25% of the booking advance received should be treated as the Assessee's income, with the Assessee entitled to 10% of the travel agents commission after ascertaining the actual outgoings.Issue 2: The legal heirs of Mr. Gautam R. Chadha challenged the Delhi High Court's order by filing appeals before the Hon'ble Supreme Court, raising questions regarding the taxation of income under the Income Tax Act. These questions included whether receipts on account of future bookings of cruise tickets assume the character of income in the hands of the Assessee at the stage of receiving the amount from the customer or when the cruise departs.Issue 3: The Assessee claimed that the questions raised before the Supreme Court were directly related to the issues in the instant appeal. The Assessing Officer certified the facts regarding the High Court's order and the pending appeals before the Supreme Court. The Tribunal acknowledged the similarity of issues and decided that the Supreme Court's decision would be binding on the parties, leading to the dismissal of the Assessee's appeal with the liberty to seek modification based on the Supreme Court's decision.In conclusion, the appeal was dismissed based on the provisions of the Income Tax Act and the pending adjudication before the Hon'ble Apex Court, with the Assessee having the option to seek modification based on the Supreme Court's decision on the identical issues.