2025 (4) TMI 1277 - SCH - Income Tax

Legal Counsel's Concession Seals Fate of Petition, Highlighting Importance of Procedural Integrity in Accounting Dispute

M/s. Central Warehousing Corporation Versus Principal Commissioner Of Income Tax.

SC dismissed SLP challenging HC decision based on legal concession by counsel. The case examined mercantile accounting principles and income accrual under ... Concession on law before the High Court - Taxation of income actually 'accrued' under mercantile system of accounting - Whether income in respect of unclaimed goods stored at CFS / ICD's maintained by the Assessee can be said to accrue merely because the goods continue to be stored indefinitely? - Whether ITATs direction to merely telescope income already offered for tax on receipt basis against Income taxable on accrual basis is misconceived / perverse on the facts of the case, and on an interpretation of section 150 (2) of the Customs Act 1962?' - High Court has recorded that the aforesaid aspects came to be decided on concession HELD THAT:- If the Corporation believes that its counsel wrongly conceded before the High Court on a point of law, it was expected of the Corporation to immediately prefer an appropriate application before the High Court and get the matter clarified. Its too late in the day to level such allegations. We condemn this practice which we have been noticing over a period of time in various litigations.Special Leave Petition is dismissed accordingly. The Supreme Court of India dismissed the Special Leave Petition filed by a State Nodal Agency challenging the High Court's decision, which was based on a legal concession made by the counsel. The case involved three key questions regarding the mercantile system of accounting and the accrual of income under section 150(2) of the Customs Act, 1962, specifically: (a) whether only income that has actually 'accrued' must be taxed; (b) whether income from unclaimed goods indefinitely stored at CFS/ICDs accrues merely by continued storage; and (c) whether the ITAT's direction to telescope income offered on receipt basis against income taxable on accrual basis was 'misconceived/perverse.'The High Court had noted that the matter was decided 'on concession.' When the petitioner later contended that its counsel wrongly conceded the legal point, the Supreme Court held that the petitioner should have promptly sought clarification from the High Court. The Court condemned the delayed attempt to retract the concession, stating, 'We condemn this practice which we have been noticing over a period of time in various litigations.' Consequently, the petition was dismissed and pending applications disposed of.