Capital Gain Deductibility: proportionate IPO and PMS expenses held allowable against capital gains where netting and nexus to transfer are establishe...
Admissibility of Documentary Evidence: appellate authority may admit self explanatory documents on first production and uphold deletion of unexplained...
Under the mercantile system, a continuing obligation to provide promised facilities and amenities over a long-term timeshare membership period gave rise to an accrued, estimable liability, so proportionate revenue recognition was permissible. The Court held that the concept of deferred income is not alien to the Income-tax Act and applied the matching principle to the assessee's advance membership collections. Annual maintenance or utility charges collected separately were not equivalent to the contractual facilities promised under the membership arrangement. The Tribunal erred in taxing the entire membership receipt in the first year, and the substantial questions of law were answered in favour of the assessee.
Under the mercantile system, a continuing obligation to provide promised facilities and amenities over a long-term timeshare membership period gave rise to an accrued, estimable liability, so proportionate revenue recognition was permissible. The Court held that the concept of deferred income is not alien to the Income-tax Act and applied the matching principle to the assessee's advance membership collections. Annual maintenance or utility charges collected separately were not equivalent to the contractual facilities promised under the membership arrangement. The Tribunal erred in taxing the entire membership receipt in the first year, and the substantial questions of law were answered in favour of the assessee.
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