2008 (1) TMI 567

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....stantial questions of law : "(i) Whether on the facts and in the circumstances of the case and in law, the learned Tribunal was justified in deleting the addition of Rs. 17,35,958 on account of income from lease rent made by the Assessing Officer and as upheld by the learned Commissioner of Income-tax (Appeals) specially when the assessee was maintaining books of account on mercantile method as provided under section 145 of the Income-tax Act? (ii) Whether on the facts and in the circumstances of the case and in law, the learned Tribunal was justified in upholding the order of the Commissioner of Income-tax (Appeals) regarding deletion of insurance charges of Rs. 1,15,828 on the plea that actual payment was made by the assessee ....

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....ue of section 145, as amended, the income chargeable under the head "Profits and gains of business or profession" or "Income from other sources" is, subject to provisions of sub-section (2), to be computed in accordance with either cash or mercantile system of accounting, regularly employed by the assessee. Earlier the provision was that such income was to be computed in accordance with the method of accounting regularly employed by the assessee. In the present case, the learned Tribunal has found that this is undisputed and settled principle of fiscal law, that only the real income is to be taxed, and that the same income cannot be taxed twice. It was also taken to be settled principle of law, that realities of life have to be considered w....

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....aised by the assessee was accepted. 6. In our view, so far as the legal proposition propounded, and considered, by learned Tribunal are concerned, they are not in dispute, more so when the Tribunal has proceeded on the basis of the judgment of the hon'ble Supreme Court in Andhra Bank's case [1997] 225 ITR 447. Therefore, it remains only a question of fact, as to whether any income was derived by the assessee in the relevant period, so as to be liable to tax, and the learned Tribunal has considered that tax liability cannot be attracted merely on the basis of entries in the book keeping unless income is accrued. Thus, in substance the finding of fact is to the effect that the assessee did not earn the income, which has been deleted by the....