2014 (11) TMI 58

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....ays in refiling the appeal. ITA-209-2014 The revenue is before us challenging order dated 30.11.2011, passed by the Income Tax Appellate Tribunal, Delhi Bench 'B' New Delhi, (hereinafter referred to as the 'ITAT') dismissing an appeal filed by the revenue, thereby confirming order dated 06.11.2009, passed by the Commissioner of Income Tax (Appeals), Rohtak (hereinafter referred to as the 'CIT(Appeals)'. Counsel for the revenue submits that as the assesse maintains a mercantile system of accounting, the mere fact that receipts may have not been realised, does not absolve the assessee of its liability to pay tax on surcharge levied for delayed payment and reflected in the bills raised by the assessee. It is furth....

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.... is levying surcharge on delayed payment of bills by the consumers; the surcharge is taken as income as and when it is collected; however a provision for charge is made as noted above under the head 'provision of surcharge not realized'. This method has been regularly followed by the appellant. During appeal proceedings before the undersigned the appellant has produced bills pertaining to as many as 50 parties of various places and has shown that the bills are accepted even without payment of surcharge by the consumers and that surcharge is shown in the books as income as and when it is collected/received. It is settled law that, "Income-tax is a levy on income. No doubt, the Income-tax Act takes into account two points of time at w....

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....be applied in a careful manner. The assessee being a sate PSU; the sur-charge on delayed payment being disputable item; was not mandatorily payable at the time of payment of electricity consumption bill; was not an accrued receipt in view of the accounting policy accepted by the revenue. Therefore, such amount of surcharge cannot be held to be taxable as it is not the real income of the assessee and is hypothetical by nature in given facts and circumstances. In view of the foregoing, we are of the view that the amount of surcharge not realized by the assessee, does not amount to accrued of receipt taxable as income, CIT(A) has rightly deleted the addition, which we uphold." We have duly considered the arguments but are unable to ac....