TaxTMI 
TaxTMI 
2018 (5) TMI 1082
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....short "the Act") dated 29.12.2009 for the Assessment Year 2007-08. 2. The only issue to be decided in this appeal is as to whether the ld CITA was justified in confirming the addition of Rs. 20,08,334/- on account of income not offered to tax, in the facts and circumstances of the case. 3. The brief facts of this issue is that the assessee is a private limited company running a beauty parlour. The return of income for A.Y.2007-08 was filed by the assessee on 31.10.2007 declaring total income of Rs. ' Nil' . The assessee received a sum of Rs. 22,00,000/- from two parties who entered into joint venture - one for centre at Bangalore and another centre at Girish Park, Kolkata. The assessee is the owner of registered trade mark " Vibes" . The ....
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....ase of violation any part of this agreement, which necessitates termination of this agreement, the assessee can withdraw its equipments procured and installed by the franchise partner in the leased premises, by giving a notice period of one week. The agreement further provided that the management of the 'Vibes' clinic shall vest with the assessee and the assessee shall have sole discretion and complete control over all the promotional activities and had to take administrative management of the business affairs and running of the clinic and the franchise partner shall not interfere with the funding of the clinic in any manner whatsoever. The agreement specifically provided that mobilization and technology knowhow fee received by the assessee....
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....ate of the inauguration of the Clinic. ( e) To have in the Premises telephone connections, electrical fittings such as tube lights, fans exhaust fans, geysers, heaters and the requisite connected power load in accordance with requirements provided by the first party .. (f) To have requisite permission/sanction from the Municipal Corporation and other connected statutory bodies to conduct carry out Activities of the Clinic. (g) To develop the Premises in accordance with Clause 4 above. (h) To abide by the provisions of clause 5 and to contribute for different types of reserves as provided in the said clause 5. (i) To alter, replenish electric installations and fittings or any other utility item referred to in the preceding par....
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....son and the consideration received by the assessee is not refundable to the other person under any circumstances. Hence the entire business risk is only on the other person and not on the assessee. Accordingly he observed that there is no reason for the assessee to defer the recognition of income over a period of the agreement i.e. 5 years. Based on these observations, the AO brought to tax differential amount of Rs. 20,08,334/- shown as liability by the assessee in its books as income accrued and received by the assessee for the year under consideration. This action of the ld. AO was upheld by the ld. CIT(A). Aggrieved the assessee is in appeal on the following revised grounds :- "1. For that on the facts and in the circumstances of the....
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....e of Rs. 22,00,000/- over a period of five years i.e. tenor of the agreement. We also take assistance from the Special Bench decision of Chennai Bench in the case of ACIT vs M/s Mahindra Holidays and Resorts India Ltd. In ITA No. 2412 to 2416/Mds/2005 for A.Y.1998-99 to 2002-03 dated 26.05.2010 wherein it was held that the amount of timeshare receivable by the assessee upfront at the time of enrolment of a member is not the income chargeable to tax in the initial year on account of contractual obligation that is fastened to the receipt to provide services in future over a term of contract. We hold that the principle of deferment of revenue recognition has been upheld by the Special Bench of Chennai Tribunal (supra). We also find from the AS....