TaxTMI 
TaxTMI 
TaxTMI 
2016 (11) TMI 1584
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....e case are as follows: The assessee is in the business of manufacturing and marketing of ice creams and other frozen foods. For the assessment year 2011-12, the return of income was filed on 15.10.2011 declaring the total income at 'nil' as the assessee incurred loss of Rs. 9,37,786/-. The assessment u/s 143(3) of the Act was completed vide order dated 6.3.2014. In the assessment completed the Assessing Officer had brought to tax the deposits received from its distributors for supply of freezer by stating as follows: "1 Income on account of lapsed liability in respect of freezer deposits: The assessee is a manufacturer and seller of ice creams. The assessee, as part of a trade promotion strategy, issues freezers to its distributors so that the products of the company can be prominently displayed and safely stored. The assessee collects the cost of the freezers from the distributors, the value of the freezer falls by 25% every year (part of a year is treated as a full year). That is to say, if the distributor terminates his agreement with the assessee company at the end of the 1st year, then he (i.e. distributor) can hope to recover only 3/4th of the payment (deposit) that he mad....
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....me' has been given an inclusive definition in section 2(24). The Supreme Court in CIT Vs. Karthikeyan (1993) 201 ITR 866 (SC) has held that the purpose of the inclusive definition is not to limit the meaning but to widen its net and several clauses therein are not exhaustive of the meaning of income; even if a receipt did not fall within the ambit of any of the clauses, it might still be income if it partakes the character of income. The issue at hand has to be seen in the light of the numerous apex court decisions holding that the word 'income' has to be interpreted with the widest amplitude. 1.5 The arguments of the assessee in brief are as under: * The assessee argued that it recognizes income on account of freezers when the agency is terminated, that it is wrong to tax the income before the termination of the agreement. * The decision of the Supreme Court in (IT Vs. T.V. Sunderam Iyengar and Sons is distinguishable. According to the assesse the case law pertains to a situation where the assessee has unilaterally credited income in the P&L Account on account of deposits received from customers but did not offer the same for tax. The system of accounting regular....
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....levant material on record. The issue arises is whether the deposits in respect of the freezer has to be considered as income of the assessee or not. As rightly submitted by the Ld. AR of the assessee that this issue was considered by the Tribunal in one of the assessees for the earlier assessment year and found that such deposits cannot be considered as income of the assessee. For the sake of convenience, we extract below the order dated 08.08.2012 passed by the Tribunal in the case of M/s. Kreem Foods (P) Ltd. In ITA No. 597/Coch/2010 relating to assessment year 2007-08:- "3. At the time of hearing, the Ld. Counsel for the assessee submitted a copy of the order dated 25-05-2012 passed by this Bench in the case of Jojo Frozen Food (P) Ltd. and Cream Packs (P) Ltd. in I.T.A. Nos. 655 & 654/Coch/2010 wherein the Tribunal has considered an identical issue and decided the same in favour of the assessee. For the sake of convenience, we extract below the operative portion of the said order in respect of the above said issue. "6. We have considered the rival submissions and carefully perused the record. We have also gone through the copy of the order passed by the co-ordinate bench of....
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....2014 (d) Star India P. Ltd. vs. Addl. CIT - 311 ITR (ST) 235 (Mumbai). (e) Govind Prasad Prabhu Nath - 171 ITR 417 (All.); (f) Hindustan Housing and Land Development Trust Ltd. - 161 ITR 524 (SC); (g) Ace Builders Pvt. Ltd. vs. CIT - 225 ITR 746 (SC); (h) Mantra Tanta Yantra Vigyan vs. CIT - 300 ITR 140 (Raj.); and (i) Guardian Industries Corpn. vs. Assistant Director of Income-tax - 7 DTR 594 (Del.). are also supports the plea of the assessee. The accrual has been dealt with in the relied judgments. Hence, under the given set of facts and circumstances, we by relying on the above decisions set aside the orders of the authorities and allow this ground of the assessee as it cannot be treated as income for the year relevant under appeal." 7. Since the co-ordinate bench has already taken a view on identical issue, by following the said decision, we hold that the deposits collected from vendors cannot be considered as the income of the assessee so long as the agency agreement continues. Accordingly, we set aside the order of Ld CIT(A) on this issue in the hands of both the assessees and direct the AO to delete the addition made on this issue in the hands of both th....