TaxTMI 
TaxTMI 
2000 (3) TMI 24
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.... tax as it is not income but only an advance to be adjusted towards remuneration as and when work is done ?" The question referred to us at the instance of the Revenue in T. C. No. 1903 of 1986, relates to the assessment year 1978-79, and is as follows : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the income accrued to the assessee only when its principal accepts the bill and, therefore, the assessee was not liable to be assessed on the sum of Rs. 5,70,416 received from its principal especially when the relevant expenses were debited already to the profit and loss account of the assessee for the year under consideration ?" Since the parties in both the cases are one and the same an....
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....rk done by the assessee, and found that the advance receipt is certainly not income and the advance is received by the assessee after the execution of work and presentation of the bills is very material and remuneration for the work done cannot accrue on the mere presentation of the bills. The Income-tax Officer in the assessment order has quoted a letter dated December 17, 1980, from Scindia Steam Navigation Company Ltd., to the effect that the assessee is entitled to commission only when the bills are passed for payment by Scindia. Counsel for the assessee submits that unless the principals accept the bills, income cannot accrue. Commission or remuneration for the work done accrues due only when the bills are passed by the principals and ....
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....nd the income received by the assessee accrues as income for that year. The assessee received 90 per cent. of the bill amount and certainly it amounts to income. We find that the view taken by the Commissioner and the Tribunal that the income accrues only after the passing of the bill is not proper. The law laid down in CIT v. Seshasayee Bros. (P.) Ltd. [1999] 239 ITR 471 (Mad), relied on by learned counsel for the assessee is not applicable to the facts of the case, since the above decision relates to assessment on additional remuneration which was based on the profit unless the amount of profit was known, it was not possible to hold that the additional remuneration accrued at the end of the relevant accounting year. The income accrued dur....