TaxTMI 
TaxTMI 
2022 (12) TMI 403
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.... law raised by the assessee. 2. After hearing Shri. A. Shankar, learned Senior Advocate for assessee and Shri. E.I. Sanmathi, Senior Standing Counsel for respondent and in our considered view following four questions arise for consideration. 1. Whether the Tribunal is justified in law in holding that the entire upfront premium received by the appellant on the execution of the concession agreement with Udupi Power Corporation Ltd of Rs.9,00,00,000/- constituted the income of the current year and cannot be recognized as income on proportionate basis over the period of the agreement of 30 years and also as observed by the Comptroller & Auditor General in their audit report on the facts and circumstances of the case? 2. Whe....
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....;ABG') and M/s Ambuja Cements limited ('ACL') for a period of 30 years and received the premium upfront. In respect of UPCL, assesse has shown the upfront premium amount in the P&L account. In the case of ABG and ACL, premium amount has been amortized and shown as current liability. 4. Shri. A. Shankar, learned Senior Advocate for assesse submitted that the assesse recognized 1/30th of the upfront premium received in respect of the three entities as income for the respective years and for A.Y. 2009-10 in this case. The assessing officer in para 6.3 of his order dated 29.12.2011 has held thus: "As per article 9.1 of the agreement, the (sic) sum of Rs.9 crores is not for 30 years and it is not dependent on number of ye....
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....sed by Karnataka State Pollution Control Board, clearing the garbage and waste materials dumped by lessees in common garbage bin within Port premises etc. • The premium received is under the capital receipt therefore not liable for tax. In support of this contention he placed reliance on Member for the Board of Agricultural Income Tax, Assam Vs. Sindhurani Chaudhurani and Ors (1957) 32 ITR 169 (SC). 8. In substance Shri. A. Shankar's argument is, premium being a capital receipt, is not taxable. The assessee is required to provide various services for 30 years and assessee is entitled to amortize the amount and offer proportionate 1/30th amount as per AS-19 as approved by the Comptroller And Auditor General. 9. Shri. E....
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.... the port land to three companies viz. UPCL, ABG Infralogistics and M/s Abmuja Cements Ltd., vide respective concession agreement. The assessee has received upfront premium from these three concessionaries at the time of execution of the agreement. We find that the transaction of leasing out the land to these companies for 30 years is completed by execution of the agreement and thereafter the assessee was not required to do or perform any act or obligation under the agreement. Thus, in other words, the assessee has received consideration for grant of license/lease to these three companies in lump sum apart from the annual license fee/royalty without any corresponding obligation to be discharged by the assessee. Thus upfront premium amount i....
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.... the assessee has recognized Rs.26,85,19,000/- as lease rental comprising the upfront premium received from three concessionaries. Therefore, when the assessee claims to have followed the accrual basis of accounting and recognizing the income on accrual basis then this very fact of recognizing the entire upfront premium as income in the books of account shows that the entire receipt accrued during the year under consideration. Though the C & AG has raised some objections in his Audit report in respect of recognizing the entire income as the year under consideration and recommended only proportionate amount of upfront premium to be considered as income of the year under consideration, however, the said remarks of the C & AG would not change ....