The DCIT, Circle-1(2), Baroda V. Effluent Channel Project Ltd., Baroda

ITA 1493/AHD/2012

• Counselvise Citation: 149320514 RSA 2012
• Duration Of Justice: 3 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 05-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 06-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMIR VAHIL
• Keywords: Capital asset; Capital receipt; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER EFFLUENT CHANNEL PROJECT LTD, 4 TH FLOOR, COMMERCE CENTRE, SAYAJIGUNJ, BARODA PAN: AAACE8486B (APPELLANT) VS THE DCIT, BARODA, CIRCLE - 1 (2) (RESPONDENT) THE DCIT, BARODA, CIRCLE - 1 (2) (APPELLANT) VS EFFLUENT CHANNEL PROJECT LTD, 4 TH FLOOR, COMMERCE CENTRE, SAYAJIGUNJ, BARODA PAN:AAACE8486B (RESPONDENT) REVENUE BY : S H RI SAMIR VAHIL , SR. D . R. ASSESSEE BY: S H RI MANISH J. SHAH , A.R. DATE OF HEARING : 05 - 11 - 2 015 DATE OF PRONOUNCEMENT : 30 - 11 - 2 015 I T A NO . 1420 / A HD/20 12 A SSESSMENT YEAR 200 9 - 10 ITA NO. 1493 /AHD/20 12 ASSESSMENT YEAR 200 9 - 10 I.T.A NO. 1420 & 1493 /AHD/20 12 A.Y. 2009 - 10 PAGE NO EFFLUENT CHANNEL PROJECT LTD VS. DCIT 2 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THESE TWO CROSS APPEALS FILED BY ASSESSEE AND REVENUE FOR A.Y. 2009 - 10, ARISE FROM ORDER OF THE CIT(A) - I, BARODA DATED 20 - 04 - 2012 IN APPEAL NO. CAB - I/201/11 - 12 , IN PROCEEDINGS UNDER SECTION 143(3) OF T HE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE S APPEAL ITA 1420/AHD/2012 RAISED TWO SUBSTANTIVE GROUNDS. FIRST ONE CHALLENGES BOTH THE LOWER AUTHORITIES ACTION IN ASSESSING WHOLE OF THE MEMBERSHIP CONTRIBUTION OF RS. 2,09,76,612/ - RESU LTING IN THE IMPUGNED ADDITION OF RS. 13 LACS AFTER SETTING OFF BROUGHT FORWARD AMOUNT OF RS. 1,70,76,612/ - . ITS SECOND SUBSTANTIVE GROUND CHALLENGES ENHANCEMENT MADE IN LOWER APPELLATE PROCEEDINGS OF RS. 17,25,648/ - BEING DEFERRED AMOUNT OF CONTRIBUTION AFTER SPREADING OVER OF THE ABOVE STATED MEMBERSHIP CONTRIBUTION. THE REVENUE S SOLE SUBSTANTIVE GROUND IN ITS CROSS APPEAL ASSAIL CORRECTNESS OF THE SPREADING OVER EXERCISE HEREINABOVE. 3. THE ASSESSEE - COMPANY IS ENGAGED IN THE BUSINESS OF CONVEYANCE OF INDUSTRIAL EFFLUENT AND MAINT ENANCE OF CHANNEL. IT RECEIVED MEMBERSHIP CONTRIBUTION FROM ITS NEW MEMBERS FOR LIFE TIME A SUM OF RS. 2,09,76,612/ - IN LIEU OF OFFERING EFFLUENT DISPOSAL FACILITY. THE ASSESSING OFFICER TAXED THE ENTIRE SUM IN THE IMPUGNE D ASSESSMENT YEAR OF RECEIPT BY FOLLOWING HIS LINE OF ACTION ADOPTED IN ASSESSMENT YEAR 2001 - 02, 2004 - 05 TO 2008 - 09 TH EREBY REJECTING I.T.A NO. 1420 & 1493 /AHD/20 12 A.Y. 2009 - 10 PAGE NO EFFLUENT CHANNEL PROJECT LTD VS. DCIT 3 ASSESSEE S ACCOUNTING TREATMENT TREATING THE SAME AS A CAPITAL RECEIPT ON THE GROUND THAT IT WAS YET TO PERFORM ITS PART O F OBLIGATION. THE SAME WAS ACCORDINGLY ADJUSTED THE BRO UGHT FORWARD SUM RESULTING IN THE IMPUGNED ADDITION OF RS. 39 LACS. 4. THE ASSESSEE PREFERRED APPEAL. THE CIT(A) HAS DEALT WITH THE ISSUE AS UNDER: - 4. I HAVE CONSIDERED APPELLANT'S SUBMISSIONS BUT DO NOT FIND THEM TO BE ACCEPTABLE. APPELLANT COMPANY, A CO - OPERATIVE VENTURE LOOKING AFTER DISPOSAL OF EFFLUENT DISCHARGES BY MEMBER INDUSTRIES PROVIDES 15 KM LONG CHANNEL UP TO GULF OF CAMBAY TO THE MEMBERS. APPELLANT COMPANY COLLECTED ONE TIME PAYMEN T (TERMED AS CAPITAL CONTRIBUTION BY APPELLANT) AS WELL AS ANNUAL PAYMENTS FROM THE MEMBERS FOR AVAILING FACILITIES OF EFFLUENT DISCHARGE. SINCE AY 2001 - 02 AND UPTO A Y 2007 - 08, APPELLANT COMPANY OFFERED L/5 TH OF ONE TIME PAYMENT BY NEW MEMBERS JOINING THE APPELLANT COMPANY FOR TAXATION IN THE YEAR OF RECEIPT. IN AY 2001 - 02 ETC., THE AO BROUGHT TO TAX, THE ENTIRE ONE TIME CONTRIBUTION TO TAX IN THE YEAR OF RECEIPT AS AGAINST ITS OFFER BY THE APPELLANT FOR TAX ON DEFERRED BASIS. APPELLANT'S CONTENTION AT THE TIME OF ASSESSMENT IN AY 2001 - 02 ETC THAT ONE TIME CONTRIBUTION WAS NOT TAXABLE AT ALL, BEING OF CAPITAL NATURE WAS ALSO REJECTED BY THE AO. THE AO OBSERVED THAT THE SO CALLED CAPITAL CONTRIBUTION FOR ONE TIME PAYMENT BY NEW MEMBERS WAS IN PROPORTION OF CA PACITY BOOKED BY THE MEMBERS IN THE SAID EFFLUENT TREATMENT AND DISCHARGE FACILITY, IT WAS NOT TAKEN INTO SHARE CAPITAL AND WAS ACCOUNTED FOR AS REVENUE RECEIPT BY THE APPELLANT ITSELF, IT WAS NON - REFUNDABLE WHETHER OR NOT THE MEMBER CONTINUED TO REMAIN AS MEMBER OR OPTED OUT AND ONE TIME CONTRIBUTION WAS CHARGED FOR SERVICES TO BE RENDERED BY THE APPELLANT IN FUTURE. HON'BLE ITAT, AHMEDABAD IN ITA NO. 4280/AHD/2007 FOR AY 2001 - 02 IN APPELLANT'S CASE HELD THAT THOUGH WHAT APPELLANT RECEIVED IS TERMED AS CAP ITAL CONTRIBUTION BY THE MEMBERS, IT IS A REVENUE RECEIPT IN THE HANDS OF APPELLANT COMPANY. HON'BLE ITAT OBSERVED THAT QUID PRO QUO OF ONE TIME PAYMENT WAS GIVING RIGHT TO THE MEMBERS TO USE THE EFFLUENT DISCHARGE CHANNEL ACCORDI NG TO THE CAPACITY PURCHAS ED BY THEM AND THUS BY MAKING ONE TIME PAYMENT, MEMBERS WERE MADE ELIGIBLE TO UTILIZE THE PRESENT CAPITAL SET UP OF I.T.A NO. 1420 & 1493 /AHD/20 12 A.Y. 2009 - 10 PAGE NO EFFLUENT CHANNEL PROJECT LTD VS. DCIT 4 THE APPELLANT COMPANY AS WELL AS FURTHER EXPANSION THEREOF, IF ANY, OR MODIFICATION THEREOF, IF MADE BY THE APPELLANT COMPANY IN FUTURE. ITA T FURTHER OBSERVED THAT APPELLANT COMPANY GAVE A CLEAR RIGHT TO ITS MEMBERS TO UTILIZE ITS CAPITAL FACILITIES FOR DISCHARGE OF AGREED QUANTITIES OF EFFLUENT AND THE ONE TIME MEMBERSHIP FEE WAS RETURN FOR ANY OBLIGATION OR SERVICES RENDERED BY THE APPELLANT IN FUTURE. 4.1 ONE TIME CONTRIBUTIONS RECEIVED FROM MEMBERS ARE NEITHER COMPENSATION FOR LOSS OF ANY PROFIT MAKING APPARATUS NOR A CONSIDERATION FOR TRANSFER OF A CAPITAL ASSET BUT ARE IN LIEU OF SERVICES OF EFFLUENT DISPOSAL PROVIDED BY THE APPELLANT. ONE TIME PAYMENTS RECEIVED ARE NON - REFUNDABLE AND WERE RECEIVED IN THE COURSE OF NORMAL BUSINESS ACTIVITY OF THE APPELLANT. NOMENCLATURE GIVEN BY THE APPELLANT, I.E. CAPITAL CONTRIBUTIONS TO SUCH ONE TIME PAYMENTS IS IMMATERIAL. APPELLANT'S CONTENTION THAT THE SO CALLED CAPITAL CONTRIBUTIONS RECEIVED FROM THE MEMBERS WERE CAPITAL RECEIPT IS, THEREFORE NOT ACCEPTABLE AND IS ALREADY REJECTED BY THE HON'BLE ITAT ALSO. IN AYS 2001 - 02, 04 - 05 & 05 - 06, ITAT BY FOLLOWING DECISION OF ITAT'S SPECIAL BENCH IN THE CASE OF MAHINDRA HOLIDAYS AND RESORT (I) LTD (2010), 131 TTTJ (CHENNAI) (SB) AND BY REFERRING TO AS - 9, ACCEPTED APPELLANT'S OFFER TO TAX, ON DEFERRED BASIS ONE TIME CONTRIBUTIONS RECEIVED FROM MEMBERS. SINCE AY 08 - 09, APPELLANT, UNLIKE PRECEDING YEARS WHERE ON E TIME CONTRIBUTIONS WERE OFFERED AS INCOME ON DEFERRED BASIS OVER A PERIOD OF 5 YEARS STARTED NOT OFFERING ONE TIME CONTRIBUTIONS AS INCOME AT ALL. APPELLANT DID NOT EVEN INCLUDE L/5 TH PORTIONS OF ONE TIME CONTRIBUTIONS RECEIVED IN PRECEDING FOUR YEARS AS ITS TAXABLE INCOME FOR AY 2008 - 09 AS WELL AS AY 2009 - 10. ONE TIME CONTRIBUTIONS RECEIVED FROM MEMBERS ARE UNDOUBTEDLY OF REVENUE NATURE AS HELD BY THE HON. ITAT, AHMEDABAD IN APPELLANT'S CASE. IN THE ABSENCE OF OFFER BY THE APPELLANT TO STAGGER/DEFER IT O VER YEARS AS DONE IN EARLIER YEARS, TAXATION OF ENTIRE AMOUNT IN THE YEAR OF RECEIPT IS JUSTIFIED. ADDITION OF CONTRIBUTION RECEIVED IN THIS YEAR I.E. RS.39,00,000/ - TO APPELLANT'S INCOME IN AY 2009 - 10 IS UPHELD. 5. AS MENTIONED ABOVE, ON 1.4.2008, APPEL LANT HAD OPENING BALANCE OF RS.1,70,76,612/ - IN THE CAPITAL CONTRIBUTION/ONE TIME CONTRIBUTION ACCOUNT DUE TO OFFER AS INCOME SINCE AY 2001 - 02 ON DEFERRED BASIS. FURTHER, AS MENTIONED, ITAT IN APPELLANT'S CASE IN AY 01 - 02, 04 - 05 & 05 - 06 THROU GH ORDER DATED 15.10.2010 BY FOLLOWING DECISION OF ITAT'S SPECIAL BENCH IN THE CASE OF MAHINDRA HOLIDAYS AND RESORT (I) LTD (2010), 131 TTTJ (CHENNAI) (SB) AND BY I.T.A NO. 1420 & 1493 /AHD/20 12 A.Y. 2009 - 10 PAGE NO EFFLUENT CHANNEL PROJECT LTD VS. DCIT 5 REFERRING TO AS - 9, ACCEPTED OFFER BY THE APPELLANT TO TAX CAPITAL/ONE TIME CONTRIBUTION RECEI VED FROM MEMBERS ON DEFERRED BASIS. AS PER APPELLANT'S OWN OFFER AS WELL AS CONFIRMATION BY THE ITAT OF TAXATION OF ONE TIME CONTRIBUTIONS OFFERED ON DEFERRED BASIS OVER A PERIOD OF 5 YEARS, PART OF OPENING BALANCE OF RS.1,70,76,612/ - WAS INCLUDIBLE IN TAX ABLE INCOME OF AY 08 - 09, AY 09 - 10 ETC., WHICH HAS NOT BEEN DONE. SHOW CAUSE NOTICE U/S.251(2) FOR ENHANCING THE ASSESSMENT FOR AY 2009 - 10 BY RS. 17,25,648/ - , BEING THE DEFERRED AMOUNT PERTAINING TO FY 2004 - 05 TO FY 2006 - 07 WAS THEREFORE ISSUED ON 10.4.201 2 PROVIDING OPPORTUNITY TO THE APPELLANT AGAINST SUCH ENHANCEMENT. 5.1 APPELLANT FILED FOLLOWING REPLY TO THE SHOW CAUSE NOTICE AND WAS HEARD: 'THE AMOUNT OF RS. 17, 25,648/ - PROPOSED TO BE ADDED BY YOUR HONOUR IS ERRONEOUS. YOUR HONORS ATTENTION IS DRAWN TO T HE FACT THAT THE COMPANY, WITH EFFECT FROM FINANCIAL YEAR 2007 - 08(A.Y.2008 - 09) CHANGED THE METHOD OF ACCOUNTING IN AS MUCH AS THE ENTIRE AMOUNT RECEIVED AS CAPITAL CONTRIBUTION HAS BEEN TREATED AS CAPITAL RECEIPT FOR VARIOUS REASONS STATED IN OUR EARL IER SUBMISSION DATED 14 TH MARCH 2012 WITH FULL CONVENTION THAT SUCH A CAPITAL RECEIPT IS NOT A INCOME AT ALL, ALTHOUGH IN EARLIER YEARS, OFFERING OF SOME PERCENTAGE OF INCOME FOR TAXATION WAS A VOLUNTARY GESTURE WHICH CANNOT FORM A BASE FOR COMPUTING A TAX ABLE INCOME OF THE COMPANY. UNDER THE CIRCUMSTANCES WE RESPECTFULLY OBJECT TO YOUR ANY SUCH ADDITION. OUR STAND IS VERY MUCH CONFIRMED BY A HONORABLE MEMBER OF THE INCOME TAX APPELLATE TRIBUNAL VIDE ORDER NO. 4280/AHD/2007, 374/AHD/2009, 26 82/AHD/2008 & 3 625/AHD/2008. WE HAVE ALREADY GIVEN COPY IN OUR EARLIER SUBMISSION. BE AS IT MAY, THE APPELLANT COMPANY HELD THIS ENTIRE AMOUNT OF RS, 39, 00, 000 / - AS AMOUNT RECEIVED AS CAPITAL CONTRIBUTION. THE ENTIRE CAPITAL CONTRIBUTION, BEING OF CAPITAL NATURE, HAS BEEN INCLUDED IN THE CURRENT LIABILITIES AS THE SAME HAS BEEN RECEIVED FROM THE MEMBER WITH SPECIFIC DIRECTION THAT IT SHOULD BE SPENT ON CAPITAL PROJECT ENVISAGED BY THE COMPANY. I.T.A NO. 1420 & 1493 /AHD/20 12 A.Y. 2009 - 10 PAGE NO EFFLUENT CHANNEL PROJECT LTD VS. DCIT 6 AS PER USER'S AGREEMENT ON PAGE NO 3 SPECIFY THAT CAPITAL CONTRIBUTION MEA NS CONTRIBUTION TOWARDS CAPITAL EXPENDITURE INCURRED/TO BE INCURRED BY ECPL FOR ITS ACTIVITIES . LEAVING THIS ASPECT ASIDE, THE MOOT QUESTION THAT ARISES IS WHETHER THE RECEIPT OF CAPITAL CONTRIBUTION IS AN INCOME OF THE ASSESSEE? THIS APPEAL IS, THEREFORE , AGAINST THE TAXABILITY OF THE ENTIRE CAPITAL RECEIPT AS REVENUE RECEIPT AS HAS BEEN DONE BY THE LD. ASSESSING OFFICER IN ONE YEAR. IT IS A CLEARLY ESTABLISHED PRINCIPLE THAT IN DETERMINING A RECEIPT AS CAPITAL RECEIPT OR REVENUE RECEIPT ONE MUST HAVE RE GARD TO THE NATURE AND QUALITY OF THE RECEIPT. EVERY RECEIPT CANNOT BE DESCRIBED AS INCOME MUCH LESS PROFIT AS COMMONLY UNDERSTOOD. THE CONNECTION BETWEEN QUALITY OF THE RECEIPT AND ITS SOURCE HAS TO BE TAKEN IN TO ACCOUNT. BESIDES IT IS THE MOTIVE OF THE PERSON WHO PAYS THE AMOUNT. MORE RELEVANCE IS TO BE ATTACHED TO THE NATURE OF THE RECEIPT IN THE HANDS OF THE PERSON WHO RECEIVES IT, AND IN ORDER TO DETERMINE ITS QUALITY THE MOTIVE OF THE GIVER HAS TO BE EXAMINED. (1963) 48 ITR 222 (SC) P.H DIVECHA. THI S MEANS THAT THERE ARE TWO RECEIPTS WHICH ARE RECEIVED FROM THE USERS' ONE, FOR CAPITAL CONTRIBUTION (AS ABOVE) AND REVENUE CONTRIBUTION BY WAY OF M &R CONTRIBUTION, (MAINTENANCE AND REPAIRS CONTRIBUTION. CLAUSE 9 OF USERS' AGREEMENT PAGE 3 ATTACHED.) WE WOULD LIKE TO INFORM YOU THAT THE ITAT HAS PASSED AN ORDER IN FAVOUR OF THE OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2001 - 02, 2004 - 05, & 2005 - 06, REGARDING CAPITAL CONTRIBUTION AND THE JUDGMENT CLEARLY LAYS DOWN A PRINCIPAL THAT WHERE FEES IS RECEIVED BY A N ASSESSEE FOR RENDERING SERVICES IN FUTURE THEN ENTIRE SUCH FEES CANNOT BE TAXED IN THE YEAR OF RECEIPT BECAUSE THE ASSESSEE HAD NOT PERFORMED ITS PART OF OBLIGATION IN THE YEAR OF RECEIPT. IT HAS TO BE PERFORMED IN ENSUING YEAR AND INCUR EXPENDITURE FOR SUCH PERFORMANCE. THEREFORE ENTIRE RECEIPT OF MEMBERSHIP FEES CANNOT BE TAXED IN THE YEAR. THE SUBSTANCE OF THE MATTER IS ' INCOME' RELIANCE IS ALSO PLACED ON THE DECISION OF SPECIAL BENCH CHENNAI TRIBUNAL IN I.T.A NO. 1420 & 1493 /AHD/20 12 A.Y. 2009 - 10 PAGE NO EFFLUENT CHANNEL PROJECT LTD VS. DCIT 7 THE CASE OF ACIT VS. MAHINDRA HOLIDAYS & RESOR TS (INDIA) LTD. (2010) 131 TTJ1. IT HAS BEEN HELD THAT A DEBT IS CREATED IN FAVOUR OF THE ASSESSEE IMMEDIATELY ON EXECUTION OF THE AGREEMENT FOR TIME - SHARING. HOWEVER, IT CANNOT BE SAID THAT CORRESPONDING SERVICES HAVE BEEN FULLY RENDERED BY THE ASSESSEE. THE ASSESSEE IS 'REQUIRED TO FURNISH ACCOMMODATION TO THE MEMBERS FOR ONE WEEK EVERY YEAR TILL THE CONTINUATION OF MEMBERSHIP. THEREFORE, TILL THIS OBLIGATION IS FULFILLED, THE DOMAIN OF MONEY IS NOT COMPLETE AS THE FAILURE TO PROVIDE THE ACCOMMODATION IN TERMS OF AGREEMENT ENTAILS LIABILITY TO PAY LIQUIDATED DAMAGES. A DISTINCTION HAS TO BE MADE BETWEEN THE TERMS OF 'RECEIPT' AND 'INCOME'. WHAT IS LIABLE TO BE TAXED IS INCOME AND NOT THE RECEIPT. THEREFORE, ONLY THAT AMOUNT WHICH IS RECEIVED AS INCOME CAN BE BROUGHT TO TAX. CAPITAL CONTRIBUTION RECEIVED HAD NOT BECOME RICHER AS THERE WAS A CORRESPONDING LIABILITY ON THE TAXPAYER TO SERVICE THE MEMBERS FOR THE CONTRACTED PERIOD. THE CAPITAL CONTRIBUTION TOWARDS FOR CAPITAL EXPENDITURE INCURRED/ TO BE INCU RRED BY COMPANY AND IT BECOMES OWNER OF THE ENTIRE SUM ONLY WHEN THE SERVICE OBLIGATION IS FULLY DISCHARGED FOR THE ENTIRE PERIOD OF MEMBERSHIP AS PER AGREEMENT. RELYING ON THE SC DECISION IN THE CASE OF E.D. SASSOON & CO LTD, THE SB OBSERVED THAT THE FOL LOWING TWO CONDITION ARE NECESSARY TO SAY THAT INCOME HAS ACCRUED TO OR EARNED BY A TAXPAYER) THE TAXPAYER MUST HAVE COME INTO EXISTENCE AND THE TAXPAYER MUST HAVE ACQUIRED A RIGHT TO RECEIVED THE PAYMENT. IN THE PRESENT CASE, A DEBT IS CREATED IN FAVOUR OF THE TAXPAYER IMMEDIATELY ON EXECUTION OF THE CONTRACT. HOWEVER, IT CANNOT BE SAID THAT THE TAXPAYER HAS FULLY CONTRIBUTED TO ITS ACCRUING BY RENDERING SERVICES WHICH WILL BE DONE OVER A NUMBER OF YEARS. MOREOVER THE ASSESSEE COMPANY ALLOWS TO THE MEMBE RS TO UTILIZE ITS CAPITAL FACILITIES FOR THE PERIOD OF 99 YEARS FOR DISCHARGE OF AGREED QUANTITIES OF EFFLUENT. IN OTHER WORDS, ASSESSEE COMPANY HAS TO PERFORM ITS PART OF OBLIGATION FOR NEXT 99 YEARS AND TO KEEP THE CAPITAL SET UP INTACT AND ALLOW I.T.A NO. 1420 & 1493 /AHD/20 12 A.Y. 2009 - 10 PAGE NO EFFLUENT CHANNEL PROJECT LTD VS. DCIT 8 THE USE THEREOF BY THE MEMBERS. THIS IS AKIN TO HIRING THE CAPITAL STRUCTURE OF THE ASSESSEE COMPANY FOR THE NEXT 99 YEARS BY MAKING ONE TIME HIRING CHARGES. SINCE THE ASSESSEE COMPANY HAS TO ENSURE USE OF CAPITAL STRUCTURE BY THE MEMBERS DURING THE TERM OF AGREE MENT, IT IS BOUND TO DISCHARGE ITS OBLIGATION IN FUTURE. THUS ONE TIME MEMBERSHIP FEE IS NOT IN FACT IN RETURN FOR ANY OBLIGATION OR SERVICES RENDERED BY THE ASSESSEE IN ONE YEAR. IT IS A RECEIPT IN ADVANCE FOR EN OBLIGATION TO BE RENDERED IN FUTURE. THUS IT CANNOT BE SAID THAT INCOME HAS ACTUALLY ACCRUED TO THE ASSESSEE IN ONE YEAR 'EVEN THOUGHT IT MIGHT HAVE RECEIVED IT IN ONE YEAR. MEREL Y RECEIPT DOES NOT ENSURE ACCRUAL UNLESS EQUIVALENT PART OF AGREED SERVICES BY THE RECEIVER IS RENDERED. IN FACT BY PAY ING ONE TIME FEES APART OF DEBT IS CREATED AGAINST THE ASSESSEE WHICH HAS TO BE DISCHARGED BY MEETING EQUIVALENT OBLIGATION IN THE FORM OF CONTINUING TO PROVIDE USE OF THE CAPITAL STRUCTURE FOR EFFICIENT DISCHARGE OF EFFLUENT EMITTED BY MEMBER - INDUSTRIES. AS PER YOUR LETTER RS. 17, 25,648/ - SHOULD HAVE BEEN INCLUDED IN TAXABLE INCOME FOR A. Y. 2009 - 10 WHICH HAS NOT BEEN DONE. CONCLUSION: IN SHORT THE CAPITAL CONTRIBUTION IS A CAPITAL RECEIPT BY ANY STANDARD OF ACCOUNTING PRINCIPLE AND CANNOT BE TAXED AS SUCH. THERE IS, THEREFORE, NO SCOPE FOR TAXING SUCH CAPITAL CONTRIBUTION AS REVENUE RECEIPT. ' 5.2 I HAVE CONSIDERED THE SUBMISSIONS, WHICH ARE IDENTICAL TO SUBMISSIONS IN APPEAL (PARA 3 OF THIS ORDER). APPELLANT'S CONTENTION THAT W.E.F. FY 2007 - 08, ME THOD OF ACCOUNTING WAS CHANGED BY TREATING ONE TIME CONTRIBUTION AS CAPITAL SUM RECEIVED IS NOT ACCEPTABLE. AS HELD BY THE ITAT AND AS DISCUSSED IN PARAS 4 & 4.1 ABOVE, ONE TIME CONTRIBUTIONS ARE REVENUE RECEIPTS TAXABLE AS APPELLANT'S INCOME. IN ANY CASE, IRRESPECTIVE OF THE TREATMENT OF ONE TIME CONTRIBUTIONS RECEIVED IN FY 2007 - 08 & FY 2008 - 09 IN ITS BOOKS BY APPELLANT AS PER THE SO CALLED CHANGED PERCEPTION; FOR EARLIER YEARS, APPELLANT ITSELF HAD TREATED THE AMOUNTS RECEIVED IN THOSE YEARS TO BE REVENU E RECEIPTS TAXABLE ON DEFERRED BASIS OVER A PERIOD OF 5 YEARS. ITAT, AHMEDABAD BY FOLLOWING DECISION OF ITAT'S SPECIAL BENCH IN THE CASE OF MAHINDRA HOLIDAYS AND RESORT (I) LTD (2010), I.T.A NO. 1420 & 1493 /AHD/20 12 A.Y. 2009 - 10 PAGE NO EFFLUENT CHANNEL PROJECT LTD VS. DCIT 9 131 TTJ (CHENNAI) (SB) AND BY REFERRING TO AS - 9, ACCEPTED OFFER BY THE APPELLANT TO TAX CAPITAL CONTRIBUTIONS RECEIVED FROM MEMBERS ON DEFERRED BASIS. THERE IS, THUS NO JUSTIFICATION FOR THE APPELLANT TO NOT INCLUDE L/5 TH OF THE CONTRIBUTIONS RECEIVED FOR EARLIER YEARS AS TAXABLE INCOME IN AY 2009 - 10. AS PER CALCULATION SUBMI TTED BY THE APPELLANT, SUCH SUM TAXABLE IN AY 2009 - 10 IS RS.17,25,648/ - . ASSE SSMENT FOR AY 2009 - 10 IS ACCOR DINGLY DIRECTED TO BE ENHANCED BY RS.17,25,648/ - . PENALTY PROCEEDINGS U/S 271(1 )(C) R.W.S. 274 FOR FURNISHING INACCURATE PARTICULARS OF INCOME ARE A LSO INITIATED IN RESPECT OF INCOME ENHANCED. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE CASE FILE. IT EMANATES FROM THE CASE FILE THAT A CO - ORDINATE BENCH OF A TRIBUNAL IN SIMILAR CROSS APPEALS ITA NOS. 1945/AHD/2011 AND 1948/AHD/2011 FOR ASSESS MENT YEAR 2008 - 09 DECIDED ON 24 - 07 - 2015 REMITS BACK THE ISSUE OF ASSESSMENT OF ASSESSEE S ABOVE STATED CAPITAL RECEIPT CONTRIBUTION BACK TO THE ASSESSING AUTHORITY FOR REWORKING AS PER EARLIER ORDER IN ASSESSMENT YEAR 2001 - 02. IT FURTHER OBSERVES THAT TH E RECEIPTS RECEIVED DURING THE RELEVANT ACCOUNTING PERIOD ARE TO BE SPREAD OVER FOR A PERIOD OF FIVE YEARS INSTEAD OF ASSESSING THE SAME IN ONE ASSESSMENT YEAR. THE SECOND ISSUE OF ENHANCEMENT STANDS DECIDED AGAINST ASSESSEE. WE FOLLOW SUIT IN THESE FACT S AND WANT OF DISTINCTION BEING POINTED OUT IN THE ABOVE STATED DECISION. THE ASSESSEE S FIRST GROUND ACCORDINGLY IS REMI TTED BACK TO A SSESSING O FFICER. SECOND SUBSTANTIVE GROUND FAILS ACCORDINGLY. ITA 1420/AHD/2012 IS PARTLY ALLOWED FOR STATISTICAL PURPO SES. COMING TO REVENUE S SUBSTANT IVE GROUND THE LD. CO - ORDINATE BENCH HAS REJECTED THE SAME BY UPHOLDING THE CIT(A) S ORDER I.T.A NO. 1420 & 1493 /AHD/20 12 A.Y. 2009 - 10 PAGE NO EFFLUENT CHANNEL PROJECT LTD VS. DCIT 10 ADOPTING SPREADING OVER FORMULA. THE REVENUE S ITA 1493/AHD/2012 IS REJECTED. 6 . ASSESSEE S APPEAL ITA 1420/AHD/2012 IS PARTLY A LLOWED FOR STATISTICAL PURPOSES AND REVENUE S CROSS APPEAL ITA 1493/AHD/ 2012 IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 30 - 11 - 2015 SD/ - SD/ - ( PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 30 /11 /2015 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,