DCIT, New Delhi V. M/s. Ferrous Infrastructure Pvt. Ltd., Gurgaon

ITA 3867/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2947 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 06-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 04-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KR SHARMA
• Keywords: Gift
• Section: 143(3); 133A; 115JB

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH 'B', NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER I.T.A. NO. 3867/DEL/2014 A.Y. 2010-11 DY. COMMISSIONER OF INCOME TAX, VS. M/S FERROUS IN FRASTRUCTURE PVT. LTD., CIRCLE 11(1), NEW DELHI VATIKA TOWERS, 1 ST FLOOR, BLOCK-B, ROOM NO. 405, GOLF COURSE ROAD, SECTOR-54, CR BUILDING, NEW DELHI GURGAON-122002 (PAN: AAACF9776H) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. ANIL KR. SHARMA, SR. DR ASSESSEE BY : NONE ORDER PER H.S. SIDHU, JM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XIII, NEW DELH I DATED 30.4.2014 PERTAINING TO ASSESSMENT YEAR 2010-11 ON THE FOLLOW ING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,09,64,450/- MADE BY NOT ALLOWING REVERSAL OF INCO ME ON ACCOUNT OF INTEREST CHARGED ON LATE PAYMENT OF PRIN CIPAL 2 AMOUNT FROM THE CUSTOMER REQUIRED TO BE PAID AGAIN ST BOOKING OF FLAT IN PROJECT AT FARIDABAD. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND A NY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARIN G. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A), NEW DELHI BEING CONTRARY TO THE FACTS ON RECORD AND THE SETTL ED POSITION OF LAW, BE SET ASIDE AND THAT OF THE ASSES SING OFFICER BE RESTORED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE HAD FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR 2008-09 ON 24.9.2010 DECLARING INCOME AT NIL. THE RETURN OF THE ASSESSEE WAS PROCESSED U/S. 143(1) OF THE I.T. ACT, 1961 AT THE RETURNED INCOME U/S. 115JB OF THE ACT HAS BEEN DECLARED AT RS. 32,75,573/-. THE REVISED R ETURN AT NIL WAS FILED ON 16.2.2012 AFTER THE SURVEY U/S. 133A OF THE ACT. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. NOTICE U/S. 143(2) OF THE ACT WAS ISSUED ON 25.8.2011 WHICH WAS DULY SERVED UPON THE ASSESSEE. IN RESPONSE TO THE NOTICE, THE AR OF THE ASSESSEE ATTENDED THE PROCEED INGS FROM TIME TO TIME. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINE SS OF REAL ESTATE DEVELOPMENT, BUILDING OF HOUSING PROJECT ETC. AO O BSERVED THAT THE COMPANY IS DEVELOPING GROUP HOUSING PROJECTS IN SEC TOR-89, FARIDABAD. THE FLATS WERE SOLD TO THE BUYERS ON THE PAYMENT PL AN LINKED TO THE VARIOUS STAGES OF THE CONSTRUCTION. THE ALLOTTEES OF THE FLATS WERE NOT MAKING THE PAYMENTS ON THE DUE DATES AS STIPULATED IN THE AGREEMENT. THE ASSESSEE CALCULATED THE INTEREST ON THE DELAYED PAYMENTS AND SERVED 3 THE DEBITS NOTES TO ALLOTTEES FOR NOT MAKING THE PA YMENT IN TIME AS STIPULATED IN THE AGREEMENTS. THE ASSESSEE BOOKED T HE INCOME OF RS.1,09,64,450/- ON ACCOUNT OF INTEREST IN THE FINA NCIAL YEAR 2008-09 TO BE REALIZED FROM THE ALLOTTEES. THE CUSTOMERS REFUS ED TO PAY THE INTEREST AND THREATENED TO CANCEL THE BOOKINGS IN THE EVENT THE COMPANY CHARGES THE INTEREST. THE COMPANY CANCELLED THE RECOVERY O F THE INTEREST IN ORDER TO REALIZE THE PRINCIPAL AMOUNTS UNDER THE CIRCUMST ANCES, THE COMPANY HAD TO REVERSE THE INCOME BY DEBITING THE PROFIT AN D LOSS ACCOUNT IN THE FINANCIAL YEAR 2009-10. THEREFORE, THE AO DISALLOW ED AND ADDED BACK THE AMOUNT OF RS. 1,09,64,450/- IN THE HANDS OF THE ASS ESSEE AND COMPLETED THE ASSESSMENT U/S 143(3) OF THE IT ACT VIDE ORDER DATED 25.01.2013 AT RS. 88,23,020/-. AGGRIEVED BY THE ASSESSMENT OR DER DATED 25.1.2013, THE ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VI DE HIS IMPUGNED ORDER DATED 30.4.2014 HAS DELETED THE ADDITION AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE 3. AGGRIEVED WITH THE IMPUGNED ORDER OF THE LD. CI T(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. LD. DR RELIED UPON THE ORDER OF THE AO AND REIT ERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 5. IN THIS CASE, NOTICE OF HEARING TO THE ASSESSE E WAS SENT BY THE REGISTERED AD POST, IN SPITE OF THE SAME, ASSESSEE, NOR ITS AUTHORIZED REPRESENTATIVE APPEARED TO PROSECUTE THE MATTER IN DISPUTE, NOR FILED ANY APPLICATION FOR ADJOURNMENT. KEEPING IN VIEW THE F ACTS AND 4 CIRCUMSTANCES OF THE PRESENT CASE AND THE ISSUE INV OLVED IN THE PRESENT APPEAL, WE ARE OF THE VIEW THAT NO USEFUL PURPOSE W OULD BE SERVED TO ISSUE NOTICE AGAIN AND AGAIN TO THE ASSESSEE, THERE FORE, WE ARE DECIDING THE PRESENT APPEAL EXPARTE QUA ASSESSEE, AFTER HEAR ING THE LD. DR AND PERUSING THE RECORDS. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS, ESPECIALLY THE ORDER OF THE LD. CIT(A). WE FIND THAT LD. FIRST APPELLATE AUTHORITY HAS ELABORATELY DISCUSSED AND ADJUDICATED THE ISSUE VID E PARA NO. 2.1 AT PAGE NO. 4 TO 7. THE SAID RELEVANT FINDINGS OF THE LD. C IT(A) ARE REPRODUCED AS UNDER:- 2.1 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND THE SUBMISSIONS MADE BY THE COUNSEL OF THE APPELLAN T. THE PERUSAL OF THE FACTS MAKE IT CLEAR THAT THE COMPANY IS DEVELOPING GROUP HOUSING PROJECTS IN SECTOR-89, FAR IDABAD. THE FLATS WERE SOLD TO THE BUYERS ON THE PAYMENT PL AN LINKED TO THE VARIOUS STAGES OF THE CONSTRUCTION. THE ALL OTTEES OF THE FLATS WERE NOT MAKING THE PAYMENTS ON THE DUE D ATES AS STIPULATED IN THE AGREEMENT. THE APPELLANT CALCULAT ED THE INTEREST ON THE DELAYED PAYMENTS AND SERVED THE DE BIT NOTES TO THE ALLOTTEES FOR NOT MAKING THE PAYMENT IN TI ME AS STIPULATED IN THE AGREEMENTS. THE APPELLANT BOOKED THE INCOME OF RS. 1,09,64,450/-ON ACCOUNT OF INTEREST I N THE FINANCIAL YEAR 200'8-09 TO BE REALISED FROM THE ALL OTTEE'S. THE 5 CUSTOMERS REFUSED TO PAY THE INTEREST AND THREATENE D TO CANCEL THE BOOKINGS IN THE EVENT THE COMPANY CHARGE S THE INTEREST. THE COMPANY CANCELLED THE RECOVERY OF THE INTEREST IN ORDER TO REALISE THE PRINCIPAL AMOUNTS UNDER THE CIRCUMSTANCES, THE COMPANY HAD TO REVERSE THE INCOM E BY DEBITING THE PROFIT AND LOSS ACCOUNT IN THE FINANCI AL YEAR 2009-10. IN CIT VS. SHOORJI VALLABHDAS & CO. REPORTED IN 46 ITR 144 (SC1 HELD AS UNDER:- ' INCOME-TAX IS A LEVY ON INCOME. NO DOUBT, THE IT ACT TAKES INTO ACCOUNT TWO POINTS OF TIME AT WHICH THE LIABIL ITY TO TAX IS ATTRACTED, VIZ., THE ACCRUAL OF THE INCOME OR ITS R ECEIPT; BUT THE SUBSTANCE OF THE MATTER IS THE INCOME. IF INCOM E DOES NOT RESULT AT ALL, THERE CANNOT BE A TAX, EVEN THOUGH I N BOOK- KEEPING, AN ENTRY IS MADE ABOUT A 'HYPOTHETICAL INC OME', WHICH DOES NOT MATERIALISE. WHERE INCOME HAS, IN FA CT, BEEN RECEIVED AND IS SUBSEQUENTLY GIVEN UP IN SUCH CIRCU MSTANCES THAT IT REMAINS THE INCOME OF THE RECIPIENT, EVEN T HOUGH GIVEN UP, THE TAX MAY BE PAYABLE. WHERE, HOWEVER, THE INC OME CAN BE SAID NOT TO HAVE RESULTED AT ALL, THERE IS OBVIO USLY NEITHER ACCRUAL NOR RECEIPT OF INCOME, EVEN THOUGH AN ENTRY TO THAT EFFECT MIGHT, IN CERTAIN CIRCUMSTANCES,' HAVE BEEN MADE IN THE BOOKS OF ACCOUNT. THE AGREEMENTS WITHIN THE PREVIOU S YEAR 6 REPLACED THE EARLIER AGREEMENTS, AND ALTERED THE RA TE IN SUCH A WAY AS TO MAKE THE INCOME DIFFERENT FROM WHAT HAD BEEN ENTERED IN THE BOOKS OF ACCOUNT. A MERE BOOK-KEEPIN G ENTRY CANNOT BE INCOME, UNLESS INCOME HAS ACTUALLY RESULT ED, AND IN THE PRESENT CASE, BY THE CHANGE OF THE TERMS THE IN COME WHICH ACCRUED AND WAS RECEIVED CONSISTED OF THE LES SER AMOUNTS AND NOT THE LARGER. THIS WAS NOT A GIFT BY THE ASSESSEE FIRM TO THE MANAGED COMPANIES. THE REDUCTI ON WAS A PART OF THE AGREEMENT ENTERED INTO BY THE ASSESSE E FIRM TO SECURE A LONG-TERM MANAGING AGENCY ARRANGEMENT FOR THE TWO COMPANIES WHICH IT HAD FLOATED.-CIT VS. SHOORJI VAL LABHDAS & CO.(1959) 36 ITR 25 (80M) : TC39R.740 AFFIRMED; CIT VS. CHAMANLAL MANGALDAS & CO.(1960) 39 ITR 8 (SC) : TC3 9R.745 APPLIED.' IN CIT VS BOKARO STEEL LTD. 2361TR 315 {SC} HELD AS UNDER: 'THE ASSESSEE HAD SHOWN IN ITS BOOKS OF ACCOUNTS A SUM OF RS. 7,39,232 AS INCOME FROM INTEREST RECEIVED FROM H. LTD. FOR THE EIGHT LOCOMOTIVES SUPPLIED BY THE ASSESSEE-COMP ANY TO THEM. THE ENTRY WAS REVERSED IN THE NEXT YEAR SINCE H LTD. HAD REPLACED THE EIGHT LOCOMOTIVES LENT BY THE ASSE SSEE- COMPANY TO IT BY NEW ONES. THE ENTIRE NATURE OF THE TRANSACTION WAS CHANGED BETWEEN THE PARTIES. THERE WAS A 7 RESOLUTION OF THE ASSESSEE-COMPANY IN THIS REGARD A ND THE INCOME FROM INTEREST DID NOT RESULT AT ALL AS THE O RIGINAL AGREEMENT CEASED TO BE OPERATIVE AB INITIO. THE ENT RY IN THE BOOKS WHICH WAS MADE WAS ABOUT A HYPOTHETICAL INCOM E WHICH DID NOT MATERIALISE AND THE ENTRY WAS REVERSE D IN THE NEXT YEAR. THE ENTRY WHICH WAS INITIALLY MADE AS IN TEREST WAS REVERSED THE NEXT YEAR BECAUSE IN 'FACT THE NATURE OF THE TRANSACTION WAS CHANGED AND THE ASSESSEE DID NOT RE CEIVE ANY REAL INCOME. THE HIGH COURT HAS, THEREFORE, RIGHTLY HELD THIS ENTRY AS NOT REFLECTING THE REAL INCOME OF THE ASSE SSEE AND HENCE NOT EXIGIBLE TO INCOME-TAX.-BOKARO STEEL LTD. VS. CIT (1988) 67 CTR (PAT) 281 : (1988) 170 ITR 545 (PAT) : TC 38R.1012 AND CIT VS. BOKARO STEEL LTD. (1988) 67 CT R (PAT) 138 : (1988) 170 ITR 522 (PAT) : TC 38R.1011 AFFIRM ED; GODHRA ELECTRICITY CO. LTD. VS. CIT (1997) 139 CTR (SQ 564 : (1997) 225 ITR 746 (SC) APPLIED.' THE INCOME TAX ACT TAKES INTO ACCOUNT TWO POINTS OF TIME AT WHICH THE LIABILITY TO TAX IS ATTRACTED, TH E ACCRUAL OF INCOME OR ITS RECEIPT, BUT THE SUBSTANCE OF THE MAT TER IS THE INCOME. IF THE INCOME DOES NOT RESULT AT ALL, THERE CANNOT BE A TAX, EVEN THOUGH IN ACCOUNTS, AN ENTRY IS MADE ABOU T THE 'HYPOTHETICAL INCOME' WHICH DOES NOT MATERIALISE. W HERE INCOME HAS, INFACT, BEEN RECEIVED AND IS SUBSEQUENT LY GIVEN UP, IN SUCH CIRCUMSTANCES IT REMAINS THE INCOME OF THE 8 RECIPIENT, EVEN THOUGH GIVEN UP, THE TAX MAY BE PAY ABLE. WHERE, HOWEVER, THE INCOME CAN BE SAID NOT TO HAVE RESULTED AT ALL, THERE IS OBVIOUSLY NEITHER ACCRUAL NOR RECE IPT OF INCOME, EVEN THOUGH AN, ENTRY TO THAT EFFECT MAY, IN CERTAI N CIRCUMSTANCES, HAVE BEEN MADE IN THE BOOKS OF ACCOU NTS. IN THE INSTANT EASEL THE APPELLANT RAISED THE DEBIT NO TES TO THE ALLOTTEE'S AND BOOKED THE INCOME IN THE BOOKS OF AC COUNTS. THE ENTRY WHICH WAS INITIALLY MADE AS INTEREST WAS REVERSED IN THE NEXT YEA R BECAUSE IN FACT THE NATURE OF THE TR ANSACTION WAS CHANGED AND THE ASSESSEE DID NOT RECEIVE ANY RE AL INCOME. THE ADDITION OF RS.1,09,64,450/-MADE BY THE ASSESSING OFFICER IS THEREFORE, DELETED. 7. ON GOING THROUGH THE AFORESAID FINDINGS OF THE LD. CIT(A), WE FIND THAT THE ASSESSEE COMPANY IS DEVELOPING GROUP HOUSING PROJECTS IN SECTOR-89, FARIDABAD. THE FLATS WERE SOLD TO THE BU YERS ON THE PAYMENT PLAN LINKED TO THE VARIOUS STAGES OF THE CONSTRUCTI ON. THE ALLOTTEES OF THE FLATS WERE NOT MAKING THE PAYMENTS ON THE DUE D ATES AS STIPULATED IN THE AGREEMENT. THE ASSESSEE CALCULATED THE INTEREST ON THE DELAYED PAYMENTS AND SERVED THE DEBIT NOTES TO THE ALLOTT EES FOR NOT MAKING THE PAYMENT IN TIME AS STIPULATED IN THE AGREEMENTS . THE ASSESSEE BOOKED THE INCOME OF RS. 1,09,64,450/-ON ACCOUNT OF INTEREST IN THE FINANCIAL YEAR 200'8-09 TO BE REALISED FROM THE ALL OTTEE'S. THE CUSTOMERS REFUSED TO PAY THE INTEREST AND THREATENED TO CANCE L THE BOOKINGS IN THE EVENT THE COMPANY CHARGES THE INTEREST. THE COMPANY CANCELLED THE 9 RECOVERY OF THE INTEREST IN ORDER TO REALISE THE PR INCIPAL AMOUNTS UNDER THE CIRCUMSTANCES, THE COMPANY HAD TO REVERSE THE I NCOME BY DEBITING THE PROFIT AND LOSS ACCOUNT IN THE FINANCIAL YEAR 2 009-10. 7.1 WE FURTHER FIND THAT THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. SHOORJI VALLABHDAS & CO. REPORTED IN 46 ITR 144 (SC) HELD AS UNDER:- ' INCOME-TAX IS A LEVY ON INCOME. NO DOUBT, THE IT ACT TAKES INTO ACCOUNT TWO POINTS OF TIME AT WHICH THE LIABIL ITY TO TAX IS ATTRACTED, VIZ., THE ACCRUAL OF THE INCOME OR ITS R ECEIPT; BUT THE SUBSTANCE OF THE MATTER IS THE INCOME. IF INCOM E DOES NOT RESULT AT ALL, THERE CANNOT BE A TAX, EVEN THOUGH I N BOOK- KEEPING, AN ENTRY IS MADE ABOUT A 'HYPOTHETICAL INC OME', WHICH DOES NOT MATERIALISE. WHERE INCOME HAS, IN FA CT, BEEN RECEIVED AND IS SUBSEQUENTLY GIVEN UP IN SUCH CIRCU MSTANCES THAT IT REMAINS THE INCOME OF THE RECIPIENT, EVEN T HOUGH GIVEN UP, THE TAX MAY BE PAYABLE. WHERE, HOWEVER, THE INC OME CAN BE SAID NOT TO HAVE RESULTED AT ALL, THERE IS OBVIO USLY NEITHER ACCRUAL NOR RECEIPT OF INCOME, EVEN THOUGH AN ENTRY TO THAT EFFECT MIGHT, IN CERTAIN CIRCUMSTANCES,' HAVE BEEN MADE IN THE BOOKS OF ACCOUNT. THE AGREEMENTS WITHIN THE PREVIOU S YEAR REPLACED THE EARLIER AGREEMENTS, AND ALTERED THE RA TE IN SUCH A WAY AS TO MAKE THE INCOME DIFFERENT FROM WHAT HAD BEEN ENTERED IN THE BOOKS OF ACCOUNT. A MERE BOOK-KEEPIN G ENTRY 10 CANNOT BE INCOME, UNLESS INCOME HAS ACTUALLY RESULT ED, AND IN THE PRESENT CASE, BY THE CHANGE OF THE TERMS THE IN COME WHICH ACCRUED AND WAS RECEIVED CONSISTED OF THE LES SER AMOUNTS AND NOT THE LARGER. THIS WAS NOT A GIFT BY THE ASSESSEE FIRM TO THE MANAGED COMPANIES. THE REDUCTI ON WAS A PART OF THE AGREEMENT ENTERED INTO BY THE ASSESSE E FIRM TO SECURE A LONG-TERM MANAGING AGENCY ARRANGEMENT FOR THE TWO COMPANIES WHICH IT HAD FLOATED.-CIT VS. SHOORJI VAL LABHDAS & CO.(1959) 36 ITR 25 (80M) : TC39R.740 AFFIRMED; CIT VS. CHAMANLAL MANGALDAS & CO.(1960) 39 ITR 8 (SC) : TC3 9R.745 APPLIED.' 7.2 WE FURTHER NOTE THAT THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS BOKARO STEEL LTD. 2361TR 315 {SC} HA S HELD AS UNDER: 'THE ASSESSEE HAD SHOWN IN ITS BOOKS OF ACCOUNTS A SUM OF RS. 7,39,232 AS INCOME FROM INTEREST RECEIVED FROM H. LTD. FOR THE EIGHT LOCOMOTIVES SUPPLIED BY THE ASSESSEE-COMP ANY TO THEM. THE ENTRY WAS REVERSED IN THE NEXT YEAR SINCE H LTD. HAD REPLACED THE EIGHT LOCOMOTIVES LENT BY THE ASSE SSEE- COMPANY TO IT BY NEW ONES. THE ENTIRE NATURE OF THE TRANSACTION WAS CHANGED BETWEEN THE PARTIES. THERE WAS A RESOLUTION OF THE ASSESSEE-COMPANY IN THIS REGARD A ND THE INCOME FROM INTEREST DID NOT RESULT AT ALL AS THE O RIGINAL AGREEMENT CEASED TO BE OPERATIVE AB INITIO. THE ENT RY IN THE 11 BOOKS WHICH WAS MADE WAS ABOUT A HYPOTHETICAL INCOM E WHICH DID NOT MATERIALISE AND THE ENTRY WAS REVERSE D IN THE NEXT YEAR. THE ENTRY WHICH WAS INITIALLY MADE AS IN TEREST WAS REVERSED THE NEXT YEAR BECAUSE IN 'FACT THE NATURE OF THE TRANSACTION WAS CHANGED AND THE ASSESSEE DID NOT RE CEIVE ANY REAL INCOME. THE HIGH COURT HAS, THEREFORE, RIGHTLY HELD THIS ENTRY AS NOT REFLECTING THE REAL INCOME OF THE ASSE SSEE AND HENCE NOT EXIGIBLE TO INCOME-TAX.-BOKARO STEEL LTD. VS. CIT (1988) 67 CTR (PAT) 281 : (1988) 170 ITR 545 (PAT) : TC 38R.1012 AND CIT VS. BOKARO STEEL LTD. (1988) 67 CT R (PAT) 138 : (1988) 170 ITR 522 (PAT) : TC 38R.1011 AFFIRM ED; GODHRA ELECTRICITY CO. LTD. VS. CIT (1997) 139 CTR (SQ 564 : (1997) 225 ITR 746 (SC) APPLIED.' 7.3 WE FURTHER OBSERVE THAT THE INCOME TAX ACT TAKE S INTO ACCOUNT TWO POINTS OF TIME AT WHICH THE LIABILITY TO TAX IS ATT RACTED, THE ACCRUAL OF INCOME OR ITS RECEIPT, BUT THE SUBSTANCE OF THE MAT TER IS THE INCOME. IF THE INCOME DOES NOT RESULT AT ALL, THERE CANNOT BE A TA X, EVEN THOUGH IN ACCOUNTS, AN ENTRY IS MADE ABOUT THE 'HYPOTHETICAL INCOME' WHICH DOES NOT MATERIALISE. WHERE INCOME HAS, INFACT, BEEN REC EIVED AND IS SUBSEQUENTLY GIVEN UP, IN SUCH CIRCUMSTANCES IT REM AINS THE INCOME OF THE RECIPIENT, EVEN THOUGH GIVEN UP, THE TAX MAY BE PAYABLE. WHERE, HOWEVER, THE INCOME CAN BE SAID NOT TO HAVE RESULTE D AT ALL, THERE IS OBVIOUSLY NEITHER ACCRUAL NOR RECEIPT OF INCOME, EV EN THOUGH AN, ENTRY TO THAT EFFECT MAY, IN CERTAIN CIRCUMSTANCES, HAVE BEE N MADE IN THE BOOKS OF 12 ACCOUNTS. IN THE INSTANT CASE THE ASSESSEE RAISED T HE DEBIT NOTES TO THE ALLOTTEE'S AND BOOKED THE INCOME IN THE BOOKS OF AC COUNTS. THE ENTRY WHICH WAS INITIALLY MADE AS INTEREST WAS REVERSED I N THE NEXT YEAR BECAUSE IN FACT THE NATURE OF THE TRANSACTION WAS C HANGED AND THE ASSESSEE DID NOT RECEIVE ANY REAL INCOME. THEREFORE , THE ADDITION OF RS.1,09,64,450/- MADE BY THE ASSESSING OFFICER WAS RIGHTLY DELETED, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, H ENCE, WE UPHOLD THE ACTION OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AN D DISMISS THE GROUND RAISED BY THE REVENUE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED ON 07/06/2017. SD/- SD/- (O.P. KANT) (H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 07/06/2017 'SRBHATNAGAR' COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES