DCIT, CIRCLE- 23(2), New Delhi V. Sistema Shyam Teleservices Ltd, New Delhi

ITA 4825/DEL/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 2637 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Appeal Filed On: 28-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAKASH DUBEY
• Assessee Lawyers: ALOK VASANT

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SH. BHAVNESH SAINI, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 4825/DEL/2017 : ASSTT. YEAR : 2013-14 DCIT, CIRCLE-23(2), NEW DELHI VS SISTEMA SHYAM TELESERVICES LTD., A-60, NARAINA INDL. AREA-1, NEW DELHI-110028 (APPELLANT) (RESPONDENT) PAN NO. AACCS1709H ASSESSEE BY : SH. ALOK VASANT, CA REVENUE BY : SH. PRAKASH DUBEY, SR. DR DATE OF HEARING: 11.02.2021 DATE OF PRONOUNCEMENT: 22.02.2021 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE A GAINST THE ORDER OF THE LD. CIT(A)-28, NEW DELHI DATED 22. 05.2017. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE REVENU E: '1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 20,26,04,801/- MADE BY THE A.O ON ACCOUNT OF UN ACCRUED INCOME IN RESPECT OF SERVICE REVENUE EARNED ON PREPAID CARDS ON WHICH THE TALK TIME UNUSED AT T HE END OF THE FINANCIAL YEAR DESPITE THE FACTS THAT TH E COMPANY HAS NOT REPORTED ANY CHANGE IN THE ACCOUNTING POLICY REGARDING THE TREATMENT OF UN ACCRUED REVENUE FROM SALE OF PREPAID CARDS. 2. WHETHER THE REVENUE RECOGNITION IN RESPECT OF UNUTILIZED TALK TIME OF PRE-PAID CARDS, REALIZED AN D ITA NO. 4825/DEL/2017 SISTEMA SHYAM TELESERVICES LTD. 2 AVAILABLE WITHOUT IN CUMBRANCE, CAN BE POSTPONED TO THE PERIOD WHEN SAME WOULD BE RENDERED? 3. 'WHETHER THE INCOME DID NOT ACCRUE TO THE RESPONDENT U/S 24(2) OF THE ACT, QUA THE PREPAID CARDS DURING RELEVANT YEAR WHEN IT RECEIVED THE ADVANCE CHARGES FROM SUBSCRIBERS THROUGH THE APPOINTED DEALERS?' 3. HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERU SED THE MATERIAL AVAILABLE ON RECORD. 4. THE ISSUE DEALS WITH TAXATION OF UN-ACCRUED INCO ME. 5. ACCORDING TO THE INTEGRATED SOFTWARE FOR BILLING & ACCOUNTING, THE REVENUE IN RESPECT OF SERVICES THAT HAVE BEEN PROVIDED IN THE FORM OF TALK TIME TO THE SUBSCRIBER S AUTOMATICALLY RECOGNIZES IN THE ACCOUNTS OF PREPAID & POSTPAID CARDS. 6. THE PREPAID CARDS HAD TWO PARTS, NAMELY ACTIVATI ON CHARGE AND TALK TIME CHARGE. WHILE THE ACTIVATION CHARGES ARE IMMEDIATELY RECOGNIZE AS REVENUES, THE TALK TIME CH ARGES ARE RECOGNIZED ON THE BASIS OF ACTUAL USE WHICH IS A NO RMAL PRACTICE FOLLOWED AS PER THE TERMS WITH DOT. THE UNUTILIZED BALANCE ON THE PREPAID CARD IS TREATED AS ADVANCE IN THE BALAN CE SHEET AND RECOGNIZED IN THE SUBSEQUENT YEAR WHENEVER THE TALK TIME WAS ACTUALLY USED. 7. THE ISSUE HAS BEEN ADJUDICATED BY THE CO-ORDINAT E BENCH OF TRIBUNAL ACCEPTING THE ACCOUNTING POLICY CONSIST ENTLY FOLLOWED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2003-04, 2 004-05 & 2009-10. THE MATTER HAS REACHED THE HONBLE JURISDI CTIONAL HIGH COURT WHEREIN THE DECISION OF THE HIGH COURT HAS BE EN ITA NO. 4825/DEL/2017 SISTEMA SHYAM TELESERVICES LTD. 3 REAFFIRMED. (101 TAXMAN 218) FURTHER, THE HONBLE S UPREME COURT VIDE ORDER DATED 12.07.2019 (108 TAXMAN 333) DISMISSED THE SLP FILED BY THE REVENUE. 8. HENCE, THE APPEAL OF THE REVENUE FOR THE INSTANT YEAR INVOLVING THE SIMILAR ISSUE IS LIABLE TO BE DISMISS ED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/02/2021. SD/- SD/- (BHAVNESH SAINI) (DR. B. R. R. KUMAR) JUDICIAL MEMBER ACCOUN TANT MEMBER DATED: 22/02/2021 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR