ACIT Vs Suryanarayana Iyer (ITAT Chennai)
ITAT Chennai held that although the assessee company was following the mercantile system of accounting, only real income could be brought to tax. Hypothetical income cannot be taxed. Hence, appeal of revenue dismissed.
Facts- The assessee is an individual who derives income providing legal assistance to lawyers, through his sole proprietary-ship business in the name and style of “Cyber Law Journal”. The RoI was selected for scrutiny and the AO noted that the assessee had entered into an agreement with M/s.Lexis Nexis Butterworths India on 19.05.2011 for providing judgments of various Courts/Tribunals. And for the said service, the assessee was to receive total compensation of Rs.10,49,86,877/- and out of which, the assessee has received only Rs.7,35,00,000/- in AY 2012-13 and during the relevant AY 2013-14, the assessee didn’t receive the balance amount of Rs.3,14,86,877/- but received only Rs.1,13,09,280/-.
AO was of the view that as per the agreement between the assessee and M/s. Lexis Nexis for the services rendered, the assessee ought to have received Rs.3,14,86,877/- and since the assessee has only offered Rs.1,13,09,280/- during the year under consideration from M/s. Lexis Nexis, the balance amount of Rs.2,01,77,597/- needs to be added by the AO as income accrued to the assessee since it was following mercantile system of accounting and added it.
