DCIT Vs Delhi Transco Ltd (ITAT Delhi)
No Income Without Certainty – Uncertain Receipts Can Be Taxed Only on Realisation – Tribunal Deletes ₹16.61 Cr Addition
Delhi Tribunal dealt with Revenue’s appeal against CIT(A)’s deletion of reassessment addition of ₹16.61 crores for A.Y. 2012-13
Assessee, a Govt. of NCT Delhi undertaking, filed return declaring nil income & book profit of ₹1005.33 crores u/s 115JB. Original assessment was completed u/s 143(3) on 23.03.2015. Subsequently, AO reopened assessment u/s 147 on 31.03.2019, alleging escapement of income of ₹16.61 crores being accrued credit bills from NHPC & THDC. AO held that since assessee follows mercantile system, such accrual had to be taxed in A.Y. 2012-13. Accordingly, reassessment order dated 23.12.2019 added ₹16.61 crores.
On appeal, CIT(A) deleted the addition, observing that credit bills pertained to power purchase transactions of pre-2007 period & there was uncertainty of realisation even after a decade. It was noted that only ₹23 lakhs was actually received in FY 2017-18 & balance ₹16.35 crores remained unrealised. Relying on AS-9 (Revenue Recognition) & judicial precedents, CIT(A) held that recognition could be postponed till actual receipt.
Revenue argued before Tribunal that since assessee maintains mercantile system, income must be taxed on accrual, citing CIT(A)’s contrary finding for A.Y. 2015-16. However, Tribunal upheld CIT(A)’s reasoning that accrual presupposes reasonable certainty of collection, which was absent here. Mere issue of credit notes did not create enforceable accrual of income.
