| COURT: | Bombay High Court |
| CORAM: | B. P. Colabawalla J, S. C. Dharmadhikari J |
| SECTION(S): | 28, 4, 56 |
| GENRE: | Domestic Tax |
| CATCH WORDS: | hypothetical income, matching concept, real income theory, securitization of lease receivables |
| COUNSEL: | Niraj Sheth |
| DATE: | September 17, 2018 (Date of pronouncement) |
| DATE: | September 19, 2018 (Date of publication) |
| AY: | 2002-03, 2003-04 |
| FILE: | Click here to view full post with file download link |
| CITATION: | |
| Gain arising to the assessee on account of securitization of lease receivables and credited to the Profit & Loss Account is a taxable receipt in the year of securitisation as per T. V. Sunderam Iyengar 222 ITR 344 (SC). Argument that the entry represents hypothetical income and not real income and that the amount is assessable in subsequent years on receivable basis is not correct. Question of whether income can also be deferred to subsequent years under the "Matching concept" as per Taparia Tools 260 ITR 102 (Bom)/ 372 ITR 605 (SC) left open | |
Thus, if the assessee claims the expenditure in that year, the Department cannot deny it. However, in a case where the assessee himself wants to spread the expenditure over a period of ensuing years, it can be allowed only if the principle of the “matching concept” is satisfied, which up to now has been restricted only to cases of debentures. Whether the ‘matching concept’ would also apply to “income” is wholly a different matter and which would be considered in an appropriate case, as and when it so arises, provided the factual foundation is laid for the same.
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