COMMISSIONER OF INCOME TAX-X Vs. PARAMJEET LUTHRA

JUDGEMENT

(1.) Present appeal relates to assessment year 2007-08 and impugns order dated 7th February, 2014, passed by the Income Tax Appellate Tribunal ("Tribunal", for short).

(2.) The respondent-assessee an individual had shown returned income of Rs.2,85,924/-, for the assessment year in question. Assessing Officer, vide its order dated 24.12.1999, had made additions and enhanced the income to Rs.65,63,039/- on various counts. The, present appeal is concerned with addition of Rs.60,70,492/- made under Section 68 of the Income Tax Act, 1961 ("Act", for short).

(3.) The Commissioner of Income Tax (Appeals) did not agree and reversed the aforesaid finding. He referred to the fact that the respondent-assessee had done liaisoning work for supply of medical equipments. Insofar as sale and purchase were concerned, the transactions were between the foreign suppliers and the concerned hospitals. The respondent-assessee's work was confined to installation and maintenance of the medical equipments. The assessee had entered into an annual maintenance contracts and it was the obligation of the respondent-assessee to maintain the said equipments for the first 5 years etc. In initial year the cost of maintenance was low, but would increase in the subsequent years with wear and tear and as the equipments got old. Accordingly, the total maintenance contract income to the extent 39% was allocated as 5% for the first year, 7% for the second year, 8% for the third year, 9% for the fourth year and l0% for the fifth year. For the assessment year 2007-08, no income or receipt from this 39% was allocated on the ground that the medical equipments were installed at the end of the said year, hence would not entail cost of maintenance in the said year. The details with regard to installation of equipments were set out and stand mentioned in tabulated form in paragraph 5.1 of the first appellate order. In paragraph 5.2, the assessee's stand that she had shown the deferred maintenance income in the subsequent assessment years 2008-09 to 2012-13, was recorded and the total quantum of Rs.55,12,088/- was bifurcated and shown as income, as per the following table:- <FRM>JUDGEMENT_325_LAWS(DLH)9_2014_1.html</FRM>