FGP LTD Vs. CIT

JUDGEMENT

(1.) Admit on the following questions :

(2.) The assessee had a royalty agreement with M/s. UP Twiga Fibre Glass Limited (UPT) under which certain amounts were payable to the assessee. The record would, however, indicate that no income has been received by the appellant till date pursuant to the royalty agreement as there is dispute between the parties and arbitration proceedings are being proceeded with. It is pointed out that when the parties have been referred to arbitration pursuant to suit filed by UPT before this court, seeking relief that no amount was due and payable by them to the assessee herein.

(3.) The learned CIT had held in favour of the appellant that no real income had accrued in favour of the assessee relying on the judgment in Godhra Electricity Company Ltd.(supra). The revenue aggrieved, preferred an appeal. The assessee relied on the judgment of the Supreme Court in Godhra Electricity Co. Ltd. Vs. Commissioner of Income Tax, 225 ITR 746. The tribunal distinguished the said judgment on the ground that on the facts it was not applicable and consequently allowed the appeal preferred by the revenue by holding that once the assessee adopted the mercantile system even if the amount is not received, it will be taxable in Assessment year for which it were payable. Hence, the present appeal.