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SUPREME COURT
R. F. Nariman, S. Ravindra Bhat, JJ
Revenue – Appellant
Versus
M/s Excel Industries Limited – Respondent
| Table of Content |
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| 1. the timing of income recognition under tax law is contingent on the realization of revenue. (Para 2 , 3) |
| 2. legal precedent establishes entitlement to tax on actual benefits received. (Para 5 , 8 , 9 , 11) |
| 3. the courts clarify that hypothetical income does not constitute taxable income. (Para 15 , 17 , 21) |
| 4. judicial stability in tax matters respects previously settled legal principles. (Para 27 , 31) |
1. Leave granted in the Special Leave Petitions.
2. The question for consideration in all these appeals is whether the benefit of an entitlement to make duty free imports of raw materials obtained by the assessee through advance licences and duty entitlement pass book issued against export obligations is income in the year in which the exports are made or in the year in which the duty free imports are made.
3. In our opinion, the income does not accrue in the year of export but in the year in which the imports are made.
4. The facts pertaining to Civil Appeal No. 125 of 2013 (M/s Excel Industries Limited for the Assessment Year 2001-02) are referred to for convenience.
5. The assessee maintains its accounts on a mercantile basis. In its return (revised on 31st March 2003)
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