Accrual of income on Amount received on sale of prepaid cards to the extent of unutilized talk time

COMMISSIONER OF INCOME TAX vs. SHYAM TELELINK LTD.

HIGH COURT OF DELHI

Income—Accrual—Amount received on sale of prepaid cards to the extent of unutilized talk time

—Every receipt is not income, for income is something which the assessee is legally entitled to appropriate to the exclusion of the giver

—However, contention of the Revenue that the prepaid amount once paid and received by the assessee was forgone by the subscriber and accordingly appropriated by the assessee is substantially correct

—At the same time, the payment was an advance and was subject to the assessee providing basic telecom service as promised, failing which the unutilized amount was required to be refunded to the pre-paid subscribers

—If the assessee had failed to perform the services as promised, it would be liable and under an obligation to refund the advance payment received

—Tribunal was therefore justified in holding that the amount received on sale of prepaid cards to the extent of unutilized talk time did not accrue as income in the year of sale