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Section 145 of the Income-tax Act, 1961 - Method of accounting - System of accounting Where assessee, maintaining books both on mercantile and receipt basis, was following receipt basis for accounting for income from lease rent and Tribunal deleted addition of lease rent income, made on accrual basis, holding that no income had been earned, as there was no real income, deletion of addition was justified Where the Tribunal deleted the addition made on account of income from lease rent on accrual basis: Held that the assessee was maintaining book of account in both manners viz. on receipt basis and on mercantile basis. For lease and hire income, the receipt basis was adopted. The Tribunal also observed that only the real income is to be taxed, and that the same income cannot be taxed twice. Realities of life have to be considered while arriving at the taxable income. Therefore, it was found that to arrive at a real income in the case in hand, the accrual basis could not be a justified one. It remained only a question of fact as to whether any income was derived by the assessee in the relevant period so as to be liable to tax, and the Tribunal had considered, that tax liability could not be attracted merely on the basis of entries in the book-keeping unless income accrued. Thus, in substance the finding of fact was to the effect that the assessee did not earn the income which had been deleted by the Tribunal by the impugned order. The Tribunal was justified in doing so. K.K. Bissa for the Appellant. Anjay Kothari for the Respondent. JUDGMENT This appeal has been filed by the revenue against the of the Tribunal dated 19-11-2003, Annexure. 3, deciding two appeals for the same assessment year 1998-99. Appeal No. 138 having been filed by the assessee and Appeal No. 161 having been filed by the revenue. 2. This appeal was admitted on 12-7-2004, while framing the following substantial questions of law : "(i) Whether on the facts and in the circumstances of the case and in law, the learned Tribunal was justified in deleting the addition of Rs. 17,35,958 on account of income from lease rent made by the assessing officer and as upheld by the learned Commissioner (Appeals)…

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