ORDER : BHARGAV D. KARIA, J. 1 This appeal is admitted by order dated 16.01.2012 on the following substantial question of law: “Whether, in the facts and under the circumstances of the case, the ITAT was right in holding that the membership fees of Rs.8,14,500/- received by the appellant was revenue receipt taxable in the hands of the appellant as income for the year under consideration.?” 2 This appeal is filed being aggrieved by the order dated 28.09.2007 passed by the Income-tax Appellate Tribunal (for short “the ITAT”) in ITA No.4020/Ahd/2002 for the Assessment Year 1998-99. 3 The appellant filed Return of Income of Rs.‘Nil’ on 25.02.1999. The Assessment Order under section 143(3) was passed assessing the income at Rs.18,24,000/- of which membership fees treated as Revenue income was of Rs.81,45,000/-. 4 Being aggrieved, the appellant preferred an appeal before the CIT(Appeals), who partly allowed the appeal by order dated 08.10.2002 dismissing the appeal of the appellant regarding addition of membership fees and partly allowed the unexplained credit under section 68. 4.1 Therefore, being aggrieved by the order passed by the CIT(Appeals), both the appellant and the respondent preferred cross appeals before the ITAT. The ITAT by the impugned order dated 29.09.2007 dismissed both the appeals. 4.2 The appellant preferred an Appeal No. 4020/Ahd/2002 before the tribunal. This court admitted the appeals only on the ground of membership fees. 5 Learned Advocate Mr.B.S.Soparkar for the appellant submitted that the Tribunal by impugned order relating to the confirmation of addition of Rs.8,14,500/- in respect of membership fees received in advance by the appellant relied upon the decision of the Tribunal in ITA No. 1270/Ahd/2007 dated 19.12.2009 in the appellant’s own case for the Assessment Year 1997-98 and relying upon the decision of the Co-ordinate Bench dismissed the appeal of the appellant on this ground. 5.1 It was submitted that the appellant preferred an appeal being Tax Appeal No. 113 of 2004 before this Court challenging the order of the Tribunal in ITA No. 1270/Ahd/2001 for the Assessment Year 1997-98 and the Tax Appeal No. 113 of 2004 was allowed by this Court by order dated 18.11.2014. It was, therefore, submitted that this appeal is also required to be allowed as per the order passed in Tax Appeal No.113 of 2004. It was, therefore, submitted that this appeal is also required to be allowed as per the order passed in Tax Appeal No.113 of 2004. 5.2 On the other hand learned Senior Standing Counsel Mr.Sanghani could not controvert the fact that the Tax Appeal No.113 of 2004 was arising out of the ITA No. 1270 of 2001 for the Assessment Year 1997-98 in case of the appellant which was followed by the Tribunal to dismiss the ground of advance membership fees in the Assessment Year 1998-99. 6 Considering the above submissions, it would be germane to refer to the order passed by this Court in case of the appellant for Assessment Year 1997-98 in Tax Appeal No.113 of 2004, which reads as under: “5 We have heard learned advocates for both the sides and perused the orders passed by the Tribunal. It is pertinent to note that the assessee company which was established with the object of providing recreation facilities to its members by way of water park had taken membership fees from the members accordingly. The assessee however did not resume the water park till the end of the year. The Assessing Officer treated this amount as revenue receipt. The CIT(A)confirmed the said entry. 6 The Tribunal has observed in para 9 of the impugned order as under: “9. We have heard the parties and considered the rival submissions. Looking to the facts and circumstances of the case, we are of the view that the assessee has received the money by way of membership fees and assessee has not started or commenced his business. The AO has treated this amount as revenue receipt. We have heard the parties and considered the rival submissions. Looking to the facts and circumstances of the case, we are of the view that the assessee has received the money by way of membership fees and assessee has not started or commenced his business. The AO has treated this amount as revenue receipt. We find that this amount is non-refundable and, therefore, in our view the CIT(A) is justified in holding that the membership fees is nothing but a revenue receipt and such income has to be brought in profit and loss account of the company Therefore, our interference is not required with the order of the CITA() Hence, the appeal is dismissed on this ground" 6.1 The Apex Court in the case of Excel Industries Ltd (supra) has observed as under: “This Court further held, and in our opinion more importantly, that income accrues when there "arises a corresponding liability of the other party from whom the income becomes due to pay that amount." It follows from these decisions that income accrues when it becomes due but it must also be accompanied by a corresponding liability of the other party to pay the amount. Only then can it be said that for the purposes of taxability that the income is not hypothetical and it has really rea accrued to the assessee. In so far as the present case is concerned, even if it is assumed that the assessee was entitled to the benefits under the advance licences as well as under the duty entitlement pass book, there was no corresponding liability on the customs authorities to pass on the benefit of duty free imports to the assessee until the goods are actually imported and made available for clearance. The benefits represent, at best, a hypothetical income which may or may not materialise and its money value is therefore not the income of the assessee. In Godhra Electricity Co. Ltd. v.Commissioner of Income Tax, [1997] 225 ITR 746 (SC) this Court reiterated the view taken in Shoorji Vallabhdas and Morvi Industries. Godhra Electricity is rather instructive. The benefits represent, at best, a hypothetical income which may or may not materialise and its money value is therefore not the income of the assessee. In Godhra Electricity Co. Ltd. v.Commissioner of Income Tax, [1997] 225 ITR 746 (SC) this Court reiterated the view taken in Shoorji Vallabhdas and Morvi Industries. Godhra Electricity is rather instructive. In that case, it was noted that the High Court held that the assessee would be obliged to pay tax when the profit became actually due and that income could not be said to have accrued when it is based on a mere claim not backed by any legal or contractual right to receive the amount at a subsequent date. The High Court however held on the facts of the case that the assessee had a legal right to recover the consumption charge in dispute at the enhanced rate from the consumers. This Court did not accept the view taken by the High Court on facts. Reference was made in this context to Commissioner of Income Tax v. Birla Gwalior (P.) Ltd.. [1973] 89 ITR 266 (SC) wherein it was held, after referring to Morvi Industries that real accrual of income and not a hypothetical accrual of income ought to be taken into consideration. For a similar conclusion, reference was made to Poona Electric Supply Co. Ltd. v. Commissioner of Income Tax. [1965] 57 ITR 521 (SC) wherein it was held that income tax is a tax on real income. Finally a reference was made to State Bank of Travancore v. Commissioner of Income Tax . For a similar conclusion, reference was made to Poona Electric Supply Co. Ltd. v. Commissioner of Income Tax. [1965] 57 ITR 521 (SC) wherein it was held that income tax is a tax on real income. Finally a reference was made to State Bank of Travancore v. Commissioner of Income Tax . [1986] 158 ITR 102 (SC) wherein the majority view was that accrual of income must be real, taking into account the actuality of the situation; whether the accrual had taken place or not must, in appropriate cases, be judged on the principles of real income theory The majority opinion went on to say: "What has really accrued to the assessee has to be found out and what has accrued must be considered from the point of view of real income taking the probability or improbability of realisation in a realistic manner and dovetailing of these factors together but once the accrual takes place, on the conduct of the parties subsequent to the year of closing an income which has accrued cannot be made 'no income" This Court then considered the facts of the case and came to the conclusion (in Godhra Electricity) that no real income had accrued to the assessee in respect of the enhanced charges for a variety of reasons. One of the reasons so considered was a letter addressed by the Under Secretary to the Government of Gujarat, to the assessee whereby the assessee was 'advised to maintain status quo in respect of enhanced charges for at least six months. This Court took the view that though the letter had no legal binding effect but "one has to look at things from a practical point of view" (See R.B. Jodha Mal Kuthiala v. Commissioner of Income Tax. [1971] 82 ITR 570 (SC)). This Court took the view that the probability or improbability of realisation has to be considered in a realistic manner and it was held that there was no real accrual of income to the assessee in respect of the disputed enhanced charges for supply of electricity. [1971] 82 ITR 570 (SC)). This Court took the view that the probability or improbability of realisation has to be considered in a realistic manner and it was held that there was no real accrual of income to the assessee in respect of the disputed enhanced charges for supply of electricity. The decision of the High Court was, accordingly, set aside Applying the three tests laid down by various decisions of this Court, namely, whether the income accrued to the assessee is real or hypothetical, whether there is a corresponding liability of the other party to pass on the benefits of duty free import to the assessee even without any imports having been made. and the probability or improbability of realisation of the benefits by the assessee considered from a realistic and practical point of view (the assessee may not have made imports), it is quite clear that in fact no real income but only hypothetical income had accrued to the assessee and Section 28(iv) of the Act would be. inapplicable to the facts and circumstances of the case. Essentially, the Assessing Officer is required to be pragmatic and not pedantic. Secondly, as noted by the Tribunal, a consistent view has been taken in favour of the assessee on the questions raised, starting with the assessment year 1992-93, that the benefits under the advance licences or under the duty entitlement pass book do not represent the real income of the assessee. Consequently, there is no reason for us to take a different view unless there are very convincing reasons, none of which have been pointed out by the learned counsel for the Revenue [Emphasis Supplied] 6.2 Similarly in the case of Bilahari Investment P. Ltd (supra) the Apex Court has held that since from the various statements produced, the entire exercise arising out of the change of method from the completed contract method to deferred revenue expenditure was revenue neutral, the completed contract method was not required to be substituted by the percentage of completion method. 7. 7. Considering the aforesaid observations of the Tribunal as well as the decisions relied upon by learned advocate for the assessee, we are of the opinion that the Tribunal has committed an error in passing the impugned order so far as considering the membership fees as income when the assessee had not resumed giving the services of the water park to its members Under such circumstances, the amount received by way of membership fees was required to be considered as an advance and thereafter as and when the business commenced the amount of liability was required to be taxed over a period of time proportionately The amount of membership fees would be considered as income from the year the business of the assessee commenced We therefore answer the questions raised in the negative ie against the revenue and in favour of the assessee. 8 In the premises aforesaid, appeal is allowed impugned order passed by the Tribunal is quashed and set aside to the extent that it considers the membership fees as revenue receipt in the year though business had not commenced Order accordingly.” 7 As the facts in both the Assessment Years i.e. 1997-98 and 1998-99 are identical in case of the appellant, and in view of the decision of this Court in Tax Appeal No. 113 of 2004, we are of the opinion that no further discussion is necessary in this appeal and considering the above reasoning, the question of law admitted by this Court regarding the taxability of the membership fees received in advance is answered in favour of the assessee and against the revenue. 8 The appeal accordingly stands allowed. No order as to costs.