Guranatee Commision to be recognized when guarantee is issued and not over period of guarantee

Assessee, as a part of its banking business provided bank guarantees and charged guarantee commission on the same. Guarantee commission was being recognized by assessee over life of guarantee on accrual basis. Guarantee commission received for year under consideration to some extent was not recognized by assessee as its income on ground that guarantee period relating to said commission was subsequent to 31‐3‐2004. It was held that addition made by Assessing Officer on the basis that period of guarantee had nothing to do with assessee's right to receive commission and accordingly, said amount was brought to tax for assessment year in question holding that said income accrued to assessee at time when corresponding guarantees were issued. [A.Y. 2004‐05 to 2006‐07)
Shinhan Bank v. Dy.DIT (2012) 54 SOT 140 (Mum.)(Trib.)