Commissioner Of Income Tax, Kota v. M/S Mittal Brothers & Co. 72

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 143 / 2012 Commissioner of Income Tax, Kota ----Appellant Versus M/s Mittal Brothers & Co. 72-73, Chitrakooth Nagar, Sawai Madhopur. ----Respondent _____________________________________________________ For Appellant(s) : Mrs. Parinitoo Jain with Ms. Shiva GoyalFor Respondent(s) : Mr. N.L. Agarwal _____________________________________________________ HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYASJudgment 12/09/2017 1. By way of this appeal, the appellant has assailed thejudgment and order of the tribunal whereby tribunal has dismissedthe appeal of the department and confirmed the order of the CIT (A). 2.This court while admitting the appeal on 24.9.2012 framed following substantial question of law:- “Whether the Tribunal was legally justifiedin holding that the receipts and the interestwere neither certain nor quantifiable so noaddition could be made for the relevantyear when the amount of interest wasactually received by the assessee in theyear under consideration?” 3.The facts of the case are that assessee respondent is a firmcarrying the business of contractor. For the impugned assessmentyear 2007-08 the return of income was filed at Rs.20,240/- and anotice u/s 143(2) was issued. The AO made a trading addition ofRs.2,47,680/- on contract receipt of Rs.30,96,012/- by applyingthe profit rate of 8%. Further, it was noticed by the AO that theassessee had undertaken contract work with the IrrigationDepartment, Dausa. The said work could not be completed by thestipulated period and hence a dispute arose between the assesseeand the Irrigation Department. The cost of this work wasestimated at Rs.60,48,691/- out of which Rs.14,31,728/- wasreceived by the assessee and balance remained unpaid for whichirrigation was going on. On 26.10.05, the District & SessionsJudge, Jaipur City decided the award of Rs.3,046,94/- against thecost of work Rs.46,16,763/- and further interest of Rs.60,24,042/-towards late payment. Pursuant to a decree, the said paymentwas received by the assessee during the financial year 2006-07relevant to A.Y. 2007-08. The State Government went in appealagainst this decision before the Hon’ble High Court, which waspending during the pendency of the assessment proceedings. 3.1During the course of assessment proceedings, it wasobserved that since the above said income had accrued to theassessee in the financial year relevant to assessment year underconsideration, the amount of award was quantified. As theassessee maintains its accounts on mercantile basis, the AOproceeded to apply net profit rate of 8% on contract receipt ofRs.30,46,042/- resulting into addition of Rs.2,47,680/- which was taxed as business income. Further the amount of interest ofRs.60,24,042/- ‘Income from other sources’. 4.Counsel for the appellant contended that tribunal hascommitted serious error in dismissing the appeal of thedepartment and confirming the order of the CIT(A). 5.Counsel for the appellant contended that the amount whichhas been received by the assessee was actual income andAssessing Officer while considering the income and all relevantfactors observed as under:- taxed as business income. Further the amount of interest ofRs.60,24,042/- ‘Income from other sources’. 4.Counsel for the appellant contended that tribunal hascommitted serious error in dismissing the appeal of thedepartment and confirming the order of the CIT(A). 5.Counsel for the appellant contended that the amount whichhas been received by the assessee was actual income andAssessing Officer while considering the income and all relevantfactors observed as under:- “djnkrk dks ftyk ,oe lS’ku U;k;k/kh’k t;iqj uxjt;iqj ds mDr QSlys ds vuqlkj 6024042@& dk C;ktizkIr gqvk gS ;g C;kt blh o"kZ dh dj;ksX; vkenuh gSftlds lEcU/k esa iw.kZ foospu mij fd;k tk pqdk gSaAdjnkrk us ;g rdZ fn;k gS fd mls 1573251@& : dhjkf’k dk uqdlku gqvk gS vr% ;g jkf’k C;kt jkf’k esa lslek;kstu dj 4450791@& : tks fd dj;ksX; gS ijVSDl yxk;k tk;A djnkrk ds bl rdZ ls eSa lgerugha gw¡ ekuuh; U;k;ky; us djnkrk dk Dyse4616768@& : ds LFkku ij 3096012@&: ekuk gS vr% 1573251@& : dk lek;kstu C;kt dh izkIr jkf’k esals laHko ugha gS vkSj nkos esa izkIr C;kt dh jkf’k6024042@& : dks vU; L=ksrksa ls vk; ekurs gq, dj”fu/kkZj.k fd;k tkrk gSAdjnkrk dks ftyk ,oe lS’ku U;k;k/kh’k t;iqj uxjt;iqj ds mDr QSlys ds vuqlkj 6024042@& dk C;ktizkIr gqvk gS ;g C;kt blh o"kZ dh dj;ksX; vkenuh gSftlds lEcU/k esa iw.kZ foospu mij fd;k tk pqdk gSaAdjnkrk us ;g rdZ fn;k gS fd mls 1573251@& : dhjkf’k dk uqdlku gqvk gS vr% ;g jkf’k C;kt jkf’k esa lslek;kstu dj 4450791@& : tks fd dj;ksX; gS ijVSDl yxk;k tk;A djnkrk ds bl rdZ ls eSa lgerugha gw¡ ekuuh; U;k;ky; us djnkrk dk Dyse4616768@& : ds LFkku ij 3096012@&: ekuk gS vr% 1573251@& : dk lek;kstu C;kt dh izkIr jkf’k esals laHko ugha gS vkSj nkos esa izkIr C;kt dh jkf’k6024042@& : dks vU; L=ksrksa ls vk; ekurs gq, dj”fu/kkZj.k fd;k tkrk gSA 5.1She further contended that the CIT(A) and tribunal havecommitted serious error more particularly in view of the decisionof the Supreme Court in Commissioner of Income Tax, WestBengal-II, Calcutta vs. Hindustan Housing and Land DevelopmentTrust Ltd. (1986) 3 SCC 641 wherein it has been held as under:- “4. During the assessment proceedings forthe assessment year 1956-57, the relevantaccounting period being the year endedMarch 31, 1956 the Income Tax Officerbrought to tax a sum of Rs. 7,24,914 in theassessee'sbusinessincome.Thisrepresented the difference between the sumthe assessment year 1956-57, the relevantaccounting period being the year endedMarch 31, 1956 the Income Tax Officerbrought to tax a sum of Rs. 7,24,914 in theassessee'sbusinessincome.Thisrepresented the difference between the sum “4. During the assessment proceedings forthe assessment year 1956-57, the relevantaccounting period being the year endedMarch 31, 1956 the Income Tax Officerbrought to tax a sum of Rs. 7,24,914 in theassessee'sbusinessincome.Thisrepresented the difference between the sumthe assessment year 1956-57, the relevantaccounting period being the year endedMarch 31, 1956 the Income Tax Officerbrought to tax a sum of Rs. 7,24,914 in theassessee'sbusinessincome.Thisrepresented the difference between the sum of Rs. 7,37,190 payable to the assessee interms of the award dated July 29, 1956 ofthe Arbitrator and a sum of Rs. 12,276 outof that amount which had already beenassessed to tax. The Income tax Officertreated the sum as liable to income-taxduring that year on the basis that theincome accrued to the assessee on the dateof the award. The assessment wasconfirmed by the Appellate AssistantCommissioner of Income-tax on first appeal.In second appeal by the assessee before theIncome-taxAppellateTribunal,twocontentions were raised by it. It was urgedthat the amount of compensation receivedby the assessee was not a receipt of arevenue nature. It was also contended thatin any event the amount did not accrue tothe assessee as its income during therelevant previous year ended March 31,1956. The Appellate Tribunal rejected thefirst contention and held that thecompensation received by the assesseerelated to the acquisition of land which wasthe stock-in-trade of the assessee, and was,therefore, a trading receipt of the businesscarried on by the assessee, and therefore, areceipt of a revenue nature liable to tax. TheAppellate Tribunal, however, accepted theother contention that the sum of Rs.7,24,914 was not taxable in the assessmentyear 1956-57. It allowed the appealaccordingly by its order dated February 22,1964. At the instance of the Revenue theAppellate Tribunal referred the question oflaw set out earlier to the Calcutta High Courtfor its opinion, and by its judgment datedJanuary 9, 1973 the High Court answeredthe question in favour of the assessee andagainst the Revenue. 5. The question raised in this appeal islimited to the point whether on the facts andcircumstances of the case the Revenue canclaim that the sum of Rs. 7,24,914 payableto the assessee as compensation can be saidto have accrued to it as income during theprevious year ended March 31, 1956relevant to the assessment year 1956-57.Now as long ago as E.D. Sassoon andCompany Ltd. and Ors. v. Commissioner ofIncome-tax,BombayCityMANU/SC/0088/1954:[1954]26ITR27(SC) this Court considered 5. The question raised in this appeal islimited to the point whether on the facts andcircumstances of the case the Revenue canclaim that the sum of Rs. 7,24,914 payableto the assessee as compensation can be saidto have accrued to it as income during theprevious year ended March 31, 1956relevant to the assessment year 1956-57.Now as long ago as E.D. Sassoon andCompany Ltd. and Ors. v. Commissioner ofIncome-tax,BombayCityMANU/SC/0088/1954:[1954]26ITR27(SC) this Court considered the question as to the point at which incomecould be said to accrue or arise to anassessee for the purpose of the IndianIncome Tax Act. In the majority judgmentdelivered by N.H. Bhagwati, J. it wasexplained that the words "arising oraccruing" describe a right to receive profits,and that there must be a debt owed bysome body. "Unless and until there iscreated in favour of the assessee a debt dueby somebody", it was observed "it cannot besaid that he has acquired a right to receivethe income or the income has accrued tohim". In the present case, although theaward was made by the Arbitrator on July29, 1955 enhancing the amount ofcompensation payable to the assessee, theentire amount was in dispute in the appealfiled by the State Government. Indeed, thedispute was regarded by the Court as realand substantial, because the assessee wasnot permitted to withdraw the sum of Rs.7,36,691deposited by the StateGovernment on April 25, 1956 withoutfurnishing a security bond for refunding theamount in the event of the appeal beingallowed. There was no absolute right toreceive the amount at that stage. If theappeal was allowed in its entirety the rightto payment of the enhanced compensationwould have fallen altogether. This is a casewhich must be distinguished from thatdecided by this Court in Kedarnath Jute Mfg.Co. Limited, v. Commissioner of Income-Tax(Central), Calcutta MANU/SC/0438/1971:[1971]82ITR363(SC) where the liability tosales tax arose immediately on a dealeraffecting sales which were subject to salestax and what remained to be done was amere quantification of that liability. The casecompares rather with Commissioner ofIncome-tax v. Jai Parkash Om Parkash Co.Ltd.MANU/PH/0305/1960.Theveryfoundation of the claim made by theassessee was in serious jeopardy andnothing would be due if the appeal wasdecided against the assessee. Our attentionhas been drawn by the Revenue to Pope TheKing Match Factory v. Commissioner ofIncome-taxMANU/TN/0558/1962:[1963]50ITR495(Mad) . That case, however,proceeded on the basis that excise duty waspayable and its quantification aloneremained to be decided in the appeal. We may point out that the Andhra Pradesh HighCourt, dealing with the taxability ofcompensation received under the LandAcquisition Act in Khan Bahadur AhmedAlladin & Sons v. Commissioner of Income-tax MANU/AP/0157/1968: [1969]74ITR651(AP) held that when landwas taken over by the Government the rightof the owner to compensation was aninchoate right until the compensation hadbeen actually determined and had becomepayable. It was observed that the enhancedcompensation accrued to an assessee onlywhen the Court accepted the claim and notwhen the land was taken over by theGovernment. Examining the questionwhether income could be said to haveaccrued to the assessee on the date whenpossession of the land was taken by theGovernment for the purpose of assessmentto tax in the year of assessment P.Jaganmohan Reddy, C.J., speaking for theCourt, said: [1969]74ITR651(AP) held that when landwas taken over by the Government the rightof the owner to compensation was aninchoate right until the compensation hadbeen actually determined and had becomepayable. It was observed that the enhancedcompensation accrued to an assessee onlywhen the Court accepted the claim and notwhen the land was taken over by theGovernment. Examining the questionwhether income could be said to haveaccrued to the assessee on the date whenpossession of the land was taken by theGovernment for the purpose of assessmentto tax in the year of assessment P.Jaganmohan Reddy, C.J., speaking for theCourt, said: If the actual amount of compensation hasnot been fixed, no income could accrue tohim. It cannot be contended that the mereclaim by the assessee, after taking ofpossession, at a particular rate or for acertain sum is the compensation. It is theamount actually awarded by the Collector orsubsequently decreed by the court whichaccrues to him, and the respective amounts,whether awarded by the Collector or thecourt accrue on the respective dates onwhich the award or the decree is passed.Income-tax is not levied on a mere right toreceive compensation; there must besomething tangible, something in the natureof a debt, something in the nature of anobligation to pay an ascertained amount. Tillsuch time, no income can be said to haveaccrued.... On the date when the Collectorawarded the compensation, it is only thatamount which had accrued or deemed toaccrue, whether in fact paid or not. But byno stretch of the words in Section 4(1)(b)(i),could it be said that the right to enhancedcompensation, which has not yet beenaccepted by the proper forum, namely, thecourt, has become payable on the date whenthe original compensation became payable,for being included in that year ofassessment. The enhanced compensation accrues only when it becomes payable, i.e.,when the court accepts the claim. As hasbeen stated earlier, a mere claim by theassessee, after taking of possession of theland, at a particular rate or for a certain sumis not compensation. It must not beforgotten that, even if a court was awardedenhanced compensation, there is a right ofappeal by the Government to the HighCourt, and the High Court may eitherdisallow that claim or reduce thecompensation. As against that judgment,there is further right of appeal to theSupreme Court. The assessee also canappeal against the insufficiency of theenhanced compensation. Can it be said thatthe final determination by the highest courtof the compensation would entitle theIncome-tax Officer, notwithstanding theperiod of limitation fixed under the Income-tax Act, to reopen the assessment in whichhe had included the initial compensationawarded by the Collector and recompute theentire income on the basis of the finalcompensation? We do not think there can beany justification for such a proposition. On aproper construction of the terms 'accrue' or'arise', we are of the view that such aninterpretation cannot be placed. Theinterpretation given by us does not affectthe interests of the revenue. At the sametime, it safeguards the assessee andprevents harassment. To hold otherwisewould be contrary to the provisions of law. The legal position was explained in furtherdetail by the Gujarat High Court in TopandasKundanmal v. Commissioner of Income-tax,Gujarat MANU/GJ/0029/1976: The legal position was explained in furtherdetail by the Gujarat High Court in TopandasKundanmal v. Commissioner of Income-tax,Gujarat MANU/GJ/0029/1976: [1978]114ITR237(Guj) . The High Court wascalled upon to decide without the right toreceive the enhanced compensation underthe Land Acquisition Act accrued or arose tothe assessee when he sought a referenceunder Section 18 of the Act or when theaward was made by the Civil Judge althoughan appeal was pending against that award.The learned Judges referred to the nature ofan award made by the Collector, andadverting to the opinion of this Court inHarish Chandra Raj Singh v. The DeputyLandAcquisitionOfficerandAnr. MANU/SC/0386/1961: [1962]1SCR676that the award made by the Collector was merely an offer or tender of thecompensation determined by the Collector tothe owner of the property on the acquisition,the High Court observed: .. the legal position which emerges is thatthere is no liability in praesenti to pay anenhanced compensation till it is judiciallydetermined by the final court since theentire question, namely, whether the offermade by the Land Acquisition Officer isinadequate and the claimant is entitled to anadditional compensation and if yes, at whatrate is in flux till the question is set at restfinally, we do not think that any enforceableright to a particular amount of compensationarises. The offer made by Land AcquisitionOfficer, by his award, if not accepted by aclaimant would not result automatically in aliability to pay additional compensation asclaimed by party aggrieved. There is nodoubt a liability to pay compensation asoffered by the Land Acquisition Officer. Butthat is far from saying that liability is aliability to pay additional compensation orenhanced compensation as claimed by aparty aggrieved. If there is an existingliability, the mere fact that the payment ispostponed to the future would not detractthat liability from becoming a debt but theliability to pay unliquidated damages oradditional compensation which are inchoateor contingent would not create a debt. Khan Bahadur Ahmed Alladin & Sons (supra)and Topandas Kundanmal (supra) wererelied on by the Gujarat High Court inAdditional Commissioner of Income-tax,Gujarat v. New Jehangir Vakil Mills Co.Ltd.MANU/GJ/0025/1979: [1979]117ITR849(Guj) for reaffirming that itwas on the final determination of theamount of compensation that the right tosuch income in the nature of compensationwould arise or accrue and till then there wasno liability in praesenti in respect of theadditional amount of compensation claimedby the owner of the land. 6. It is unnecessary to refer to all the casescited before us. It is sufficient to point outthat there is a clear distinction betweencases such as the present one, where theright to receive payment is in dispute and itis not a question of merely quantifying the amount to be received, and cases where theright to receive payment is admitted and thequantification only of the amount payable isleft to be determined in accordance withsettled or accepted principles. We are ofopinion that the High Court is right in theview taken by it and, therefore, this appealmust be dismissed.” 6. The tribunal has sought to rely upon the aforesaid judgment. 7.However, Supreme Court in subsequent decision inCommissioner of Income Tax, Faridabad vs. Ghanshyam (HUF)(2009) 315 ITR 1 (SC) held as under:- amount to be received, and cases where theright to receive payment is admitted and thequantification only of the amount payable isleft to be determined in accordance withsettled or accepted principles. We are ofopinion that the High Court is right in theview taken by it and, therefore, this appealmust be dismissed.” 6. The tribunal has sought to rely upon the aforesaid judgment. 7.However, Supreme Court in subsequent decision inCommissioner of Income Tax, Faridabad vs. Ghanshyam (HUF)(2009) 315 ITR 1 (SC) held as under:- “27. In the case of Hindustan Housing(supra)certain lands belonging to the assessee-company, which was in the business ofdealing in land and which maintained itsaccount on mercantile system, were firstrequisitioned and then compulsorily acquiredby the State Government. The LandAcquisition Officer awarded Rs. 24,97,249/-as compensation. On appeal the Arbitratormade an award at Rs. 30,10,873/- withinterest at 5% from the date of acquisition.Thereupon, the State preferred an appeal tothe High Court. Pending the appeal, theState Government deposited in the Court Rs.7,36,691/- being the additional amountpayable under the award and the assesseewas permitted to withdraw that additionalamount on furnishing a security bond forrefunding the amount in the event of thesaid Appeal being allowed. On receiving theamount, the assessee credited it in itssuspense account on the same date. Thequestion was : whether the additionalamount of Rs. 7,24,914/- could be taxed asthe income on the ground that it becamepayable pursuant to the award of theArbitrator. The Tribunal held that the amountdid not accrue to the assessee as its incomeand was, therefore, not taxable in theassessment year 1956-57. The financial yearin which the additional amount came to bewithdrawn ended on 31.3.56. It was held bythis Court that although award was made on29.7.1955, enhancing the amount of compensation payable to the assessee, theentire amount was in dispute in the appealfiled by the State. Therefore, there was noabsolute right to receive the amount at thatstage. It was held that if the Appeal was tobe allowed in its entirety, the right topayment of enhanced compensation wouldhave fallen altogether. Therefore, accordingto this Court, the extra amount ofcompensation of Rs. 7,24,914/- was notincome arising or accruing to the assesseeduring the previous year relevant to theassessment year 1956-57. 28. The question is : whether the judgmentof this Court in Hindustan Housing(supra)would apply to the present case which arisesunder the Income-tax Act, 1961? At theoutset, it may be noted that the judgment ofthis Court inHindustan Housing(supra)was delivered on 29.7.86. It was prior to1.4.88whenSection 45(5)stoodincorporated by Finance Act 1987 w.e.f.1.4.88. Further, the judgment of this CourtinHindustan Housing(supra) has beengiven in respect of assessment year 1956-57under the Income-tax Act, 1922 whereas, inthe present case, we are concerned with the1961 Act which defines the word "transfer"in much wider sense under Section 2(47).Lastly, for the reasons given hereinafter,particularly in the context of introduction ofSection45(5)of the 1961 Act w.e.f.1.4.88 atotally new scheme stood introducedkeeping in mind cases of compulsoryacquisition under the 1894 Act under whichcompensation is payable at multiple stagesand amounts stand withdrawn by theassessee- claimants and used by theassessee(s) for several years, during whichlitigation is pending. It is in the context ofSection45(5)that we need to decide theyear of taxability. It is significant to notethat Section 12B of 1922 Act did not containspecific reference to compulsory acquisitionas contained in Section2(47)of the 1961Act. Therefore, in our view, the judgment ofthis Court in Hindustan Housing (supra) isnot applicable to the present case. 35. It was urged on behalf of the assesseethat Section 45(5)(b)of the 1961 Act dealsonly with re-working, its object is not toconvert the amount of enhanced compensation into deemed income onreceipt. We find no merit in this argument.The scheme of Section45(5)of the 1961 Actwas inserted w.e.f. 1.4.88 as an overridingprovision. As stated above, compensationunder the L.A. Act, 1894, arises and ispayable in multiple stages which does nothappen in cases of transfers by sale etc.Hence, the legislature had to step in and saythat as and when the assessee-claimant is inreceipt of enhanced compensation it shall betreated as "deemed income" and taxed onreceipt basis. Our above understanding issupported by insertion of Clause (c) inSection45(5)w.e.f.1.4.04andSection155(16)which refers to a situationof a subsequent reduction by the Court,Tribunalorotherauthorityandrecomputation/amendmentoftheassessment order. Section 45(5)read as awhole (including clause "c") not only dealswith re- working as urged on behalf of theassessee but also with the change in the fullvalue of the consideration (computation)andsincetheenhancedcompensation/consideration(includinginterest under Section28of the 1894 Act)becomes payable/paid under 1894 Act atdifferent stages, the receipt of suchenhanced compensation/consideration is tobe taxed in the year of receipt subject toadjustment, if any, under Section 155(16)ofthe 1961 Act, later on. Hence, the year inwhich enhanced compensation is received isthe year of taxability. Consequently, even incases where pending appeal, theCourt/Tribunal/Authoritybeforewhichappeal is pending, permits the claimant towithdraw against security or otherwise theenhanced compensation (which is indispute), the same is liable to be taxedunder Section 45(5)of the 1961 Act. This istheschemeofSection 45(5)andSection155(16)of the 1961 Act. We mayclarify that even before the insertion ofSection45(5)(c)and Section 155(16)w.e.f.1.4.04,thereceiptofenhanced compensation under Section 45(5)(b)wastaxable in the year of receipt which is onlyreinforced by insertion of Clause (c) becausethe right to receive payment under the 1894Act is not in doubt. It is important to notethat compensation, including enhancedcompensation/consideration under the 1894Act, is based on the full value of property ason date of notification under Section 4ofthat Act. When the Court/Tribunal directspayment of enhanced compensation underSection23(1A), or Section23(2)or underSection28of the 1894 Act it is on the basisthat award of Collector or the Court, underreference, has not compensated the ownerfor the full value of the property as on dateof notification.” 8.Taking into consideration it has been contended that theactual income as assessed by the AO is required to be taken intoconsideration for the current year. 9.She has also relied upon the decision of Andhra Pradesh HighCourt in Commissioner of Income Tax vs. M. Sarojini Devi (2001)250 ITR759 (AP) wherein it has been held as under:- “2. We have given the facts of the casesomewhat in detail only because we havefind that the question is not happily framed.The question, which needed to beanswered, is "Whether the assessing officerhas to wait till the final disposal by the finalCourt in an acquisition matter before theinterest accrued is taxed?" Therefore, weare reframing the question in the abovementioned phraseology and we find that thequestion is already answered by theSupreme Court in RAMA BAI vs. C.I.T.2. Thefact that the compensation was enhancedby the High Court in an appeal and theinterest accruing to it was received by theassessee makes him liable to pay the tax.However, it will be spread over the periodfor which it accrued to him, in accordancewith the Supreme Court judgment. In any “2. We have given the facts of the casesomewhat in detail only because we havefind that the question is not happily framed.The question, which needed to beanswered, is "Whether the assessing officerhas to wait till the final disposal by the finalCourt in an acquisition matter before theinterest accrued is taxed?" Therefore, weare reframing the question in the abovementioned phraseology and we find that thequestion is already answered by theSupreme Court in RAMA BAI vs. C.I.T.2. Thefact that the compensation was enhancedby the High Court in an appeal and theinterest accruing to it was received by theassessee makes him liable to pay the tax.However, it will be spread over the periodfor which it accrued to him, in accordancewith the Supreme Court judgment. In any case, if the judgment enhancing thecompensation in favour of the assessee isreversed by the Supreme Court, then theassessee, even after payment of the tax onthe accrued interest, would not beremediless. He can always seek the refundof the tax so paid, by making appropriateapplication for rectification of theassessment. The Tribunal relied onjudgment in Smt. Sankari Manickyamma (1supra) that obviously stands reversed inview of the judgment of the Supreme Courtjudgment in Rama Bai (2 supra).” 10.However, counsel for the respondent has contended that theassessee has suffered actual loss and it has been contended thatthe assesse has incurred loss as observed by the AO which readsas under:- “ekU;oj] gesa izkIr : 30]96]012@& lafonk jkf’k dhizkfIr gqbZ gS mlesa ls gekjs }kjk etnwjh] esVsfj;y]VªkUliksVZs’ku o lqijokbtjh LVkQ rFkk TNPij [kpZdkQh jkf’k [kpZ gqbZ Fkh] gekjk ml le; Bsdk feykFkk og izkstsDV ysV gksus ds dkj.k gekjk yscj lkexzhbR;kfn ij [kpkZ vf/kd gqvk Fkk o izfr;ksfxrk ds pyrsde jsV ij Bsdk feyk FkkA blds vfrfjDr pwafd geusmDr lHkh [kpZ ¼Bsds½ ls lEcfU/kr dj fn;s FksA vkSjgesa lafonk ls iSlk izkIr ugha gqvk Fkk bl dkj.k gesavkSj yksxksa ls Hkh iSlk m/kkj ysdj HkqxrkurqyukRed :i ls T;knk djuk iM+k FkkA ;fn gesa mlhle; iwjh jde fey Hkh tkrh rks gesa 2 ls 2-5 izfr’krls vf/kd 'kq) ykHk ugha gksrk ;fn 'kq) ykHk dh nj 2-5 izfr’kr Hkh ekuh tkos rks : 1]15]419@& gksrh gSysfdu pwafd izkfIr;k¡ 15]73]251@& de gqbZ rks mluqdlku dks ekurs gq, mijksDr O;kikfjd xfrfof/k;ksa lsgekjh QeZ dh 'kq) vk; ¼&½ 1457832@& curh gSblfy, ;fn mijksDr vk; dk fu/kkZj.k bl o"kZ esafd;k Hkh tkrk gS rks gekjs fo:) dksbZ nsunkjh ugha”curhA 11.He further contended that while considering the case, thetribunal has rightly held in favour of the assessee observing asunder:- 11.He further contended that while considering the case, thetribunal has rightly held in favour of the assessee observing asunder:- “After considering the orders of the AOand ld. CIT(A) we find that ld. CIT(A) hasrightly deleted both the additions. As perDistrict Curt order, Award was given infavour of the assessee for Rs.91,20,054/-.This award contains two items i.e.Rs.30,46,914/- for work+Rs.60,24,042/-for interest. It is a matter of fact that thisaward was awarded by District Court for adispute of contract work which was relatedto assessment year 1981-82. The entireorder of the District Court is challengedbefore the Hon’ble High Court. Copy of theaward given by District Court as well ascopy of petition filed by the RajasthanGovernment before the Hon’ble High Courtare placed on record. We further notedthat even the AO himself admitted at page4 of his order that the dispute is beforeHon’ble High Court and it has beenobserved by AO that it will take yearstogether and for this reason this incomecannot be said that is not assessable inthe year under consideration. It has beenfurther mentioned by AO himself that ifthe Hon’ble High Court decided the issueagainst the assessee, then the assesseecan seek relief in the year of decision. Allthese facts are mentioned in the order ofthe AO at page 4 as mentioned above.This is undisputed fact that entire awardgiven by District Court has beenchallenged before the Hon’ble RajasthanHigh Court which is pending and the ld.CIT(A) has examined this fact extensivelyand then only has held that neither anytrading addition can be made nor anyaddition can be made on account ofinterest. For this purpose reliance isplaced on the decision of Hon’ble ApexCourt in case of Hindustan Housing andLand Development Trust Ltd, 161 ITR 524(SC). For the sake of further clarification,the interest component is not theassessee has earned any interest incomeon account of principal award received byassessee which was deposited in the bankand interest income has accrued to theassessee. In fact, the District Court awardwas for Rs.91 lacs or odd which includedthe interest on the principal and this entireaward has been challenged by theRajasthan Government before the Hon’bleRajasthan High Court. Therefore, the matter is under dispute. Since the matteris under dispute, no addition can be madein the year under consideration in thehands of the assessee as held by theHon’ble Apex Court (supra). In view ofthese facts and circumstances and in viewof the detailed reasoning given by the ld.CIT(A), we confirm his order.” 11.However taking into account that the carry forward loss wasnot there and in view of the decision of the Supreme Court inGhayshyam (supra) as reproduced herein above, we are of theview that the interest actually received was income. 12.We restore the order of the AO and the order of CIT(A) andorder of the tribunal is quashed and set aside. 13.It is made clear that ultimately assessee will make paymentin case he lost before the court the same will be treated as set offexpenses. 14.Counsel for appellant contended that in view of the provisionof Section 155 (16) of the Income Tax Act which reads as under:- “155……. (16) Where in the assessment for any year,a capital gain arising from the transfer of acapital asset, being a transfer by way ofcompulsory acquisition under any law, or atransfer, the consideration for which wasdetermined or approved by the CentralGovernment or the Reserve Bank of India, iscomputed by taking the compensation orconsideration as referred to in clause (a) or,as the case may be, the compensation orconsideration enhanced or further enhancedas referred to in clause (b) of sub-section(5) of section 45, to be the full value ofconsideration deemed to be received oraccruing as a result of the transfer of theasset and subsequently such compensation “155……. (16) Where in the assessment for any year,a capital gain arising from the transfer of acapital asset, being a transfer by way ofcompulsory acquisition under any law, or atransfer, the consideration for which wasdetermined or approved by the CentralGovernment or the Reserve Bank of India, iscomputed by taking the compensation orconsideration as referred to in clause (a) or,as the case may be, the compensation orconsideration enhanced or further enhancedas referred to in clause (b) of sub-section(5) of section 45, to be the full value ofconsideration deemed to be received oraccruing as a result of the transfer of theasset and subsequently such compensation or consideration is reduced by any court,Tribunal or other authority, the AssessingOfficer shall amend the order of assessmentso as to compute the capital gain by takingthe compensation or consideration as soreduced by the court, Tribunal or any otherauthority to be the full value ofconsideration; and the provisions of section154 shall, so far as may be, apply thereto,and the period of four years shall bereckoned from the end of the previous yearin which the order reducing thecompensation was passed by the court,Tribunal or other authority.” 15.He further contended that the AO is required to reassess the income. In our considered opinion, if the appellant apply u/s 155(16), the AO will decide the same in accordance with law. 15.In that view of the matter, the issue is answered in favour ofthe department and against the assessee. 16.The appeal stands allowed. (VIJAY KUMAR VYAS)J. (K.S.JHAVERI)J. Brijesh 122.