Ita 180/2002 v. The Appeal Is Therefore Dismissed

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR THURSDAY, THE 31ST JANUARY 2008 / 11TH MAGHA 1929 ITA.No. 180 of 2002() --------------------- ITA.146COCH/2000 of I.T.A.TRIBUNAL,COCHIN BENCH .................... : APPELLANT/APPELLANT ------------------------------------ THE COMMISSIONER OF INCOME TAX, TRIVANDRUM BY ADV. SRI.P.K.R.MENON(SR.),SR.COUNSEL FOR IT SRI.GEORGE K. GEORGE, SC FOR IT RESPONDENTS: RESPONDENT ----------------------- N.C.KALADHARAN,L/R LATE GOWRI PONNAMMA,AND LATE CHELLAPPAN,TRIVANDRUM BY ADV. SMT.S.K.DEVI FOR R SRI.M.RAJ MOHAN FOR R SRI.SANTHOSH P.ABRAHAM FOR R SRI.DEEPSUR D.JAYAN FOR R SRI.SHANMUGHAM D. JAYAN FOR R THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 31/01/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ON 31/01/2008, THE COURT ON THE SAME DAY DELIVERED THE C.N. Ramachandran Nair &T.R. Ramachandran Nair, JJ. - - - - - - - - - - - - - - - - - - - - - - - - I.T.A.NO.180 of 2002 - - - - -- - - - - - - - - - - - - - - - - - - - - Dated this the 31st day of January, 2008. JUDGMENT C.N. Ramachandran Nair, J. This appeal is filed by the department challenging the common orderof the Income Tax Appellate Tribunal dismissing separate appeals filed bythe assessee as well as the department against the order of theCommissioner of Income Tax (Appeals). The assessment relates to theyear 1993-94. The assessee, one Mr. N. Chellappan was awarded a contractby the Kerala State Electricity Board for the construction of a tunnel in theyear 1966. However, after completion of the work in part, the contract wascancelled on 23.7.1970. The assessee filed a suit for settlement ofaccounts before the Sub Court, Trivandrum which ended in valuation of thework done and an award was passed with interest thereon. The decree gotfinalised vide judgment of this court, after remand by the Supreme Court.In the course of litigation, the assessee died and proceedings were continuedagainst his wife who also died later. The respondent assessee is the son whorepresented the assessee before the Tribunal and before this court. ITA 180/2002 2. We have heard learned Standing Counsel appearing for thedepartment and learned counsel for the respondent. 3. The question raised is whether the estimation of income at 10% asfixed by the Commissioner of Income Tax (Appeals) and confirmed by theTribunal applies to interest element of the award amount. According to theRevenue, interest is entirely taxable as it is an addition to the contractamount. However, we find that the issue is covered by the decision of theSupreme Court in Commissioner of Income Tax v. Govinda Choudhurgand Sons (203 ITR 881) wherein the Supreme Court held that thecompensation as well as interest have to be treated as contract receipts.Since the issue raised is covered by the decision of the Supreme Court, wedo not think there is any scope for considering the decision relied on by thelearned counsel for the Revenue in United Construction Contractors v.Commissioner of Income Tax (1994 (1) KLT 880). The appeal is therefore dismissed. (C.N. Ramachandran Nair, Judge.) (T.R. Ramachandran Nair, Judge.) ITA 180/2002 -3- C.N. Ramachandran Nair & & T.R. Ramachandran Nair, JJ. - - - - - - - - - - - - - - - - - - - - - -I.T.A. No.180 of 2002 - - - - - - - - - - - - - - - - - - - - - - JUDGMENT 31[st] January, 2008.