The Commissioner Of Income Tax - 10Mumbai v. M/S. Vidyavihar Containers Limited

IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. INCOME TAX APPEAL NO.2232 OF 2009 The Commissioner of Income Tax - 10Mumbai ..Appellant. Vs. M/s. Vidyavihar Containers Limited ..Respondent. ..... Mr. Suresh Kumar for he Appellant.Mr. Jamshed Mestry i/b Atul K. Jasani for the Respondent. .... CORAM:DR. D.Y. CHANDRACHUD, & J.P.DEVADHAR, JJ. 4th January, 2010. P.C.: 1.Consent Terms were arrived at by the assessee before the Debt Recovery Tribunal, Mumbai in proceedings which were instituted by the Union of India under the provisions of the Recovery of Debts due to Banks and Financial Institutions Act, 1993. Under the Consent Terms it was envisaged that the assessee would have to pay to the Union Bank a sum of Rs.20.93 Crores of which a down payment of Rs. 3 Crores was to be made while the balance of Rs.17.93 Crores was to be payable in 24 monthly installments commencing from 31st January, 2001. In the event of default, all the concessions granted to the assessee under the Consent Terms were to be rescinded and the entire debt was to become payable at once. 2.The issue before the Income Tax Appellate Tribunal related to the waiver of the principal sum granted by the bank in the amount of Rs.3,14,79,159/-. The dispute related to Assessment Year 2001-02. The Tribunal observed that the assessee, in order to become entitled to the concession of a waiver of principal and interest had to comply with the condition of paying the remaining sum of Rs.17.93 Crores in 24 monthly installments commencing from 31st January, 2001. Consequently, there was no vested right in the assessee which had accrued during the previous year relevant to Assessment Year 2001-02. The Tribunal was of the view that the waiver granted by the bank of the principal sum was subject to conditions and it was only on the fulfillment of the conditions that the assessee would become entitled to the benefit of the waiver. The time for the fulfillment of the conditions for waiver was beyond the previous year relevant to Assessment Year 2001-02. Consequently there was no occasion to apply either Section 41(1) or 28(iv) of the Income Tax Act, 1961 in case of the assessee for the Assessment Year 2001-02. 3.The Tribunal has correctly construed the Consent Terms that were arrived at between the assessee and the Union Bank on 26th December, 2000 before the Debt Recovery Appellate Tribunal, Mumbai. The Consent Terms envisaged certain concessions being granted to the assessee in the payment of the principal and interest subject to due fulfillment of the conditions stipulated therein. The conditions stipulate that in the event of default the entire debt was to become due and payable. The time for fulfillment of the conditions of waiver was beyond the previous year relevant to Assessment Year 2001-02. During the previous year relevant to Assessment Year 2001-02 no vested right had accrued to the assessee for the waiver of the principal. In these circumstances, the Tribunal was justified in holding that there was no accrual of income during the previous year relevant to the Assessment Year 2001-02. The Tribunal, it may be noted, has left open the question of chargeability to tax for adjudication in the appropriate Assessment Year if and when an occasion so arises. The judgment of the Tribunal therefore makes it abundantly clear that the adjudication by the Tribunal is confined to the previous year relevant to Assessment Year 2001-02 and the question of liability if any in respect of succeeding years has been kept open. 4.In these circumstances, no question of law, much less a substantial question of law, arises in these proceedings. The Appeal is accordingly dismissed. (DR.D.Y.CHANDRACHUD, J.) (J.P.DEVADHAR, J.)