The Commissioner Of Income Tax 17 v. Abdul Rasool Virji

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1839 OF 2011 The Commissioner of Income Tax 17. v. Abdul Rasool Virji. ..Appellant. ..Respondent. Mr. A.R. Malhotra for the Appellant. Mr. P.J. Pardiwala, Sr. Advocate i/by M & M Legal Ventures for the Respondent. CORAM : J.P. DEVADHAR AND M.S. SANKLECHA, JJ. DATE : 18[th] March, 2013. PC: In this appeal by the revenue for assessment year 2004-05 following question has been raised for our consideration. Whether on the facts and in the circumstances of the case and in law the Tribunal was correct in setting aside the order of the revisionary authority without appreciating the fact that the order passed by the Assessing Officer in allowing interest awarded by the Court to the assessee as exempt was both erroneous and prejudicial to the interest of the revenue and for that view of the matter could not appreciate the fact that CIT was right in invoking section 263 of the Income Tax Act, 1961 in the instant case? 2)The respondent assessee purchased a property in Delhi. There was some dispute between Delhi Development Authority and the respondent which reached the Delhi High Court. In the above dispute Delhi High Court directed the respondent assessee to pay an amount of Rs.1.49 crores to the Delhi Development Authority. In appeal, the Apex Court directed the Delhi Development Authority to refund the amount of Rs.70.94 lacs along with interest of Rs.48.59 lacs to the respondent assessee. 3)Thereafter, the respondent assessee sold the said property and computed its long term capital loss at Rs.2.02 crores without reducing the cost of acquisition by the amount of interest of Rs.48.59 lacs. The Assessing officer by order reduced the cost of acquisition of the property by the interest amount of Rs.48.59 lacs , thus, reducing its long term capital loss to Rs.1,50,000/- which was to be carried forward. However, the amount of interest of Rs.48.59 lacs was not subjected to tax. 4)The CIT by order under Section 263 of the Act sought to revise the Assessing officer's order on the ground that the interest amount which has been received by the respondent assessee cannot be reduced from the cost of acquisition in arriving at long term capital loss. Further the interest received has to be subjected to tax under the head “Income from other sources”. In that view of the matter, CIT directed the Assessing Officer to redetermine the income. 5)On appeal the Tribunal held that the Assessing officer had relied upon the decision of the Punjab & Haryana High Court in the matter of CIT v. B. Raj reported in 264 ITR 617 wherein it has been held that interest awarded by court is not assessable to tax under the head “Income from other source”. Therefore, the view taken by the Assessing officer was a possible view as the interest granted by the Apex Court was discretionary and not payable under any statutory provision. In these circumstances, the Tribunal held that the view of the Assessing officer being a possible view the same could not said to be erroneous in view of the decision of the Apex Court in the matter of Malbar Industries Ltd. v. CIT reported in 243 ITR 83. 6)In these circumstances, we see no reason to entertain the question of law.Accordingly, the appeal is dismissed. No order as to costs. (M.S.SANKLECHA, J.) (J.P. DEVADHAR, J.)