The Commissioner Of Income Tax v. M/S. Walchandnagar Ind. Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO. 3769 OF 2006 IN The Commissioner of Income Tax ... Appellant Versus M/s. Walchandnagar Ind. Ltd. ... Respondent Mr. R. Asokan for the Appellant. Mrs. Vasanti Patel for Respondent. CORAM: F.I. R.S. MOHITE, JJ. P.C. P.C. . There is delay of 572 days in preferring the appeal. The motion is for condonation of delay. . The question of law as framed by the Revenue reads as under : "The substantial question of law arises in the present appeal is regarding the correct interpretation of Sec. 45(5) of the Income Tax Act, 1961 and whether on the facts and in the circumstances of the case and in law, the Hon’ble Tribunal is right in dismissing the appeal of the revenue and upholding the order of the CIT(A)". . The learned tribunal has affirmed the order of Commissioner (Appeals). The learned Tribunal for that purpose relied on various judgments including of the Supreme Court. . The issue arises from the acquisition of land belonging to the assessee. In an application for enhancement of compensation, the District Court enhanced the compensation. The Government aggrieved preferred an appeal. The amount awarded which was deposited has been allowed to be withdrawn by the Assessee on furnishing security in the form of bank guarantee. The question is whether the amount which has been withdrawn by the assessee on furnishing the bank guarantee can be assessed as income in the hands of the assessee for relevant assessment year. A similar issue had come up before the Supreme Court in Commissioner of Income Tax Vs. Hindustan Housing and Land Development Trust, 161 ITR 524. The Supreme Court held that though the assessee may have withdrawn the money on furnishing the security, there was no absolute right to receive the amount at that stage. Hence, the appeal preferred is liable to be allowed. When the right to payment of enhanced compensation is in dispute, the amount of enhanced compensation is not income arising or accruing to respondent. . The only contention urged on behalf of the revenue is the present case is covered by the Income tax Act, 1961 whereas the judgment in Hindustan (supra) was under Income Tax Act, 1922. It is sought to be submitted that in the present case, the issue is covered by Section 45(5) of the Income Tax Act. We have perused Section 45(5). In our opinion, that would make no difference as the amount which the assessee has received is pursuant to withdrawal of the amount deposited from the court by furnishing bank guarantee and is subject to the final order to be passed by the Court. It is only on disposal of the appeal and if the appeal preferred by the Revenue is dismissed or whatever order is passed, the amount lying in the hands of assessee would have to be offered to tax. . In the light of the above, in our opinion, in so far as the additional compensation awarded by the District Court is concerned, the question of law would not arise and consequently appeal dismissed. On behalf of the assessee the learned counsel undertakes that as and when the appeal is finally disposed of or all the legal proceedings are completed and if the award of enhancement fully or partly is upheld, they will offer the amount received income. Statement accepted. (R.S. MOHITE, J.) (R.S. MOHITE, J.)(F.I.REBELLO, J.) (F.I.REBELLO, J.) (R.S. MOHITE, J.)