2004 (2) TMI 22 - HC - Income Tax

Assessee is a judicial officer. His claim that he had not been allowed pay scale at the appropriate time to which he was entitled was accepted by the High Court and it was ordered that his pay scale be appropriately fixed and that the consequential arrears be paid to him. The High Court also directed that interest at the rate of 12 per cent on the arrears from the date of accrual till the date of payment be also allowed. - assessee received arrears of salary along with interest of Rs. 3, 41, 148 The said amount was treated as income by the Assessing Officer for the assessment year 1997-98 and added to the taxable income of the assessee. The assessee claimed that the interest allowed by the High Court in its discretion on the arrears of salary did not constitute income and was not liable to tax Held that this claim has been rightly accepted by the Tribunal revenue s appeal is dismissed in limine

Summary

Issues:
1. Taxability of interest on arrears of salary received by a judicial officer.
2. Applicability of earlier court judgments in similar cases.
3. Condonation of delay in filing the appeal.

Analysis:
1. The judgment addresses the issue of taxability of interest on arrears of salary received by a judicial officer. The assessee, a judicial officer, received arrears of salary along with interest, which the Assessing Officer treated as income and added to the taxable income. The assessee contended that the interest allowed by the High Court did not constitute income and was not liable to tax. The Tribunal, relying on a previous order in a similar case, held in favor of the assessee. The High Court, in line with its earlier decision in a related case, upheld the Tribunal's decision, stating that no substantial question of law arose for consideration.

2. The judgment discusses the applicability of earlier court judgments in similar cases. The Tribunal's decision in the case of another judicial officer, Sh. B. Rai, where relief was granted under identical circumstances, was relied upon in the present case. The High Court had previously upheld the order in CIT v. B. Rai [2003] 264 ITR 617. Since the Tribunal's decision aligned with the legal precedent established in B. Rai's case, the High Court found no substantial question of law requiring consideration.

3. The judgment also addresses the issue of delay in filing and refiling the appeal. The Revenue had filed the appeal with a delay, and separate applications for condonation of delay were submitted. However, since the High Court determined that there was no merit in the case, it dismissed the appeal without issuing notice to the assessee for considering the condonation of delay. Consequently, the appeal was dismissed in limine without further proceedings.