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Issues involved:
The judgment involves the interpretation of whether amounts collected by the assessee in excess of the price fixed by the government, pursuant to interim court orders, are assessable as income for specific assessment years. Summary: The assessee, a sugar factory, collected excess amounts for levy sugar following an interim court order, pending final decision in a writ petition challenging government notifications on sugar prices. The High Court allowed the assessee to retain these amounts as deposits subject to conditions. Subsequently, the writ petition was dismissed, and the assessee was directed to refund the excess amount. The Income-tax Officer treated the excess collection as income and assessed it. However, the Commissioner of Income-tax (Appeals) and the Tribunal, following precedents, held that such amounts were not assessable income. In the judgment, the court considered previous decisions where it was established that when the right to receive payment is in dispute, no income arises or accrues. The court emphasized that the amounts collected were inchoate or contingent, as the right to receive them was subject to final court decisions. The assessee was accountable for the excess collection and obligated to refund if directed by the court. Therefore, the court concluded that the amounts in question were not assessable as the income of the assessee for the relevant assessment years. The court referred to various precedents, including decisions by the Supreme Court and other High Courts, to support its conclusion that in cases where the right to receive payment is in dispute, no income is deemed to arise or accrue. The court highlighted that the right to receive the excess amounts collected by the assessee was uncertain until the finalization of the court dispute, making the amounts non-assessable as income. In conclusion, the court answered the question referred to it in favor of the assessee, holding that the amounts collected in excess of the government-fixed prices were not assessable as income for the relevant assessment years. The reference was disposed of accordingly, with no order as to costs.
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