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Issues Involved:
1. Whether the addition of Rs. 4,54,762 for the assessment year 1978-79 is contrary to law and amounts to double taxation. 2. Whether the amount of Rs. 6,08,758 received under the arbitration award is a capital receipt or taxable as income. Detailed Analysis: Issue 1: Double Taxation of Rs. 4,54,762 The assessee argued that the addition of Rs. 4,54,762 for the assessment year 1978-79 is contrary to law and results in double taxation. The assessee contended that this amount had already been assessed in earlier years (1974-75 to 1977-78) through revised returns, thus assessing it again would violate the principle that income can be taxed in the hands of the same person only once. The assessee relied on authoritative texts and a Supreme Court decision to support this claim. The Tribunal, however, found that the assessee did not maintain proper books of account and thus was presumed to follow a cash system of accounting. The Tribunal cited the case of N.R. Sirker vs. CIT to support this presumption. Since the amount of Rs. 6,08,758 was received during the relevant previous year, it was taxable in the assessment year 1978-79. The Tribunal also noted discrepancies in the revised returns filed by the assessee, which did not reflect the additional amounts claimed. Consequently, the Tribunal concluded that there was no double taxation. Issue 2: Nature of Rs. 6,08,758 as Capital Receipt or Income The assessee contended that the amount of Rs. 6,08,758 received under the arbitration award should be treated as a capital receipt and not taxable as income. The assessee argued that the additional amount accrued when sales were made in the previous years and was only quantified later. The assessee relied on various judicial precedents to support this claim, including the Supreme Court's decision in Mrs. Khorshed Shapoor Chenai vs. Asstt. CED, A.P. The Tribunal, however, held that the entire amount of Rs. 6,08,758 was related to the business of the assessee and was thus taxable as a trade receipt. The Tribunal referred to the Supreme Court decision in CIT vs. A. Gajapathy Naidu, which held that additional amounts received due to arbitration awards are taxable in the year of receipt. The Tribunal also cited the case of CIT vs. Kalicharam Jagannath, where the additional sum sanctioned by military authorities was held to be taxable in the year it was sanctioned, not in the year of the original contract. The Tribunal rejected the assessee's argument that the amount was a capital receipt, stating that the amount was directly related to the business and thus taxable. The Tribunal also dismissed the claim of double taxation, noting that the revised returns filed by the assessee did not accurately reflect the additional amounts and thus could not support the claim of double taxation. Conclusion The Tribunal upheld the addition of Rs. 4,54,762 for the assessment year 1978-79, concluding that there was no double taxation and that the amount of Rs. 6,08,758 received under the arbitration award was taxable as income. The appeal was dismissed.
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