9911796707
TMI Blog1985 (8) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... apart from the usual contract receipts, an amount of Rs. 6,08,758 has been received by the assessee in terms of an arbitration award dated 17-11-1977. According to the assessee, an amount of Rs. 1,53,996 was included in the relevant assessment years' contract receipts and the balance amount of Rs. 4,54,762 had been split up for the preceding assessment years 1974-75 to 1977-78 and included in the receipts of those years on the ground that they related to those years. According to the ITO the assessee became entitled to the additional amount of Rs. 6,08,758 only on the issue of the award in November 1977 and that the income arose only consequent to the award. Hence, the date of accrual was the date of the award. In that view of the matter, he treated the entire receipt as receipt for the assessment year 1978-79. Thus, he made an addition of Rs. 4,54,762 in the assessment for the assessment year 1978-79 under consideration. 3. Aggrieved by the order of the ITO the assessee preferred an appeal to the Commissioner (Appeals). Before the Commissioner (Appeals) the assessee urged that he filed revised returns for the assessment years 1974-75 to 1977-78 disclosing the following amounts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The sale price was only quantified later. The interest granted by the Courts on enhanced compensation is held by various Courts as having accrued in the relevant years but not in the year of receipt. This would equally apply here. Reliance was placed on the decision of the Supreme Court in Mrs. Khorshed Shapoor Chenai v. ACED [1980] 122 ITR 21. The right or liability, as the case may be, exists by itself and is not created by the judgment or decree of a Court as laid down by the Bombay High Court in the case of CIT v. Babulal Narottamdas [1976] 105 ITR 721. The additional amount of Rs. 6,08,758 is a capital receipt as per the decision in IRC v. Ballantine 8 TC 595. If this is accepted the amount of Rs. 1,53,996 included by the assessee as the receipt in the assessment year under appeal should also be excluded. 5. The arguments of the learned departmental representative were to the following effect : In spite of repeated opportunities given to the assessee, the assessee has not produced books of account said to have been maintained by him in support of the profit and loss account filed for the assessment years 1975-76 to 1977-78. So it cannot be said that the amount of Rs. 4,54 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of CIT v. Kalicharan Jagannath [1961] 41 ITR 40 (All.) during the accounting year 1945-46 the assessee entered into a contract with, and supplied fruits and bullock carts to the military authorities at rates fixed by the agreement. The supply resulted in a loss and the assessee submitted a petition for a review under the terms of the agreement. On 6-11-1947, the military authorities sanctioned the payment of an additional sum which was paid to the assessee on 17-2-1948 and 24-2-1948. The Income-tax Department sought to include the additional sum in the assessment for the assessment year 1946-47. The Allahabad High Court held that the additional sum was not liable to be assessed for the assessment year 1946-47. It held that until the order of review the only right that the assessee had was to claim the money payable at the rates laid down in the agreement itself, that the additional amount became payable to the assessee not by virtue of any right conferred by the agreement, but because of the order passed in review under the terms of the agreement directing the payment of the amount and, thus, creating a right to this amount in favour of the assessee, that even though the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 1975-76 the assessee filed the original return on 31-7-1976. In the profit and loss account for the year ended 31-3-1975 enclosed to the return of income the assessee has shown the net loss at Rs. 16,397. In the said profit and loss account the following figures were exhibited: Rs. Rs. 1. Opening stock of materials and work in progress 4,900 2. Opening stock of finished poles 27,700 3. Materials purchased 91,876 Less: Transfer to construction of yard 22,990 -------------- 68,886 4. Depreciation 43,737 5. Closing stock of poles 61,550 6. Sales 1,08,188 According to the assessee's letter dated 6-12-1977 placed in the ITO's records for the assessment year 1977-78, which was filed in the Income-tax Office on 7-12-1977, the assessee had filed revised returns for the assessment years 1974-75 to 1977-78 stating as under: "Due to the award of an arbitrator proceeds which mainly gives effect to enhancement of rates of poles, that I manufacture and supply to electricity board my sales turnover for the years 1973-74 to 1976-77 have substantially increased and as a result of which I have to file revised income-tax return with relevant profit and loss acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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