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TMI Blog1984 (9) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... n dealing with the price fixation, etc. Production of sugar begins generally in the month of November and goes right on to April of even May. The Government fixes the price of sugar at two levels : the levy sugar price applicable to 65 per cent of the sugar produced, which has to be sold to the Government or its nominees such as the Food Corporation of India, who distribute the sugar to fair price shops ; 35 per cent, viz., the balance called free sugar which the factory can sell at any price. Since there could be a loss in the sale of levy sugar on account of the price fixation, the factories could make up for the loss by fixing their own prices for the sale of free sugar. This latter also enables the consumers to get their needed quantity of sugar even though at higher prices. 3. The price of sugar is fixed by the Government in the Ministry of Agriculture through the publication of orders in this regard. Thus, on 28-11-1974, Sugar (Price Determination for 1974-75 Production) Order, 1974 was passed fixing the price of sugar for the 1974-75 season. For the category of sugar designated ' D-29 ', the ex-factory price was fixed by this order at Rs. 156.99 per quintal. Subsequently, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade sugar and/or at the corresponding rates of other sugar fixed under the Sugar (Price Determination for 1974-75 Production) Order, 1974, dated 28th November, 1974, and the rate of Rs. 140.31 per quintal of ' D-29 ' grade sugar and/or at the corresponding rates of other sugar fixed under the order of 1975, dated 29th November, 1975, for the levy sugar out of the production of 1975-76 season purchased by the respondents from the commencement of the said season on the petitioner's furnishing the bank guarantee as hereinafter mentioned. 5. By consent, the petitioners to furnish periodically to the satisfaction of the Registrar of the High Court and in the draft form hereto annexed and with such variations therein, as the case may require a guarantee of a scheduled bank effective from date of commencement of the production season 1975-76 for the repayment of the amount with interest at the rate of 12 per cent per annum being the difference between the price fixed by the Sugar (Price Determination for 1974-75 Production) Order, 1974, dated 28th November, 1974, viz., Rs. 156.99 per quintal of ' D-29 ' grade sugar and for corresponding, rates of other sugar fixed by the said order and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he direction about the time within which the payment is to be made at the time of final decision if occasion arises. 10. The petitioners are paying Central Excise duty on the sugar sold by them to the respondents on the price at the rate of Rs. 156.99 per quintal of ' D-29 ' grade sugar and the corresponding rates of other sugar fixed by the said order dated 28th November, 1974, as per the Central Excise department's orders. In the event of the impugned order being held valid or the Court fixing any other rate higher than Rs. 140.31 but lower than Rs. 156.99 per quintal, the petitioners shall apply to Central Excise authorities for refund of the difference of excise duty and if such refund is granted and received, the amount of such refund will be paid immediately on receipt by the petitioner to the respective respondents to whom the sugar is sold. If, however, the Court fixes a rate exceeding Rs. 156.99 per quintal for ' D-29 ' grade sugar and/or corresponding rates of other sugar fixed under the said order dated 28th November, 1974, and the petitioners are required to pay excise duty on the difference between the said two rates, the same will be made good to the petitioners by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned counsel has laid stress in this context on the fact of the assessee paying interest to the Government if the amounts were to be refunded to them. No one will pay interest on his own amounts. The receipt in this case was not at all in the form of income. 9. According to the learned counsel, the crucial question to be asked was whether the assessee received this amount as income. In the alternative, did the amount accrue or arise to him as income during the year. The questions relevant in this connection relate to the person to whom income accrues, the time when it accrues, the source from which it accrues and lastly, where it accrues. Referring to the Supreme Court decision in the case of E.D. Sassoon Co. Ltd. v. CIT [1954] 26 ITR 27, it is pointed out that the right to claim this amount has not arisen in the assessee's case. Even though the assessee received an excess amount and kept it in a suspense account, the position of the assessee was merely as a trustee or as a person who had merely kept the amount in deposit with him to be returned in either case with interest. There was no accrual of income. The learned counsel has, in this connection, referred to the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal amount, whatever be its nature with several conditions attached. Certainly against this background, this could not constitute the assessee's income taxable during the year. 12. Shri Inamdar, one of the interveners, pointed out that the right to determine the price is vested with the Government. A trader cannot unilaterally charge the price especially when a customer would dispute the same. If the assessee challenged the price fixed and an ad interim arrangement was arrived at, the extra amount received in an interim settlement cannot be said to be part of the price or even trading receipts at all. Reference is made to the decision in CIT v. Tollygunge Club Ltd. [1977] 107 ITR 776 (SC), especially certain passages at pages 779-780. According to the learned counsel, accrual implies a vested and complete right. Apart from the possibility of the trader receiving an amount, the vesting of the right as well as its being complete, according to the learned counsel, are important ingredients. Reference is made in this connection to the decision of the Gujarat High Court in Topandas Kundanmal v. CIT [1978] 114 ITR 237, the Bombay High Court in CIT v. Associated Commercial Corpn. [1963] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent. That the income in a matter of negotiation accrues only at the respective stages where decisions are concluded, would, according to the learned counsel, be clear from the decisions of the Supreme Court in CIT v. A. Gajapathy Naidu [1964] 53 ITR 114 and CIT v. Swadeshi Cotton Flour Mills (P.) Ltd. [1964] 53 ITR 134. These cases clearly lay down that the extra price fixed at the end of negotiations---which will apply also to a suit contested before a Court---became income only at the time when they are settled and received. Reference is also made to the decisions in Smt. Geeta Sanghi's case, Syed Khadruddin Ali Khan's case, K. Sadasiva Krishna Rao v. CIT [1983] 144 ITR 270 (AP) and Nizam Sugar Factory's case. 16. The learned counsel for the assessee, the main appellant in the present case, had raised a preliminary point that the assessment has become time barred when it was made. The limitation, having supervened the entire assessment, has to be struck down. This point was not raised before the authorities below. It has been raised as an additional ground of appeal before us. The learned counsel has referred to the decisions in CIT v. Mahalakshmi Textile Mills Ltd. [1967] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases where limitation is pleaded in respect of applications, appeals, suits, etc., has not been able to place before us any decision explaining the provisions of limitation imposed on an executive or judicial authority. Where there is a time bar to proceedings taken by or orders passed by an executive or judicial officer, the time bar really is a fetter on his discretion and action. We are not quite sure that the decisions dealing with limitation in respect of applications, appeals, suits, etc., which form the important subject-matter of the Indian Limitation Act, 1908, would apply to fetters placed on executive or judicial authorities for deciding a matter. Reference to cases in the former sphere can at best be made analogically when they refer to a time bar for action by an executive or judicial officer. Whether the point urged by the learned counsel for the department that in these latter cases exclusion of certain periods would automatically result in adding the excluded period to the one year provided, is not clear. The learned counsel for the assessee, however, having withdrawn this ground and since we are deciding the matter on merits in his favour, this point is not gone in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titute a part of the same. Actually we are not concerned with when the income accrues in this case because as trading receipts, income has already been received by the assessee. Assistance is also sought from the decisions in Uttam Singh Duggal Co. (P.) Ltd. v. CIT [1981] 127 ITR 21 (Delhi) and Addl. CIT v. U.P. State Agro Industrial Corpn. [1982] 133 ITR 597 (All.). 23. Alternatively, it is pointed out that the ' price ' under the order of the Government stood at Rs. 140.31 per quintal. In the writ petition, the assessee claimed a price of Rs. 187. The High Court fixed it at Rs. 156.99 per quintal. Looking to the uncertain, unfixed nature of the price for computing the profit, an estimate of the price has to be made. All that the ITO has done is to make this estimate of the price at Rs. 156.99 per quintal, which incidentally the High Court allowed by the consent order. There cannot be two sets of prices for a commodity. The assessee would receive only a single price. According to the learned counsel, splitting of the price was neither correct nor justified. On the basis of the receipts, the entire amount received by the assessee should be treated as the assessee's price for go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e period 1974, the price of sugar was fixed at Rs. 156.99 per quintal. By a subsequent fixation, the price was reduced to Rs. 140.31. For the season 1975, the Government fixed the price of levy sugar at Rs. 140.31. It would appear that because of increase in prices, cost of production, etc., the manufacturer was expecting a high price from the Government. Taking, therefore, into account the fair price he ought to receive, a writ was filed before the High Court challenging the price fixed by the Government. The assessee asked for a price of Rs. 187 per quintal in the writ petition. The High Court admitted the writ petition and granted stay of the order of 1974 fixation to be continued for 1975 fixation. It, however, permitted the assessee in the consent order passed to receive the sum of Rs. 156.99 per quintal towards the sale of sugar. Certain conditions were imposed on the assessee. The assessee was to produce a bank guarantee for the difference in amount between Rs. 156.99 and Rs. 140.31 per quintal. After the decision of the writ petition and the final fixation of the price, any excess received by the assessee was to be refunded with interest at 12 per cent. The Levy Sugar Price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use this was the price earlier fixed by the levy price sugar fixation order of 1974. This figure of Rs. 156.99, therefore, has absolutely no quality of price of sugar fixed on it. This stamp, as claimed by the learned counsel for the department, is simply not there. 27. On the contrary, the stipulation about the payment of interest, the provision of a bank guarantee for such payment, the writ petition remaining undecided even today that the price is not fixed by the Court, all go to indicate that the figure of Rs. 156.99 has absolutely nothing to do with any price that may be fixed in the future by the High Court. A plain reading of the situation, therefore, amounts to this : the writ petition having been admitted, the High Court took care to see that the assessee received some money during the year partly perhaps as security for the payment and partly perhaps to ease the assessee out of a bad financial position, on account of which it claimed a higher price of sugar based on the cost of production indicated. The price of sugar is fixed at Rs. 140.31, which the Government order stipulates. Any excess permitted by the High Court to be drawn under the consent order would be a mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osit with its particular nature not fixed. It is neither of the nature of the sales tax disputed nor of a dharmada collected as in those cases. These are specific levies and the Courts considered their nature as receipts. When in the present case the receipt is of an ad hoc deposit returnable with interest to specified purchasers, these decisions either for or against the department cannot have any application. 30. On the contrary, the decisions in A. Gajapathy Naidu's case and Swadeshi Cotton Flour Mills (P.) Ltd.'s case indicate that when price is under negotiation, any excess price paid subsequently would be regarded as the income of the year when the price is finally fixed and the negotiation comes to an end. It does not relate to the earlier year when the title to the goods had passed to the purchaser. We have, therefore, no hesitation in holding that the sum of Rs. 25,27,126 is not the assessee's income for the year or taxable during the year. The assessee's appeal is allowed. 31. Following the above decision, all other appeals are allowed. Per Shri D.S. Meenakshisundaram, Judicial Member --- I have perused the order of my learned brother, Dr. V. Balasubramanian, and I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osited a sum of Rs. 7,36,691, which the assessee withdrew after executing a security bond on 9-5-1966. Their Lordships of the Calcutta High Court held that the extra amount of compensation amounting to Rs. 7,24,914 was not income which accrued or arose during the previous year relevant to the assessment year 1956-57. Their Lordships held that the compensation amount could be considered to have accrued or arisen only when the said amount has become determinate or payable. The amount awarded by the Collector, in the first instance, was clearly a determined amount and was payable and the said amount had already suffered tax. With regard to the enhanced amount which was, subsequently, fixed by the order of the arbitrator, their Lordships held as follows : " . . . With regard to the enhanced amount which was subsequently fixed by the order of the arbitrator, the said amount cannot be said to be a determinate amount as the said amount is now pending appeal in the High Court. The enhanced amount may be affirmed by the High Court, may be reduced by the High Court or the entire enhanced amount may be disallowed. In the instant case the claim for the said further amount is in jeopardy and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only about the year of chargeability. On the contrary, we are here called upon to decide the nature of the receipt itself, whether it is receipt of an income character. 36. The precarious nature of the right of the present appellants to the excess amounts received by them under the orders of the Court, pending final adjudication of the dispute by the Court, will be clear when we study the facts of the case set out in the case of Topandas Kundanmal at pages 239 to 241. In that case, as a result of the judgment of the Gujarat High Court, in the land acquisition case, the award of the civil judge (S.D.) enhancing the compensation was set aside by the High Court in the appeal preferred by the State Government and the assessee became liable to repay to the State Government the amount of Rs. 50,000 with interest at 4 per cent per annum from the date of withdrawal to the date of such repayment. In that case, the State Government had deposited the compensation amount in the High Court and the assessee was allowed to withdraw only a portion, i.e., Rs. 50,000 out of it, on furnishing solvent security. It is on these facts, their Lordships of the Gujarat High Court held that it is only when ..... X X X X Extracts X X X X X X X X Extracts X X X X
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