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TMI Blog1984 (9) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... n to April or 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 sugar produced which has to be sold to the Govt. 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 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 Govt. in the Ministry of Agriculture through the publication or Orders in this regard. Thus on 28th Nov., 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. 156.00 per quintal. Subsequently on 14th July, 1975 another Order was passed varying price w.e.f. 12th July, 1975. The revised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 974, dt. 28th Nov., 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 1975 season purchased by respondents from the commencement of the said season on the petitioner furnishing as the bank guarantee as hereinafter mentioned. 5. By consent the petitioner to furnish periodically to the satisfaction of the registrar of the High Court and in the draft form hereto annexed and with such variations herein 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 affixed by the Sugar (Price Determination for 1974-75 Production) Order, 1974 dated 28th Nov., 1974 viz. Rs. 156.99 per quintal of D-29 Grade Sugar and for corresponding rates of other sugar and for corresponding rates of other sugar fixed by the said rates of other sugar fixed by the said Order and the price fixed by the Sugar (Price Determination for 1975-76 Production) Order, 1975 dated 29th Nov., 1975, viz., Rs. 140.31 per quintal of D-29 Grade Sugar and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r quintal of D-29 Grade sugar and the corresponding rates of other sugar fixed by the said Order dt. 28th Nov., 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 high than Rs. 140.31 but lower than Rs. 156.99 peer quintal, the petitioner shall apply to Central Excise Authorities for refund of the difference of Excise duty and is 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 or other sugar fixed under the said order dt. 28th Nov., 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 petitioner by there respondents concerned immediately." 5. As a result of the consent terms, the assessee was to collect an amount of Rs. 156.99 per quintal for the sugar sold as under the previous orders of the Govt. The sum of Rs. 140.31 for D-29 Grade sugar was credited to the Sales Account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as income. In the alternative did the amount accrue or arise to him as income during the year. The question 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 there Supreme Court decision in the case of E. D. Sassoon Co. Ltd. Ors. vs. CIT (1954) 26 ITR 27 (SC), it is pointed out that the right to claim this amount has not arising 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 ld. counsel had, in this connection, referred to the decision of the Punjab Haryana High Court in the case of Salig Ram Kanhaya Lal vs. CIT (1982) ITR 915 which followed the decision in (1984) 26 ITR 27, CIT vs. Jai Prakash Om Prakash Co. Ltd. (1961) 41 ITR 718 (P H) and CIT vs. Ashokbhai Chimanbhai (1965) 56 ITR 42 (SC), all supporting the assessee on his argument about accrual. It is pointed out that the special leave pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extra amount received in an interim settlement cannot be said to part of the price or even trading receipts at all. Reference is made to the decision in CIT vs. Tollygunge Club Ltd. 1977 CTR (SC) 195 : (1977) 107 ITR 776 (SC) especially certain passages at pp. 779-780. According to the ld. 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 ld. counsel, are important ingredients. Reference is made in this connection to the decision of the Gujarat High Court in Topandas Kundanmal vs. CIT 1976 CTR (Guj) 507 : (1978) 114 ITR 237 (Guj), Bombay High Court in CIT vs. Associated Commercial Corporation (1963) 48 ITR 1 (Bom), Calcutta High Court in CIT vs. Hindustan Housing Land Development Trust Ltd. (1977) 108 ITR 380 (Cal) and the Allahabad High Court in Lakshman Prakash vs. CIT (1973) 92 ITR 492 (All). The decision in the case of Addl. CIT vs. New Jehangir Vakil Mills Co. Ltd. (1979) 8 CTR (Guj) 61 : (1979) 117 ITR 849 (Guj) of Gujarat High Court is also referred to. 13. Shri V. H. Patil, intervener, pointed out that all receipts do not necessarily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lay down that the extra price fixed act the end of negotiations which will apply also to a suit contested before a court become income only at the time when they are settled and received. Reference is also made to decisions in CIT vs. Smt. Geeta Sanghi (1983) 36 CTR (MP) 96 : (1983) 144 ITR 834 (MP), CIT vs. Syed Khadruddin Ali Khan Anr. (1983) 35 CTR (AP) 344 : (1983) 144 ITR 266 (AP), K. Sadasiva Krishna Rao vs. CIT (1983) 33 CTR (AP) 34 : (1983) 144 ITR 270 (AP) and (1984) 145 ITR (SC) 5. 16. The ld. 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 ld. counsel has referred to the decisions in CIT vs. Mahalakshmi Tastile Mills Ltd. (1976) 66 ITR 710 (SC), Hukumchand Mills Ltd. vs. CIT (1967) 66 ITR 722 (SC) to claim that the powers of the Tribunal are not circumscribed by the rules. The Tribunal can admit a point where the facts are clear and do not require investigation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... really is 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 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 ld. counsel for the department that in these latter cases exclusion of certain periods would automatically result in auditing the excluded period toe the one year provided i not clear. The ld. 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 into. 22. On merits the ld. counsel forth department has pointed out that the sum of Rs. 25,27,126 is liable to be taxed as income during the year. Taking us through the entire procedure relating to the price fixation the dispute before the court, the Consent Order, etc., the ld. counsel has pointed out that these documents themselves clearly indicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 597 (All). 23. Alternatively, it is pointed out that the "price" under the order of the Govt. 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 set of prices for a commodity. The assessee would receive only a single price. According to the ld. 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 goods sold and hence income. Authority for this is sought from the decision of the Supreme Court in Mrs. Chorshed Shapoor Chenai vs. Asstt. CED (1980) 14 CTR (SC) 356 : (1980) 122 ITR 21 (SC). Other cases referred to in this connection are Shah Vrajlal Madhavji vs. CIT (1974) 95 ITR 614 (Ker) and CIT vs. Nadiad Electric Supply Co. Ltd. (1971) 80 ITR 650 (Bom). Even on the q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ., the manufacturer was expecting a high price from the Govt. Taxing, therefore, into account the far price he ought to receive a Writ was filed before the High Court challenging the price fixed by the Govt. 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 1974 fixation 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 there price any excess received by the assessee was to be refunded with interest at 12 per cent. The Levy Sugar Price Equalisation Fund Act, 1976, superimposed on the above an obligation on the assessee to refund the "excess realisation" to the fund created under that Act. The excess realisation itself is defined in s. 2 of the Act as: "(i) means the price realised by any producer on the sales of levy sugar of such grade, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the court, all go to indicate that the figure of Rs. 156.99 has absolutely within 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 his, 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 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 Govt. Order stipulates. Any excess permitted by the High Court to be drawn under the Consent Order would be mere deposit with the assessee. Lest the assessee should fritter away this money or cause loss to the Govt. purchaser the High Court stipulated the production of the bank guarantee. Because amount is not the price, the High Court also stipulated the payment of interest. We have, therefore, no hesitation in coming to the conclusion that there excess of Rs. 25,27,126 is only a deposit with the assessee to strengthen its financial position against an alleged increase in cost of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 asked 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 allowed. 31. Following the above decision, all other appeals are allowed. 22nd Sept., 1984 D. S. MEENAKSHISUNDARAM, J. M. 32. I have perused the order of my ld. Brother, Dr. V. Balasubramanian, and I agree that the appellants are entitled to succeed in their appeals. However, I would like to add a few words in support of the same. 33. In para 21 of my ld. Brother's order, he has death with the contentions of the ld. Counsel for the department relating to the eustion of limitation which was raised by the appellant Shri Someshwar Sahakari Sakhar Karkhana Ltd. Pune, in ITA No. 201 (Pune)/1982, by way of an additional ground. However, in view of the fact that Shri B. L. Prophale, the ld. counsel for the appellant, has withdrawn this additional ground o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already suffered tax. With regard to the enhanced amount which was subsequently fixed by the order of the arbitrator. Their Lordships held as follows at p. 394 of the Reports: "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 the right of the assessee to receive any further amount is also clearly unsettled. Unless the question of payment of may enhanced compensation is decided and the amount of enhanced compensation becomes determinate and payable, the said amount cannot, in our opinion, be said to accrue or arise. The further amount awarded by the arbitrator forms in reality at this stage the subject- matter of a mere claim or an assertion on the par of the assessee to receive the said amount, but the said claim has yet to be accepted by the court. The facts that the assessee was allowed to withdraw the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, as a result of judgment of the Gujarat High Court, in the Land Acquisition case, the award of the Civil Judge (SD) 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 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 those facts, their Lordships of the Gujarat High Court held that it is only when there amount of compensation is adjudicated upon the court and it is only when the court awards interest on such enhanced amount of compensation, that the assessee had an enforceable right to the principal amount of compensation as well as to the interest. Their Lordships further held that if an assessee has got an inchoate right and has not acquired any vested right to enhanced or additional compensation over and above what has been offered to him by the Law Acquisition Officer, it cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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