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TMI Blog2017 (8) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... warded at the final hearing would not necessarily be related to the interest earned on the fixed deposit in the absence of any such direction being made in the interim order. Thus the impugned order of the Tribunal has correctly held that the decision of the Delhi High Court in Paragon Construction (supra) would have no application in view of the above distinction to the present facts. In the present case it is an accepted position that the right to receive the interest from the fixed deposits already accrued to the appellant-assessee. In such circumstances, the interest on the fixed deposit would be chargeable to tax, as sought to be done by the Assessing Officer under the head income from other sources. Principle of the restitution as provided under Section 144 of the Civil Procedure Code applicability - Held that:- An application for restitution may or may not be made by the successful party. In any event even if application is made, the benefit which the assessee would have gained out of benefit/income out of the amount of ₹ 63.33 lakhs would be net of tax. In those circumstances, the requirement for the appellant to pay to the State would be only the net amount rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Division enhanced the compensation to ₹ 63.33 Lakhs (including interest of ₹ 17.57 Lakhs). (c) Being aggrieved with the order dated 21st September, 1996 passed by the Civil Judge Senior Division, the State filed an appeal bearing F.A. No.716 of 1996 before this Court. In the above appeal, this Court by an interim order dated 9th July, 1997 permitted the appellant/assessee to withdraw the amount of ₹ 63.33 Lakhs on her furnishing a bank guarantee of ₹ 35 Lakhs and solvent surety for the balance to the satisfaction of the Court. Consequent to complying with the above, the enhanced compensation of ₹ 63.33 Lakhs was received by the appellant/assessee on 19th August, 1997. (d) The appellant/assessee thereafter deposited the entire amount of ₹ 63.33 Lakhs in Fixed Deposit with the Banks. The appellant/assessee earned interest of ₹ 3.40 Lakhs on the Fixed Deposit with the bank for the Assessment Year 1998-99. The Assessing Officer sought to tax the interest received on Fixed Deposit of ₹ 63.33 Lakhs of the Banks as income from other sources. The appellant/assessee resisted the same on the ground that the issue of compensation has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original compensation and enhanced compensation received on account of land being acquired is not taxable, for the reason it is agricultural income. However, so far as interest on enhanced compensation under Section 28 of the Land Acquisition Act for Assessment Years 1996-97 and 1997-98 is concerned, it restored the same for reconsideration, to the Assessing Officer. So far as the appeals for Assessment Years 1998-99 to 2001-02 are concerned, it allowed the Revenue's appeal by holding that interest received on fixed deposit with banks is taxable. It held that the decision of Delhi High Court in Paragon Construction (I) Private Limited .vs. C.I.T. (2005) 274 I.T.R. 413 being relied upon by the appellant is not well founded. This is so as it would not be applicable to the facts of the present case in as much as in that case the interim order of the Court allowing the party to withdraw the amount provided for payment of interest in case the applicant/assessee loses at the final hearing of the proceeding seeking to challenge the award by an Arbitrator. In this case, the interim order of the Court dated 9th July, 1997 which allowed the appellant to withdraw the amount of ₹ 63 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is not a continuation of the compensation proceedings along with interest thereon which are receivable consequent to the land acquisition. Thus the two should not be linked. (c) The decision of the Delhi High Court in Paragon Construction (supra) would have no applicability to the present facts. This is as observed by the Tribunal for the reason that in the interim order dated 9th July, 1997 passed by the High Court allowing the appellant/assessee to withdraw the amount of ₹ 63.33 lakhs contained no stipulation that in case appellant/assessee loses before the High Court, then the assessee was obliged to return the amount of ₹ 63.33 Lakhs along with interest, as was the case in the case of Paragon Construction (supra). (d) Section 144 of the Civil Procedure Code would have no application to the present facts, in absence of successful party i.e. the State making an application to the Court for restitution. 8. We have considered the rival submissions. The only substantial question of law raised relates to the impugned order of the Tribunal completely misconstruing the decision of the Delhi High Court in Paragon Construction (supra) which according to the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial question of law in favour of the Revenue. However, we have considered the further submissions made by the appellantassessee challenging the impugned order. This as we heard the parties on the same at length. The core issue which arises for our consideration is whether interest received on fixed deposit for the subject assessment year has accrued to the appellant-assessee for being taxed. The main limb of the appellant-assessee's case as canvassed before us is that the interest on the fixed deposit should not be brought to tax in the subject assessment year as the source of the deposit on which the interest has been earned is the compensation received by her in land acquisition proceedings. It is a settled issue between the parties that the amounts received at the interim stage in the land acquisition proceedings cannot be brought to tax not only for the reason that it is agricultural income but also for the reason that final determination of the enhanced compensation receivable by the appellant-assessee has not yet been finally determined. Mr. Thakar very fairly states that it is not appellant's claim that interest received on the fixed deposits is not taxable because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds from which the income has been earned. In the mercantile system of accounting, income accrues when the right to receive the same arises, even though the actual receipt could be at a later date. In the present case it is an accepted position that the right to receive the interest from the fixed deposits already accrued to the appellant-assessee. In such circumstances, the interest on the fixed deposit would be chargeable to tax, as sought to be done by the Assessing Officer under the head income from other sources. 12. It was next submitted that in any view of the matter on the principle of the restitution as provided under Section 144 of the Civil Procedure Code , the appellant-assessee would be obliged to return the amount of ₹ 63.33 lakhs along with all benefits obtained by her to the successful party i.e. the State. Section 144 of the Code of Civil Procedure would only be triggered if the successful party makes an application to the Court for restitution. This application for restitution by the successful party is not a certainty. An application for restitution may or may not be made by the successful party. In any event even if application is made, the benefit whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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