9911796707
TMI Blog2018 (3) TMI 1039X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to the extent of 500 per Sq Ft has not accrued to the appellant and therefore cannot be treated as income of the assessee. The A.O has misunderstood the issue as of deduction of amount. The said amount has not accrued to the assessee and the question of claiming it as deduction would arise only if it is first held that it is income of the assessee. From the record, we also found that the ownership of additional FS1 is in dispute and the assessee has been permitted to develop and sell the such disputed additional FSI subject to certain conditions and deposit of 500 per sq ft of such additional FSI sold. The right to the said amount of 500 per sq ft has not accrued to the assessee and the owner of such amount would be decided by Courts and till such time as the issue is resolved the said amount does not accrue to the assessee. The detailed finding so given by the CIT(A) to the effect that 500/- per sq.ft of built-up area so deposited in the Court is not accrued to the assessee after relying on various judicial pronouncements, are as per material on record and which have not been controverted by learned DR by bringing any positive material on record. Accordingly, we do not find any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d suit against the firm restraining assessee firm from construction and consumption of remaining FSI. The City Civil Court in September 1998 passed the order in favour of the firm. The same order was challenged before the Hon'ble High Court by the society members. The Hon'ble Bombay High Court permitted the firm to consume the FSI subject to certain conditions including the condition of deposit of ₹ 500 per Sq.ft. with the city Civil Court on the sale of gala by the firm. The assessee firm submitted that the outcome of the money deposited with court will depend on the decision of the Hon'ble High Court, it is in the ;nature of contingent as the final decision is yet to be given by the court and thereby the outcome of deposit of ₹ 500 per sq.ft. will be crystallized only after the decision of the High Court. The assessee further submitted that in case if the assessee firm loses the case before the High Court then the society will be entitled to share of additional FSI (which is enjoyed FSI by the assessee firm) with the existing gala owners. In view of this the assessee firm has shown this amount of deposit of ₹ 1,15,04,185/- as contingent in nature and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 500/~ sq.ft. in the City Civil Court, within 15 days from the date of agreement for sale of gala with the intended purchaser/s. iii) Respondent No. 1 shall file the statement quarterly in the City Civil Court pertaining to area agreed to sell, the total consideration, and name and address of the such intended purchasers. iv) The Registrar of City Civil Court, Mumbai, shall invest the amount deposited in the Court, in the quantum of Rs. 1 lakh in the Nationalised bank for a period of initially one year and to go on renew till the hearing and final disposal of the suit No. 3159 of 1995. v) The amount deposited with accrued interest will be paid to the party which succeeds in Suit No. 3159 of 1995. vi) Respondent No. 1 shall not sell and /or dispose of the suit plot of land save and except the suit galas to be constructed, vii) Respondent No. 1 shall not give the galas to be constructed on the suit plot of land on Leave and License Basis and/or on Lease to any person." Subsequently the Hon "hie City Civil Court in it's order dated 8/9/2008 decided the issue in favour of the appellant but the court has not directed to, refund the deposit to the appellant. The appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt No. 1 will not have any right, title interest in FSI available for construction thereon and the same cannot be utilized by the Respondent No. 1 as the Respondent No, 1 is not the owner of the suit property. As such the plan sanctioned in respect of the suit property in favour of Respondnet no. 1 will be of no use because he will not be able to put up structure as he ceases to be owner of the Suit property. 7.2 The appeal filed by the owners of the industrial shed are pending before the Hon'ble High Court , The monies deposited by the appellant are also not refunded to the appellant. These facts clearly brings out that there is dispute, about the receipt of Rs. 500 per sq.ft. of the spaces sold out and only the High Court's decision will bring the dispute to end and then only it will be known who is entitled to the receipt of Rs. 500 per sq.ft. Until then the receipt cannot \ be considered as income of the appellant as it has not accrued to the appellant in view of the pending dispute. The Hon'ble Bombay High Court in the case of FGP Ltd. vs. CIT 326 1TR 444(Bom) has held as follows: " 4. The Apex Court in Godhra Electricity Co. Ltd. (supra) has laid down the tes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars of each of their customers from whom they charge the amount in excess of the prescribed limit." 18. The writ petition was dismissed on 25th April, 1980, and the stay was vacated but till the matter was decided on 25th April, 1980, the question whether the assessee could recover storage charges in excess of Ks. 11.50 per bag fixed by the Government remained disputed and in view of the above dispute the amount recovered in excess of the amount fixed could not be treated as income which had accrued to the assessee in the accounting year ending on 31st March, 1980. The above view have full support from the decision of the Supreme Court in the case of CIT vs. Hindustan Housing and Land Development Trust Ltd. (1986) 58 CTR (SQ 179: (1986) 161 ITR 524 (SC), wherein their lordship observed as under: " Held, affirming the decision of the High Court, that although the award was made by the arbitrator on 29th July, 1955, enhancing the amount of compensation payable to the respondent, the entire amount was in dispute in the appeal filed by the State Government. And the dispute was regarded by the Court as real and substantial because the respondent was not permitted to withdr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decrial amount in the execution court and permitted the assessee to withdraws the money only on furnishing an adequate security with the stipulation that if the amount was not deposited within the period mentioned, the stay order granted would be automatically discharged. Thereafter by furnishing a bank guarantee, the assessee was permitted to withdraw the money. The bank guarantee given by the Central Bank of India provided that the bank , would undertake to pay the entire amount of Rs. 2,45, 190 without any demur merely on the demand of the Hon'ble High Court if the revision was allowed by it. The Ld. Accountant Member felt that when as a consequence of application filed in the High Court challenging the very validity of the appointment or arbitrator and when the High Court stayed the operation of the decree, no right to those amounts accrued to the assessee within the meaning of s.5 of the IT Act, so as to say tat those amounts were the income of the assessee. The mere receipts of the money by furnishing a bank guarantee does not mean that the assessee received the amount as and by was of income. It is only tentative Member attached with the liability of repayment in case th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Del) held that so long as the appeals pending the enhanced compensation determined the District Judge could not said to have accrued and could not be taken into account in computing the capital gains. That could not be said to have accrued and could not be taken into account in computing the capital gains. That was a case where land was acquired by the Government under the Land Acquisition Act of 1984. A notification under s. 4 of the Act was made. Thereafter a declaration under s.8 was also made. The assessee then filed their claim before the Land Acquisition Collector for a sum of about Rs. 24 lacs. The Land Acquisition Collector after due enquiry gave an award for a sum of Rs. 12,13,000. After this award the amount was deposited but the assessee did not accept this award of compensation. He moved reference petition under s. 18 of the Land Acquisition Act for the determination of compensation by the Government. The Additional District Judge determined the compensation by enhancing it by Rs. 3.58 lacs. Still dissatisfied the assessee filed appeal for further enhancement in the High Court. The Government also filed a counter appeal against in the enhancement granted by the Addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compensation is decided and the amount of enhanced compensation becomes determinable and payable, the amount cannot be said to arise or accrue. With the filing of the appeal by the Government against the determination of compensation by the District Court, the amount is in jeopardy. The right to receive the enhanced compensation by the assessee is clearly unsettled. The assessee has withdrawn it only on furnishing security for restitution. The withdrawal of the amount is contingent in as much as it is likely to be defeated by the acceptance of the appeal of the Government. The liability to pay additional or enhanced compensation is an incents or contingent right not creating a debt." It will be seen from this judgment that with the filing of the appeal by the government against the determination of compensation by the District Judge, the amount fell into jeopardy, that the right to receive the enhanced compensation was clearly unsettled, that the withdrawal of the amount was subject to the contingent right in as much as it was likely to be defeated by the acceptance or the appeal of the government. The liability to pay additional or enhanced compensation was, then an incheate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Sohanla vs. ITO 16 TTJ(J)) 550 has held: "The assessee is a dealer of Urea, the price of which is regulated by the Central Government. With effect from 1st June, 1974, the selling price of Urea was enhanced by the Govt. Under the Notification but a condition was imposed that old stock would be sold at an old rate. The assessee disputed such restriction imposed by the Govt. And dispute was carried to the Hon'ble High Court under a writ petition. Pending the writ, the High Court permitted the assessee to sell the old stock at the enhanced rate, subject to the condition that a separate account for the difference of the old and the enhanced rate would be maintained and the excess amount would be deposited with the Distt. Collector. The said writ was finally decided by the High Court in December, 1978 and, then the assessee made an application for refund of the excess amount that was being deposited with the Collector, Then, the State Government opposed the submission of the assessee and the High Court ordered the refund of the amount subject to the assessee furnishing a bank guarantee. It was stated in the order that if in appeal, the order of the High Court was rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserves enforceability by legal process is considered to be sine qua non of a legal right. For such observation, reliance was on the book by Paton on Jurisprudence (4th Edition page 286). Then the High Court observes the question of enforceability of the right to receive the income is, therefore, embedded in tee concept of accrual of income while considering the question of taxability of such income under the provisions of the IT Act. The point at issue has to be seen in the light of the above legal position. The question for consideration is whether the assesses had acquired . any enforceable right in the year under appeal. The High Court passed the order pending the writ in the first instance at 3rd Oct, 1974 permitting the assessee to sell the stock at the enhanced rate subject to the condition that the excess amount would remain in deposit with the Collector and a separate account will be maintained by the assessee therefore. It clearly shows that the assessee had not acquired an enforceable right during the year under appeal to get the amount, which was deposited with Collector. The assessee having not acquired the impugned amount during the year under appeal, which according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax paid by the assessee for a particular year. In that situation the assessee will be in a adverse position and no court has held in any case that any person aggrieved should be in adverse position. This is a case of death by accident and if the legal heir directed to refund the compensation along with interest then there is not remedy to these legal heirs. Therefore, in view of these facts and circumstances, we are of the considered view that interest so awarded is liable to be assessee in the year in which it reached its finality." 7. 3 In view of the above decisions, I am of the view that the amount of Rs.500 per sq.ft. for the spaces sold out is a disputed receipt and it will become ' income of the appellant only if the dispute comes to the finality and the final decision is in favour of the appellant. Until then the receipt cannot be considered as income in the appellant's hands. Hence no income has accrued to the appellant from the receipt of Rs. 500 per sq.ft. from the spaces,. sold .out in this accounting year relevant to this asst. year. The A.O is directed to delete the addition made. p. In the result, the appeal is allowed. 7. Against the above order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ress any opinion on the merit of the suit, The Learned advocate for the plaintiffs and the defendant no, 1 agreed that the defendant no. 1 should be allowed to do only piling work. The said piling work may be one feet above the ground level and it should not be more then one feet above the ground level The above statement of the learned advocate for the Plaintiffs and the dependent no.l appeals to me proper and acceptable. Hence the defendant no.l is allowed to do piling work upto one feet above ground level only of proposed building." 11. The City Civil Court passed the order in September, 1998 in favour of the assessee firm that the firm is the sole owner of the additional FSI. The said order was challenged by the societies before the Hon'ble Bombay High Court. The Hon'ble Bombay High Court permitted the assessee firm to consume the additional FSI, subject to the certain condition, including the condition of the deposit of ₹ 500/- per sq. ft. of built up area with City Civil Court on sale of gala by the assessee firm. The assessee firm was required to deposit @ ₹ 500/- per sq. ft. of built up area of gala sold in respect of additional FSI. The order of the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivalents to 152874 sq. ft with the conversion factor of 10.764 per sq. mtr. The assessee firm is entitled to undisputed FSI of 152874.63 sq. ft. built up area. An FSI sold after 152874.63 sq. ft. will be liable for court deposit @ ₹ 500/- sq. ft. built up area. The area developed after 1995 can be summarized as follows: Area in sq meter Area in sq feet Total FSI available as on 1995 89220.46 sq. mtr 9,63,894 sq. ft/ - FSI not in dispute that belongs to appellant 52553.75 sq. mtr 5,65,689 sq. ft . FSI in dispute for which right of development is subject to outcome of judicial proceedings and ₹ 500 to be deposited in Court i 36666.71 sq. mtr 3,94,680 sq. ft 13. The area sold upto 1,52,874.63 sq ft belonged to the assessee firm undisputedly and therefore whole of the sale consideration belongs to the assessee and has been duly accounted for in the books of accounts. As per the chart enclosed for A Y 2006-07, 2007-08 and 2008-09, the assessee started making deposit with court an amount equal to ₹ 500 per sq ft once the disputed FSI was utilized. The amount deposited in the Court in the three years in appeal are as follows; A Y 2006-07 AY 2007-08 A Y 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
