1991 (6) TMI 61

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..... the work of supply of stones during the years 1966-67 to 1968-69. A dispute arose regarding some claim of the assessee which was referred to arbitration in the year 1972. The arbitrator gave his award on November 5, 1976, and fixed a sum of Rs. 2,32,000 as payable to the assessee by way of compensation. The compensation as awarded was treated as the income of the accounting year which ended on Ma .....

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..... aforesaid amount of Rs. 2,32,000 cannot be regarded as in the nature of a capital receipt. But his submission is that as the assessee is maintaining its accounts as per the mercantile system and the execution of the contract had taken place in the years 1966-67 to 1968-69, the compensation has to be treated as income for those years and not for the assessment year 1977-78, as was done by the Depa .....

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..... , as, otherwise, the assessee would have shown the same in its books of account as it was maintaining the same as per the mercantile system. This submission is met by Shri Mahanti by contending that if the income had, in fact, accrued in those years and the assessee had not shown the same in its books of account, the present would be a case of suppression of income in which eventuality it would ha .....

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..... e in a particular accounting year, he shall include the same in the income in the assessment of the succeeding assessment year. The further observation in this case is that no power is conferred on the Income-tax Officer under the Act to relate back an income that accrued or arose in a subsequent year to an earlier year on the ground that the said income arose out of an earlier transaction. Let .....

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..... . On the facts of the case, we are, therefore, satisfied that though the assessee maintained the mercantile system of accounting, the compensation as awarded by the arbitrator cannot be said to have accrued during the years when the contract was executed. The claim made before the arbitrator ripened into a right for the first time when the award was made. The same having been made on November 5, 1 .....

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