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TMI Blog2021 (6) TMI 892X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT ORDER J. Sudhakar Reddy, Member (A) Both these appeals are filed by the assessee directed against the Common order of the Learned Commissioner of Income Tax (Appeals)-20, Kolkata [hereinafter the CIT(A) ], passed u/s. 250 of the Income Tax Act, 1961 (hereinafter the 'Act'), dated 06.06.2019 for the Assessment Years 2005-06 2006-07. As the issues arising in both these appeals are common and as the facts are identical, for the sake of convenience, they are heard together and disposed off by way of this common order. 2. The facts in brief are as follows: That the return for the Assessment Year 2005-06 was filed on 05.10.2005 disclosing a total income of ₹ 719,24,787/-. The return was duly processed u/s. 143(1) and the case was selected for scrutiny and passed the order u/s. 143(3) on 28.11.2006 wherein assessed income ₹ 756,14,140/-. That the assessee Company has worked for HSCL in Libya in 1984. That due to some dispute the assessee company has approached the Arbitrators and the original Arbitration Award was passed on 28.11.1998 wherein the Ld. Arbitrators have awarded amounting to 2250000 Libyn Dinar. That the Decree was passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee Company was entitled to additional depreciation u/s. 32(1)(iia) amounting to ₹ 91,17,497/- and the A.O. was disallowed the said amount without any specific reason which is baseless. That the A.O. has wrongly charged interest u/s. 234D amounting to ₹ 19,28,569/- is completely arbitrary, unjustified and illegal. 3. On appeal the ld. first appellate authority confirmed the order of the AO. Aggrieved, the assessee is in appeal before us on the legality of reopening the assessment u/s. 147 of the Act as well as addition made on merits. 3.1. The ld. Counsel for assessee submitted the reopening of assessment is bad in law for both the assessment years for the reason that, the reasons were based on findings of the ld. CIT(A) in his order dated 20.07.2016 for the AY 2009-10. He referred to the reasons of reopening and the findings of the ld. CIT(A) in his order dated 20.07.2016 for the AY 2009-10 and submitted that the reopening of these assessments based on the directions of the ld. CIT(A) is bad in law. For this proposition, he relied on the judgement of the jurisdictional High Court in the case of R.H. Dave vs. Commissioner of Income-Tax reported in 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case held as follows: I have carefully perused the assessment order and submissions of the assessee. In the assessment order the A.O. himself has analyzed the law relating to taxability of interest received on delayed payments of compensation and agreed that amendment to section 145A, which provides for taxation of interest received by assessee on compensation or on enhanced compensation' as income of the year in which it is received, is applicable from A.Y. 2010-11 and was not applicable for the assessment year under appeal. However, he was of the view that under such a situation a substantial part of interest income would not be taxed at all. He was of the view that no tax mechanism or provision can ever allow an income to escape assessment and that since the present case falls outside the period from which the amendment to section 145A was effective, the same was to be dealt with on merits. According to the A.O. the assessee's claim to receive principal and interest had accrued only when the favourable Court verdict was delivered on 17.04.2008 and the assessee could not have accounted for receipt of interest prior to the Court verdict because the right to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessed as assessee's income of the year under appeal since, the interest was awarded by the Court for the period 28.11.1998 to 31.03.2008, no part of such interest accrued during the assessment year under appeal, therefore, no part of such income is assessable as income of the assessment year 2009-10. As regards amended section 145A it is observed that the same has been amended by the Finance Act, 2009 with effect from 01.04.2010 wherein in sub-clause (b) this has been inserted as under: Interest received by an assessee on compensation or on enhanced compensation, as the case may be, shall be deemed to be the income of the year in which it is received. CBDT has issued Circular No. 05/2010 dated 3rd June, 2010, wherein Para 46 it has in Para 46.4 clarified: This amendment has been made applicable with effect from 1st April, 2010, and will accordingly apply in relation to assessment year 2010-11 and subsequent assessment years. Following the above referred to judgements as well as the amendment of Sec. 145A and the CBDT's Circular, it is amply clear that the interest on delayed payment of Arbitration Award amount cannot be assessed to income-tax i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disposal of the case; it was possible in certain cases that in order to render a finding in respect of A, a finding in respect of B might be called for; for instance where the facts showed that the income could belong to either A or B and to none else, a finding that it belonged to B or did not belong to B, would be determinative of the issue as to whether it could be taxed as A's income; a finding respecting B was initially involved as a step in the process of reaching the ultimate finding respecting A; if, however, the finding as to A's liability could be directly arrived at without necessitating a finding in respect of B, then a finding made in respect of B was an incidental finding only and it was not a finding necessary for the disposal of the case pertaining to A. Here, we have noticed the language of Clause (a) of Sub-section (1) of Section 251, which empowers the AAC to set aside the assessment and refer the case back to the ITO for making a fresh assessment in accordance with the direction given by the AAC. This power must be limited to the assessment year in question. In view of the categorical ratio of the Supreme Court in the aforesaid decision, in our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of R.S. Davey -vs.-CIT [140 ITR 1035], a similar issue relating to scope of powers of first appellate authority had arisen for the consideration of Hon'ble Calcutta High Court and it was held by the Hon'ble Calcutta High Court that the ld. CIT(Appeals) was not competent to give to the Assessing Officer the direction in respect of an assessment year which was not in appeal before him. Respectfully following the said decision of the Hon'ble jurisdictional High Court, we cancel the direction given by the ld. CIT(Appeals) to the Assessing Officer in respect of the assessment year 2015-16, which was not in appeal before him and allow Ground No. 3 of the assessee's appeal. 6.6. In the case of Sri Biswajit Chatterjee (supra) the Kolkata 'C' Bench of the Tribunal held as follows: 11. Now the Revenue has agitated before us that Ld. CIT(A) erred in not giving direction to reopen the case of earlier years of the assessee in which investments were made. In this regard, we find that Ld. CIT(A) has been given power u/s. 251 of the Act to confirm the order of AO reduce, enhance or annul assessment order under the provision of Act there is no power available t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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