SMT. SHARDA PAREEK, Jaipur V. ACIT, Jaipur

ITA 1112/JPR/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91875 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 19-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NEENA JEPH JCIT DHK
• Keywords: Question of law
• Section: 143(3); 56(2); 154

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 1112/JP/2011 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 . SMT. SHARDA PAREEK, 27, INDIRA NAGAR, TONK ROAD, JAIPUR. CUKE VS. THE ACIT, CIRCLE-6, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AIQPP 0046 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJEEV SOGANI (CA) JKTLO DH VKSJ LS@ REVENUE BY : SMT. NEENA JEPH (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 27.05.2015. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 17.07.2015. VKNS'K@ ORDER PER SHRI T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATING FROM THE ORDER OF LD. CIT (A)-II, JAIPUR DATED 21.10.2011 FOR THE A.Y. 2007-0 8. THE SOLE GROUND OF APPEAL IS AGAINST CONFIRMING THE ACTION OF THE AO IN TAXING A SUM OF RS. 13,80,216/- AS ALLEGED INTEREST INCOME. 2. THE ASSESSEE FILED RETURN OF INCOME ON 26.07.200 7 AT RS. 1,47,298/-. THE AO OBSERVED THAT RETURN OF ASSESSEE WAS ACCOMPANIED WI TH THE COMPUTATION OF TOTAL INCOME AND VARIOUS OTHER ANNEXURES AND SCHEDULES. C OPIES OF TDS CERTIFICATES IN THE NAME OF THE ASSESSEE AND MS. CHAVVI PAREEK HER DAUG HTER ARE ATTACHED TO THE RETURN. 2 ITA NO. 1112/JP/2011 A.Y. 2007-08 SMT. SHARDA PAREEK, JAIPUR. THE NATURE OF PAYMENTS MENTIONED IN THE TDS CERTIFI CATES IS TDS ON MOTOR ACCIDENT CLAIM TRIBUNAL (MACT) CLAIM, INTEREST, TDS ON MACT AWARD INTEREST. THE CASE WAS SCRUTINIZED UNDER SECTION 143(3) OF THE IT ACT. TH E ASSESSEE HAD INTIMATED THAT IN VIEW OF THE PENDENCY OF AN APPEAL FILED BY THE INSURANCE COMPANY IN THE HIGH COURT AT JAIPUR, INTERIM PAYMENT AGAINST INTEREST CANNOT BE TAXED PENDING FINALISATION OF DISPUTE REGARDING COMPENSATION ON WHICH INTEREST IS GRANTED . THE ASSESSEE LADY HAD ALSO PREFERRED AN APPEAL FOR ENHANCEMENT OF THE AWARD AM OUNT IN THE HIGH COURT. THE HONBLE HIGH COURT VIDE ORDER DATED 06.08.2004 AND 06.05.2005 DIRECTED THAT INTERIM PAYMENT TO BE CONTINUED BEING MADE AGAINST INTEREST PAYMENT AND IN THE FUTURE ALSO. THE JURISDICTIONAL HIGH COURT VIDE ORDER DATED 06.0 5.2005 PLACED ON RECORD FOR THE ASSESSMENT YEAR 2006-07 ORDERED AS UNDER :- THE ADDITION INTERIM ORDER DATED 06/08/2004 IS MOD IFIED IN THE MANNER THAT THE OPERATION OF THE IMPUGNED AWARD SHA LL REMAIN STAYED SUBJECT TO THE CONDITION THAT THE APPELLANT PAYS TO THE CLAIMANTS THE AMOUNT OF INTEREST SO FAR ACCRUED IN PROPORTION AS DIRECTED BY THE LEARNED TRIBUNAL, AND CONTINUES TO PAY INTEREST THAT WOULD HAVE ACCRUED ON THE AMOUNT, IT THE AMOUNT WERE TO BE INVESTED IN THE M ANNER DIRECTED BY THE LEARNED TRIBUNAL. SUCH AMOUNT OF INTEREST SHOULD BE PAID QUARTERLY, BY THE DEPOSITING IN THE SAVING BANK ACCOUNT OF THE RESPEC TIVE CLAIMANTS, IN PROPORTION, AS DIRECTED BY THE LEARNED TRIBUNAL. TH E BANK ACCOUNT NUMBERS TO FURNISHED BY THE CLAIMANTS IN THE COURT WITHIN TWO WEEKS FROM TODAY. THE AMOUNT OR ARREARS OF INTEREST BE DE POSITED WITHIN SIX WEEKS FROM TODAY. IT IS MADE CLEAR THAT IF ANY DEFAULT IS COMMITTED I N PAYMENT OF SUBSEQUENT INTEREST, THIS STAY ORDER SHALL COME TO AN END AUTOMATICALLY. 3 ITA NO. 1112/JP/2011 A.Y. 2007-08 SMT. SHARDA PAREEK, JAIPUR. HOWEVER, IF ANY DISPUTE IS RAISED REGARDING QUANTUM OF INTEREST WHICH IS PAID BY THE APPELLANT, IT WILL BE OPEN TO THE CLAIM ANTS TO GET IT CLARIFIED FROM THE COURT BY MOVING APPLICATION. IT IS FURTHER CLARIFIED THAT IF THE CLAIMANTS NEED ANY PART OF CORPUS FROM THE AWARDED AMOUNT, IT WILL BE OPEN TO THE CLAIMANTS TO MOVE APPLICATION IN THE CO URT FOR MODIFICATION OF THE ORDER. 2.1. IT IS FURTHER OBSERVED THAT ASSESSEE HAD CITED SEVERAL CASES IN SUPPORT OF ARGUMENT AND REQUESTED THAT THE ENTIRE AMOUNT DIREC TED TO BE PAID AS AN INTERIM MEASURE CANNOT BE TAXED AS INTEREST INCOME IN THE H AND OF THE ASSESSEE AT LEAST AT THIS PARTICULAR STAGE. NONE OF THE CASES CITED BY THE A SSESSEE SUPPORT THE CONTENTION OF THE ASSESSEE. THE CASE OF HINDUSTAN HOUSING & LAND DEV ELOPMENT TRUST LTD. DEALS WITH CAPITAL GAIN AND IS ALSO DISTINGUISHABLE BECAUSE IN THAT CASE THE DISPUTES AS WELL AS QUANTUM WERE NOT SETTLED. THE CASE OF SANKARI MANI CKUYAMMA, 105 ITR 172 (AP) WAS DISTINGUISHABLE AS IT DEALS WITH RIGHT TO RECEIVE A ND RIGHT TO CLAIM COMPENSATION AND IT WAS HELD THAT SAME WAS VITAL TO BE IGNORED. THE OT HER CASES CITED BY THE LD. COUNSEL IN HIS SUPPORT ARE WITH REGARD TO THE YEAR OF TAXABILI TY OF THE INTEREST ON COMPENSATION RECEIVED. THE APEX COURT HAS HELD THAT WHERE A DIS PUTE AROSE BETWEEN THE ASSESSEE CONTRACTOR AND THE GOVERNMENT AND THE ARBITRATOR AW ARDED CERTAIN AMOUNT BY WAY OF COMPENSATION FOR THE WORK DONE AS ALSO INTEREST, IN TEREST AWARDED BY THE ARBITRATOR ON COMPENSATION AMOUNT IS INCOME, FOR WHICH THE AO REL IED UPON THE CASE OF CIT VS. B.N. AGARWALA, 259 ITR 754 (SC). HE FURTHER OBSERVED TH AT WHERE THE INSURANCE COMPANY HAD ACCEPTED THE VALIDITY OF THE CLAIM MADE BY AND PAID ADHOC COMPENSATION ON ACCOUNT OF MINIMUM LOSS SUFFERED BY IT, SUCH COMPEN SATION WAS LIABLE TO BE TAXED AS 4 ITA NO. 1112/JP/2011 A.Y. 2007-08 SMT. SHARDA PAREEK, JAIPUR. INCOME OF THE ASSESSEE IN THE RELEVANT ASSESSMENT Y EAR IN WHICH THE SAID CLAIM WAS ACCEPTED IRRESPECTIVE OF THE FACT THAT LATER ON INS URANCE COMPANY REPUDIATED ITS LIABILITY UNDER THE INSURANCE POLICY BY ALLEGING COLLUSION BE TWEEN THE ASSESSEE AND SURVEYOR AND CALLED UPON THE ASSESSEE TO REFUND ON ACCOUNT PAYME NT MADE TO IT. THE AO RELIED UPON THE CASE OF AMARTAARA LTD. VS. CIT (2003) 132 TAXMA N 766 (MUM.). WHILE DEALING WITH THE ISSUE OF ACCRUAL, INCOME AND LAND ACQUISITION, THE APEX COURT HAS OBSERVED THAT THE INTEREST CANNOT BE TAKEN TO BE ACCRUED ON THE DATE OF THE ORDER OF THE COURT GRANTING ENHANCED COMPENSATION BUT HAS TO BE TAKEN AS HAVING ACCRUED YEAR AFTER YEAR FROM THE DATE OF DELIVERY OF POSSESSION OF THE LANDS TILL TH E DATE OF SUCH ORDER. THE AO PLACED RELIANCE IN THE CASE OF RAMA BAI VS. CIT, 181 ITR 4 00 (SC). IN THE PRESENT CASE THE JURISDICTIONAL HIGH COURT HAD IN ITS ORDER DIRECTED THAT THE IMPUGNED AWARD WOULD REMAIN STAYED SUBJECT TO THE APPELLANT PAYING THE C LAIMANTS THE AMOUNT OF INTEREST SO FAR ACCRUED IN PROPORTION AS DIRECTED BY THE TRIBU NAL. IT IS FURTHER DIRECTED THAT THE INTERESTS WERE TO BE PAID CONTINUOUSLY QUARTERLY. THIS SHOWS THAT THE RIGHT OF THE ASSESSEE TO THE CLAIM OF INTEREST HAD ATTAINED FINA LITY. MOREOVER, THE AWARD PASSED ON 10.06.2004 SAYS THAT THE APPLICANTS HAD RECEIVED IT S INTERIM AWARD A SUM OF RS. 50,000/- AND AFTER ADJUSTING THE SAME BALANCE AMOUN T OF RS. 2,60,03,600/- IS PAYABLE TO APPLICANTS BY THE DEFENDANTS FROM THE DATE OF HE ARING OF THE CLAIM APPLICATION DATED 24.10.2000 ALONG WITH INTEREST @ 6% PER ANNUM TILL REALIZATION. THIS SHOWS THAT THE ASSESSEE WAS GIVEN INTEREST ON THE AWARD AND THE SA ME HAS BEEN SHOWN BY THE ASSESSEE IN HER RETURN. AS PER PROVISIONS OF SECTI ON 4 OF THE IT ACT, 1961 INCOME RECEIVED OR ACCRUING DURING THE RELEVANT PREVIOUS Y EAR IS SUBJECT TO TAX. THE MERE RIGHT 5 ITA NO. 1112/JP/2011 A.Y. 2007-08 SMT. SHARDA PAREEK, JAIPUR. AND CLAIM TO RECEIVE IS NOT SUBJECT TO TAX. IN THE CASE OF ASSESSEE THE AMOUNT HAS BEEN RECEIVED AND TAX DEDUCTED THEREOF. WHAT THE ASSESS EE HAD RECEIVED A SUM OF MONEY AND NOT MERELY A RIGHT/CLAIM TO RECEIVE THE SAME. MOREOVER, ACCRUAL CANNOT BE IGNORED SO AS TO TAX INCOME ON RECEIPT BASIS LATER IT IS NO T OPEN TO THE ITO, IF INCOME HAS ACCRUED TO THE ASSESSEE AND IS LIABLE TO BE INCLUDE D IN THE TOTAL INCOME OF THE ASSESSEE OF A PARTICULAR YEAR, TO IGNORE THE ACCRUAL AND THE REAFTER TO TAX IT AS INCOME OF ANOTHER YEAR ON THE BASIS OF RECEIPT. HE RELIED UPON IN TH E CASE OF LAXMIPATH SINGHANIA VS. CIT, (1969) 72 ITR 291 (SC) AND ITO VS. BACHU LAL KAPOOR (1966) 60 ITR 74 (SC). THE AO CONCLUDED THAT THE INTEREST ACCRUAL TO THE ASSESSEE TILL THE CLOSE OF FINANCIAL YEAR IS LIABLE TO BE TAXED. THE TOTAL INTEREST CREDITED IN THE NA ME OF THE ASSESSEE FROM THE INSURANCE COMPANY AMOUNTED TO RS. 7,80,216/-, FROM THE BANKS THE SAME AMOUNTED TO RS. 48,937/- AND THE AMOUNT CREDITED IN THE NAME OF MS. CHAVVI PAREEK, DAUGHTER OF THE ASSESSEE AMOUNTED TO RS. 6,00,000/-. THUS INTEREST CREDITED IN THEIR ACCOUNT AT RS. 14,29,153/-. THE LD. AO ALSO REPRODUCED THE SECTIO N 199 OF THE IT ACT AND HELD THAT AS PER THIS PROVISION THE TAX DEDUCTED IS TO BE TREATE D AS THE PAYMENT OF THIS TAX ON BEHALF OF PERSON FROM WHOSE INCOME THE DEDUCTION WAS MADE AND CREDIT IS ALLOWED FOR THE AMOUNT SO DEDUCTED FOR THE ASSESSMENT YEAR FOR WHIC H INCOME IS ASSESSABLE. THE ASSESSEE BY FILING TDS CERTIFICATES AND THE RETURN CLAIMING CREDIT FOR TDS DEDUCTED ON THE INTEREST INCOME THEREOF HAS VOLUNTARILY SHOWN T HE INTEREST INCOME AND CLAIMED CREDIT FOR TDS. THE AO ASSESSED THE INTEREST INCOM E OF RS. 14,29,153/- UNDER THE HEAD INCOME FROM OTHER SOURCES. 6 ITA NO. 1112/JP/2011 A.Y. 2007-08 SMT. SHARDA PAREEK, JAIPUR. 3. BEING AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT (A), WHO HAD CONFIRMED THE ADDITION CONSIDERING HIS OWN DECISION IN THE CASE OF ASSESSEE IN A.Y. 2006-07 AFTER CONSIDERING ASSESSEE S REPLY AND LEGAL POSITION ON THIS ISSUE IN DETAIL. THE LD. CIT (A) HELD THAT SINCE THERE IS NO MATERIAL CHANGE IN FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, THE FIRST THREE GROUNDS OF APPEAL ARE ACCORDINGLY DISMISSED FOLLOWING THE DECISION FOR THE A.Y. 2006- 07. HE FURTHER IMPROVED HIS ORDER BY CONSIDERING THE FOLLOWING DECISIONS :- SHRI PATESHWARI ELECTRICAL AND ASSOCIATED INDUSTRIE S PVT. LTD. VS. CIT 287 ITR 165 (ALL.) CIT VS. M. SAROJINI DEVI 250 ITR 759 (AP) 4. NOW THE ASSESSEE IS BEFORE US. THE LD. A/R OF T HE ASSESSEE SUBMITTED THAT THE HONBLE TRIBUNAL IN ITA NO. 325/JP/2011 FOR A.Y. 20 06-07 DATED 02.02.2012 IN ASSESSEES OWN CASE HAS HELD THAT RATE OF INTEREST AWARDED BY THE MACT IS NOT FINAL. THE INSURANCE COMPANY HAS FILED APPEAL BEFORE THE J URISDICTIONAL HIGH COURT AND THE APPEAL HAS BEEN ADMITTED AND IT MAY BE POSSIBLE THA T ORDER OF MACT MAY BE APPROVED OR DISAPPROVED. BUT THE ORDER OF MACT IS NOT FINAL. THEREFORE, IN THESE CIRCUMSTANCES AND IN VIEW OF THE VARIOUS DECISIONS, WE ARE OF THE CONSIDERED VIEW THAT WHETHER THE INTEREST AWARDED BY THE MACT IS REVENUE OR COMPENSA TION BUT IT CANNOT BE TAXED IN THE YEAR UNDER CONSIDERATION AS THE SAME HAS NOT BEEN R EACHED ITS FINALITY. THEREFORE, INTEREST RECEIVED/ACCRUED IS NOT ASSESSABLE IN THE YEAR UNDER CONSIDERATION AS THE SAME WILL BE CONSIDERED IN THE YEAR WHEN THE COMPENSATIO N AND INTEREST AWARDED BY THE MACT REACH ITS FINALITY. HE FURTHER ARGUED THAT MA TTER IS STILL PENDING BEFORE HONBLE 7 ITA NO. 1112/JP/2011 A.Y. 2007-08 SMT. SHARDA PAREEK, JAIPUR. HIGH COURT. THE CLAIM AND QUANTUM OF COMPENSATION, ALLOWING OF INTEREST, THE RATE OF INTEREST ARE IN FLUX AND ARE NOT YET FINAL. THE IN SURANCE COMPANY HAD ALSO DISPUTED THE RIGHT TO CLAIM THE COMPENSATION. THEREFORE, ISSUE IS OPEN FOR BOTH THE PARTIES BEFORE HONBLE RAJASTHAN HIGH COURT. THE ASSESSEE IS FOR HIGHER COMPENSATION AND THE INSURANCE COMPANY IS FOR REDUCING THE COMPENSATION AWARDED BY THE MACT. THE HONBLE RAJASTHAN HIGH COURT HAS NOT DIRECTED TO PA Y THE COMPENSATION TO THE ASSESSEE BUT ONLY INTEREST IS ALLOWED TO BE PAID TO THE ASSE SSEE SUBJECT TO FURTHER ORDERS OF THE HONBLE COURT. HE FURTHER HAS DRAWN OUR ATTENTION ON QUESTION OF LAW ADMITTED BY THE HONBLE RAJASTHAN HIGH COURT FOR A.Y. 2006-07 FILED BY THE DEPARTMENT. THEREFORE, THE LD. A/R SUBMITTED THAT THE ORDER OF THE TRIBUNAL FO R A.Y. 2006-07 MAY PLEASE BE FOLLOWED AS FACTS AND ISSUES ARE IDENTICAL TO A.Y. 2006-07. AT THIS JUNCTURE THE BENCH ASKED THE ASSESSEE TO AVAIL THE STATUTORY REMEDY AV AILABLE TO IT IN TERMS OF SECTION 158A OF THE ACT WHEN IDENTICAL QUESTION OF L AW IS PENDING BEFORE THE HONBLE HIGH COURT. THE LD. COUNSEL SOUGHT TIME TO S EEK INSTRUCTIONS FROM THE ASSESSEE. ON THE NEXT DATE OF HEARING, THE LD COUNS EL HAS COMMUNICATED THAT THE ASSESSEE DOES NOT WISH TO AVAIL THE REMEDY AVAILABLE U/S 158A OF THE ACT. 5. THE LD. D/R SUBMITTED THAT SIMPLE AND PLAIN READ ING OF ORDER CLEARLY STATES THAT THE JURISDICTIONAL HIGH COURT HAS DIRECTED THAT THE IMPUGNED AWARD WOULD REMAIN STAYED SUBJECT TO THE APPELLANT (INSURANCE COMPANY) PAYING THE ASSESSEE THE INTEREST SO FAR ACCRUED IN PROPORTION AS DIRECTED BY THE MACT. IT I S FURTHER DIRECTED THAT THE INTEREST WAS TO BE PAID CONTINUOUSLY QUARTERLY. THE LD. D/R FURTHER SUBMITTED AS UNDER :- 8 ITA NO. 1112/JP/2011 A.Y. 2007-08 SMT. SHARDA PAREEK, JAIPUR. THERE IS NO DIRECTION OF ANY REFUND OF INTEREST IN THE ORDER AND IT IS NOT CONTINGENT ALSO. THIS SHOWS THAT THE RIGHT OF THE ASSESSEE TO THE CL AIM OF INTEREST HAD ATTAINED FINALITY. THE HONBLE JURISDICTIONAL HIGH COURT HAS ALSO CLEA RLY STATED IN THEIR ORDER THAT INTEREST HAS ACCRUED TO THE ASSESSEE. THE LEARNED COUNSEL ARGUED THAT THEY HAVE AN APPREH ENSION THAT THE ASSESSEE MAY HAVE TO REFUND THE INTEREST .. BUT TH E ORDER NO WHERE SUGGESTS THAT ASSESSEE HAVE TO REFUND THE AMOUNT . ITS JUST AN APPREHENSION IN ASSESSEES MIND WHICH HAS NO SUBSTA NCE. APPREHENSION CANNOT OVERRIDE THE ORDER OF THE HONBLE HIGH COURT WHICH DIRECTS ACCRUAL OF INTERESTS WITHOUT ANY CONDITIONS. ASSESSEE HAS MOVED APPLICATION TO CLAIM HIGHER AMOU NT OF COMPENSATION SO IN A WAY EVEN IF DECISION WILL COME IT WILL BE OF ENHANCEMENT OF COMPENSATION AND NOT OF REDUCTION. 5.1. THE LD. D/R FURTHER SUBMITTED THAT AS PER SECT ION 5 OF THE INCOME TAX ACT, 1961 INCOME RECEIVED OR ACCRUING DURING THE RELEVANT PRE VIOUS YEAR IS SUBJECT TO TAX. THE MERE RIGHT AND CLAIM TO RECEIVE IS NOT SUBJECT TO T AX. IN THE CASE OF THE ASSESSEE THE AMOUNT I.E. INTEREST HAS BEEN RECEIVED AND TAX DEDU CTED THEREOF. WHAT THE ASSESSEE HAS RECEIVED IS A SUM OF MONEY AND NOT MERELY A RIG HT/CLAIM TO RECEIVE THE SAME. MOREOVER ACCRUAL CANNOT BE IGNORED, IF INCOME HAS A CCRUED TO THE ASSESSEE AND IS LIABLE TO BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE OF PARTICULAR YEAR. 5.2. THE LD. D/R SUBMITTED THAT THE HONBLE TRIBUNA L IN THEIR ORDER DATED 02.02.2012 IN ASSESSEES OWN CASE IN A.Y. 2006-07 HAS FAILED T O APPRECIATE THE FACTS OF THE CASE AND HAS ERRONEOUSLY ALLOWED RELIEF TO THE ASSESSEE. BECAUSE THE ITAT HAS NOT 9 ITA NO. 1112/JP/2011 A.Y. 2007-08 SMT. SHARDA PAREEK, JAIPUR. APPRECIATED THE HIGH COURT ORDER THAT THE INTEREST SO AWARDED HAS BEEN ACCRUED AND RECEIVED BY THE ASSESSEE FROM THE INSURANCE COMPANY DURING THE YEAR UNDER CONSIDERATION AND THE SAME IS TAXABLE DURING THE YE AR UNDER CONSIDERATION AS PER SECTION 5 OF THE I.T. ACT, 1961. MOREOVER, THE ASSE SSEES INCOME AFTER GIVING APPEAL EFFECT TO THE TRIBUNALS ORDER IN A.Y. 2006-07 WOUL D BE LESS THAN THE INCOME RETURNED BY THE ASSESSEE AS PER RETURN FILED ON 31.07.2006 AND WILL REQUIRE OF REFUND OF TAX PAID BY THE ASSESSEE ON INCOME DISCLOSED IN THE RETURN OF I NCOME, WHICH WILL NOT BE PERMISSIBLE IN VIEW OF HONBLE APEX COURTS DECISION IN THE CAS E OF CIT VS. SHELLY PRODUCTS & OTHERS REPORTED IN 261 ITR 367. 5.3. THE LD. D/R FURTHER SUBMITTED THAT IT IS WORTH WHILE TO MENTION THAT CLAUSE (B) HAS BEEN INSERTED IN SECTION 145A TO PROVIDE THAT THE I NTEREST RECEIVED BY THE ASSESSEE ON COMPENSATION OR ON ENHANCED COMPENSATION SHALL BE D EEMED TO BE HIS INCOME FOR THE YEAR IN WHICH IT IS RECEIVED, IRRESPECTIVE OF THE M ETHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. SIMILARLY CLAUSE (VII) HAS BEEN INSERTED IN SECTION 56(2) TO PROVIDE THAT INCOME BY WAY OF INTEREST RECEIVED ON COMPENSATION OR ON E NHANCED COMPENSATION REFERRED TO BE IN CLAUSE (B) OF SECTION 145A SHALL BE ASSESSED AS INCOME FROM OTHER SOURCES IN THE YEAR IN WHICH IT IS RECEIVED. THOUGH THESE AMEN DMENTS WERE INSERTED BY THE FINANCE ACT, 2009 W.E.F. 1.10.2009 BUT IT CLEARLY E STABLISH THE INTENTION OF LEGISLATURE THAT INTEREST WHICH IS ACCRUED TO THE ASSESSEE SHOU LD BE TAXED IN THE YEAR IN WHICH IT IS RECEIVED ELSE ASSESSEE WILL TAKE THE PLEA FOR FINAL ITY OF SETTLEMENT OF DISPUTE TILL INFINITUM WHICH IS NOT CORRECT AS PER LAW. 10 ITA NO. 1112/JP/2011 A.Y. 2007-08 SMT. SHARDA PAREEK, JAIPUR. 5.4. THUS IN VIEW OF ABOVE, THE LD. D/R SUBMITTED A ND PRAYED THAT THE HONBLE BENCH WILL APPRECIATE ALL THE FACTS IN CORRECT MATRIX AND WILL DISMISS THE ASSESSEES APPEAL. 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE HAVE ALREADY MENTIONED THAT THE ASSESSEE HAS DECLINED TO AVAIL AN EASY AND EXPEDIENT REMEDY TO AVOID REPEATED APPEALS ON THE SAME QUESTI ON OF LAW, MORE SO THE ASSESSEE AND REVENUE HAVE RAISED. BOTH ARE BEFORE T HE HON'BLE HIGH COURT ON THE SAME SUBSTANTIAL QUESTION OF LAW. SINCE THE ASSE SSEE IS NOT INTERESTED IN AVAILING THE REMEDY, WE ARE LEFT WITH NO ALTERNATE BU T TO DECIDE THE ISSUE ON MERIT. BEFORE US THE ISSUE IS WHETHER INTEREST RECEIVED/C REDITED AT RS. 13,80,216/- IS TO BE TAXED AS INCOME OF THE ASSESSEE UNDER THE HEAD I NCOME FROM OTHER SOURCES. THE CO- ORDINATE BENCH OF THE TRIBUNAL HAS CONSIDERED THE I SSUE WHETHER THE INTEREST AWARDED BY THE MACT IS REVENUE OR COMPENSATION, BUT IT CANN OT BE TAXED IN THE YEAR UNDER CONSIDERATION AS THE SAME HAS NOT REACHED ITS FINAL ITY. THE OPERATIVE PORTION OF THE ITAT ORDER AT PAGE 42 IS REPRODUCED AS UNDER :- FROM THE ABOVE CASE, IT HAS BEEN CLEARLY ESTABLIS HED AND PROVED THAT THE RATE OF INTEREST AWARDED BY THE MACT IS NO T FINAL. THE INSURANCE COMPANY HAS FILED APPEAL BEFORE HONBLE J URISDICTIONAL HIGH COURT AND THE APPEAL HAS BEEN ADMITTED AND IT MAY BE POSSIBLE THAT ORDER OF MACT MAY BE APPROVED OR DISA PPROVED. BUT THE ORDER OF MACT IS NOT FINAL. THEREFORE, IN THESE CIRCUMSTANCES AND IN VIEW OF VARIOUS DECISIONS, WE ARE OF THE CON SIDERED VIEW THAT WHETHER THE INTEREST AWARDED BY MACT IS REVENUE OR COMPENSATION 11 ITA NO. 1112/JP/2011 A.Y. 2007-08 SMT. SHARDA PAREEK, JAIPUR. BUT IT CANNOT BE TAXED IN THE YEAR UNDER CONSIDERAT ION AS THE SAME HAS NOT REACHED ITS FINALITY. ACCORDINGLY, WE HOLD THAT THE AMOUNT OF INTEREST AWARDED IN THE YEAR UNDER CONSIDERATION OR RECEIVED BY THE LEGAL HEIRS IS NOT ASSESSABLE IN THE YEAR UNDER CONSIDERATION AS THE SAME WILL BE CONSIDERED IN THE YEAR WHEN THE CO MPENSATION PLUS INTEREST AWARDED BY MACT REACHED ITS FINALITY. WE ORDER ACCORDINGLY. AS PER DETAILS FURNISHED BY THE LD. A/R OF THE ASSE SSEE AND TDS DEDUCTED, IT IS FOUND THAT ASSESSEE HAD BEEN ALLOWED INTEREST ON COMPENSA TION APPROVED BY THE MACT. BOTH THE PARTIES HAVE CHALLENGED THE DECISION OF MACT BU T HONBLE JURISDICTIONAL HIGH COURT HAS DIRECTED THAT INTEREST WAS TO BE PAID CONTINUOU SLY QUARTERLY. THE ASSESSEE HAS CHALLENGED THE COMPENSATION AMOUNT AND NOT INTEREST RATE. THEREFORE, THE RATE OF INTEREST IS FINAL WHEN NOT CHALLENGED BEFORE THE CO URT BY THE INSURANCE COMPANY. THE ASSESSEES APPREHENSION THAT ASSESSEE MAY HAVE TO R EFUND THE COMPENSATION AS WELL AS INTEREST ALLOWED ON IT. IT IS NOT BASED ON ANY EVID ENCE BUT ONLY AN APPREHENSION THAT IF OTHERWISE COMPENSATION IS REDUCED BY THE COURT WHIC H CAN BE CLAIMED BY THE ASSESSEE UNDER SECTION 154 OF THE IT ACT BEFORE THE AO AS HE LD BY THE VARIOUS HIGH COURTS ON THIS ISSUE. THE ASSESSEE HAS DISCLOSED THIS INTERE ST INCOME AS WELL AS CLAIMED TDS DEDUCTED IN THE RETURN OF INCOME. INTEREST AWARDED BY THE HONBLE HIGH COURT HAS ACCRUED AND RECEIVED BY THE ASSESSEE FROM THE INSUR ANCE COMPANY DURING THE YEAR UNDER CONSIDERATION. THE ARGUMENTS OF LD. D/R SUPPO RT THE FINDING THAT AS PER SECTION 5 THE INTEREST INCOME IS ACCRUED/ARISE DURING THE YEA R UNDER CONSIDERATION. IF ASSESSEES CONTENTION IS ACCEPTED THEN RETURNED INCOME WILL BE IN MINUS WHICH WILL NOT BE 12 ITA NO. 1112/JP/2011 A.Y. 2007-08 SMT. SHARDA PAREEK, JAIPUR. PERMISSIBLE IN VIEW OF THE APEX COURT DECISION IN C ASE OF CIT VS. SHELLY PRODUCTS & OTHERS (SUPRA). THE CASE LAWS REFERRED BY LD. CIT (A) ARE SQUARELY APPLICABLE AND WE ARE OF THE CONSIDERED VIEW THAT LD. CIT (A) WAS JUS TIFIED IN CONFIRMING THE ADDITION MADE BY THE AO ON ACCOUNT OF INTEREST RECEIVED BY THE AS SESSEE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.07.2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 17/7/ 2015 DAS/ VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SMT. SHARDA PAREEK, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT-THE ACIT, CIRCLE-6, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 1112/JP/2011) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR 13 ITA NO. 1112/JP/2011 A.Y. 2007-08 SMT. SHARDA PAREEK, JAIPUR.