S G Sshastrabudhe, Pune V. ITO, Ward 3(4), Pune

ITA 1212/PUN/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9882 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-10-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 06-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 1212/PN/2010 (ASSESSMENT YEAR: 2002-03) S.G. SAHASRABUDHE 94 MAYUR COLONY, KOTHRUD PUNE-411 029 PAN ACEPS 8669 R .. APPELLANT VS. I.T.O. WARD 3(4) PUNE RESPONDENT APPELLANT BY : SHRI C.H. NANIWADEKAR RESPONDENT BY : MS. ANN KAPTHUAMA DATE OF HEARING: 11-10-2012 DATE OF PRONOUNCEMENT: 31-10-2012 ORDER PER G.S. PANNU, A.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-II PUNE DA TED 22-7-2010 WHICH, IN TURN, HAS ARISEN FROM ORDER DATED 12-11-2 007 PASSED BY THE ASSESSING OFFICER, UNDER SECTION 143(3) R.W.S. 148 OF THE INCOME- TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO TH E ASSESSMENT YEAR 2002-03. 2. IN THIS APPEAL, THE SUBSTANTIVE DISPUTE RELATES TO AN ADDITION OF RS. 29,77,168/- MADE BY THE ASSESSING OFFICER IN AN ASSESSMENT MADE U/S 143(3) READ WITH SEC. 148 OF THE ACT DATED 12-11-2007. THE AMOUNT IN QUESTION REPRESENTED AN AWARD DECREED BY CIVIL COURT, PUNE, IN FAVOUR OF THE ASSESSEE. AS PER THE ASSESSING OFFICER, THE AMOUNT WAS DECREED BY THE CIVIL COURT ON A DATE FALLING WITHIN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND THEREFORE, THE SAID AMOUNT REPRES ENTED THE INCOME WHICH HAD ACCRUED IN THE HANDS OF THE ASSESS EE. THE ASSESSEE, ON THE OTHER HAND, HAS CONTESTED THE SAME BY POINTING 2 ITA NO 1212/PN/10 S.G. SAHASRABUDH E A.Y. 2002-03 THAT NO INCOME HAS ACCRUED WHICH IS LIABLE TO BE TA XED IN THE INSTANT ASSESSMENT YEAR. 3. BRIEFLY PUT, THE FACTS RELEVANT FOR DETERMINATIO N OF THE IMPUGNED DISPUTE CAN BE SUMMARIZED AS FOLLOWS. THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF CIVIL CONT RACTING. THE ASSESSEE CARRIED OUT CIVIL CONSTRUCTION WORK FOR MA HARASHTRA HOUSING AND AREA DEVELOPMENT AUTHORITY (IN SHORT MHADA) R ELATING TO CONSTRUCTION OF AN OFFICE BUILDING FOR PUNE BOARD A T PUNE. THE ASSESSEE WAS AWARDED THE WORK IN 1986 AND THE SAME WAS EXECUTED DURING THE PERIOD 1986 TO 1989. DUE TO CERTAIN DIS PUTES AND BREACH OF CONTRACT, THE ASSESSEE FILED A CIVIL SUIT IN THE COURT OF CIVIL JUDGE, PUNE IN THE YEAR 1990. ON 13-12-2001, THE SUIT WAS DECIDED IN FAVOUR OF THE ASSESSEE AND THE CIVIL COURT DECREED AN AMOUNT OF RS. 29,77,168/- IN FAVOUR OF THE ASSESSEE. SUBSEQUENTL Y, MHADA FILED AN APPEAL BEFORE HONBLE HIGH COURT OF BOMBAY AND B Y WAY OF AN INTERIM ORDER PASSED ON 19-9-2002, THE HONBLE BOMB AY HIGH COURT STAYED THE OPERATION OF THE ORDER PASSED BY THE CIV IL COURT SUBJECT TO DEPOSIT OF RS. 15,00,000/- BY MHADA. THE ASSESSEE WAS PERMITTED TO WITHDRAW THE SAID AMOUNT ON FURNISHING OF BANK G UARANTEE AND AN UNDERTAKING THAT THE AMOUNT SHALL BE RESTORED IF SO ORDERED AS AND WHEN BY THE COURT. 4. IN THIS BACKGROUND, THE PLEA SET UP BY THE ASSES SEE IS THAT THE APPEAL OF MHADA IS STILL PENDING BEFORE THE BOMBAY HIGH COURT AND THEREFORE, THE MATTER IN RESPECT OF CLAIM AND INTER EST THEREON DECREED IN FAVOUR OF THE ASSESSEE BY THE PUNE COURT HAS NOT ATTAINED FINALITY AND THEREFORE, THE INCOME THEREOF DOES NOT ACCRUE TO THE ASSESSEE. IN SUPPORT, RELIANCE HAS BEEN PLACED ON THE FOLLOWING DECISIONS. 3 ITA NO 1212/PN/10 S.G. SAHASRABUDH E A.Y. 2002-03 (I) PARAGON CONSTRUCTIONS (I) PVT.LTD. VS. CIT (200 5) 274 ITR 412 (DEL) (II) CIT VS. SARVATRA ROADRUNNERS P. LTD. (2008) 30 ITR 443 (DEL). (III) CIT VS. BAVLA GOPALAK VIVIDH KARYAKARI SAHAKA RI MANDLI LTD (2002) 253 ITR 97 5. ON THE OTHER HAND, THE LEARNED DR APPEARING FOR THE REVENUE SUBMITTED THAT THE JUDGMENT OF THE CIVIL COURT WAS DATED 31-12-2001 IN TERMS OF WHICH, THE IMPUGNED AMOUNT WAS DECREED IN FAVOUR OF THE ASSESSEE AND THEREFORE, THE AMOUNT IS LIABLE TO BE ASSESSED AS INCOME FOR THE IMPUGNED ASSESSMENT YEAR. THE LEARN ED DR REFERRED TO THE DISCUSSION MADE BY THE CIT(A) IN PARA 4.1 OF THE IMPUGNED ORDER WHEREIN IT IS POINTED OUT THAT FOLLOWING THE APPEAL FILED BY MHADA BEFORE THE HONBLE BOMBAY HIGH COURT, THE ORD ER OF THE CIVIL JUDGE, PUNE, WAS STAYED ONLY IN THE SUBSEQUENT FINA NCIAL YEAR I.E. ON 19-9-2002. THEREFORE, IN SO FAR AS THE POSITION AS AT THE END OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR U NDER CONSIDERATION IS CONCERNED, THE DECISION OF THE CIV IL COURT, PUNE, WAS EXISTING AND WHAT HAPPENED SUBSEQUENTLY IN THE NEXT FINANCIAL YEAR WHEN MHADA WENT TO HIGH COURT, IS OF NO CONSEQ UENCE FOR DETERMINING THE TAXABILITY OF IMPUGNED SUM IN THE I NSTANT ASSESSMENT YEAR. IN THIS MANNER, THE STAND OF THE ASSESSING OFFICER IS SOUGHT TO BE DEFENDED THAT THE IMPUGNED SUM WAS ASSESSABLE TO TAX IN THE INSTANT YEAR AS THE INCOME THEREON HAD A CCRUED IN THE HANDS OF THE ASSESSEE. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE SHORT CONTROVERSY IN THIS APPEAL REVOLVES ROUND AS TO WHE THER THE ASSESSEE OBTAINED A RIGHT OVER THE SUM OF RS. 29,77 ,168/- DECREED IN HIS FAVOUR BY CIVIL COURT, PUNE VIDE ORDER DATED 13-12-2001. THE FACTUAL POSITION SHOWS THAT THE OR DER OF CIVIL JUDGE, PUNE, DATED 13-12-2001 HAS BEEN STAYED IN TE RMS OF INTERIM ORDER PASSED BY THE HONBLE BOMBAY HIGH COURT ON 19 -9-2002 ON AN 4 ITA NO 1212/PN/10 S.G. SAHASRABUDH E A.Y. 2002-03 APPEAL FILED BY MHADA. THE RELEVANT PORTION OF THE INTERIM ORDER PASSED BY THE HONBLE HIGH COURT ON 19-9-2002 HAS B EEN PUT BEFORE US, WHICH READS AS UNDER: HEARD LEARNED COUNSEL FOR BOTH THE SIDES. APPLICAT ION IS ALLOWED IN TERMS OF PRAYER CLAUSE (A) ON A CONDITIO N THAT THE APPELLANT SHALL DEPOSIT THE AMOUNT OF RS. 15 LA KHS WITHIN 8 WEEKS FROM THE DATE OF THIS ORDER, ON FURN ISHING BANK GUARANTEE AND/OR UNDERTAKING THAT THE AMOUNT S HALL BE RESTORED, IF SO ORDERED, AS AND WHEN, BY THE COU RT. PARTIES TO ACT ON THE AUTHENTICATED COPY OF THIS O RDER. IT IS ACCORDINGLY ORDERED THAT SINCE THE MOUNT OF R S. 15,00,000/- HAS BEEN DEPOSITED IN THIS COURT, WITHI N THE STIPULATED PERIOD, THE EFFECT AND OPERATION OF THE IMPUGNED JUDGMENT AND ORDER DATED 13-12-2001, PASSE D BY THE COURT IN SPL. CIVIL SUIT NO. 399 OF 1990 AND THE SAME IS HEREBY STAYED PENDING HEARING AND FINAL DISPOSAL OF THE ABOVE FIRST APPEAL. 6. IT IS ALSO POINTED OUT THAT THE DEFENDANT MHADA HAD SOUGHT STAY ON EXECUTION OF DECREE PASSED BY THE LOWER COU RT BEFORE THE HONBLE HIGH COURT. FACTUALLY, IT IS ALSO NOT DISP UTED THAT THE APPEAL OF MHADA BEFORE THE HONBLE BOMBAY HIGH COURT AGAIN ST THE ORDER OF CIVIL COURT, PUNE DATED 13-12-2001 HAS NOT BEEN DISPOSED OFF. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE AS SESSEE MADE A STATEMENT AT BAR THAT THE APPEAL OF MHADA BEFORE TH E HONBLE BOMBAY HIGH COURT HAD NOT BEEN FINALLY DETERMINED Y ET. 7. IN THE AFORESAID BACKGROUND, IT IS QUITE CLEAR T HAT THE ASSESSEE DID NOT ACQUIRE AN UNQUALIFIED RIGHT OVER THE AMOUN T OF RS. 29,77,168/- AWARDED BY THE CIVIL COURT, PUNE, INAS MUCH AS THE OPERATION OF ORDER OF THE CIVIL COURT HAS SINCE BEE N STAYED BY THE HONBLE BOMBAY HIGH COURT. EVEN THOUGH PART AMOUNT I.E. RS. 15,00,000/- HAS BEEN RECEIVED BY THE ASSESSEE IN VI EW OF THE INTERIM ORDER MADE BY THE HONBLE HIGH COURT BUT SUCH AMOUN T WAS PERMITTED TO BE WITHDRAWN ON FURNISHING OF BANK GUA RANTEE AND ON AN UNDERTAKING THAT THE ASSESSEE WAS TO RESTORE THE SAME BY WAY OF RESTITUTION, IF THE OTHER PARTY I.E. MHADA WAS TO S UCCEED IN ITS 5 ITA NO 1212/PN/10 S.G. SAHASRABUDH E A.Y. 2002-03 APPEAL BEFORE HIGH COURT. THEREFORE, IT CANNOT BE SAID TO BE A CASE WHERE THE ASSESSEE ACQUIRED AN UNQUALIFIED RIGHT WI TH RESPECT TO THE AMOUNT OF RS. 29,77,168/-. IN FACT, IN OUR CONSIDE RED OPINION, THE CASE OF THE ASSESSEE IS FULLY SUPPORTED BY THE RATI O OF JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. HINDUS TAN HOUSING & LAND DEVELOPMENT TRUST LTD. (1986) 161 ITR 524 (SC ). BEFORE THE HONBLE SUPREME COURT, AN ISSUE AROSE AS TO WHETHER THE INCOME CAN BE SAID TO HAVE ACCRUED ON A DISPUTABLE AMOUNT OF ENHANCED COMPENSATION. IN THE CASE BEFORE THE HONBLE SUPR EME COURT, THE AMOUNT OF COMPENSATION PAYABLE TO THE ASSESSEE AS A RESULT OF AWARD WAS CHALLENGED BY THE GOVERNMENT IN APPEAL. THE ASSESSEE THEREIN WAS NOT PERMITTED TO WITHDRAW THE AMOUNT DE POSITED BY THE STATE GOVERNMENT WITHOUT FURNISHING A SECURITY BOND FOR REFUNDING THE AMOUNT IN THE EVENT OF GOVERNMENT SUCCEEDING IN APPEAL. UNDER THESE CIRCUMSTANCES, THE HONBLE SUPREME COURT HELD THAT THERE WAS NO ABSOLUTE RIGHT WITH THE ASSESSEE TO RECEIVE THE AMOUNT OF COMPENSATION AT THAT STAGE, INASMUCH AS, IF THE AP PEAL OF THE STATE GOVERNMENT WAS ALLOWED IN ITS ENTIRETY, THE RIGHT O F THE ASSESSEE TO RECEIVE ENHANCED COMPENSATION WOULD FAIL ALTOGETHER . IT WAS THEREFORE, HELD THAT NO INCOME ACCRUED TO THE ASSES SEE ON THAT BASIS. IN THE CASE BEFORE US, THE INTERIM ORDER PA SSED BY THE HONBLE HIGH COURT MAKES IT CLEAR THAT THE ASSESSEE HAD NO ABSOLUTE RIGHT TO RECEIVE THE MONEY, IN THE SENSE THAT NO RI GHT HAD ACCRUED OR VESTED IN THE ASSESSEE QUA THE AMOUNT OF RS. 29,77,168/-. IN THE EVENT MHADA SUCCEEDED IN APPEAL BEFORE THE HONBLE HIGH COURT, THE AWARD OF CIVIL COURT, PUNE DATED 13-12-2001 WOU LD NOT SURVIVE AND IN ANY CASE, DURING THE PENDENCY OF THE APPEAL BEFORE THE HONBLE HIGH COURT, THE OPERATION OF ORDER OF THE CIVIL COURT DATED 13-12-2001 STOOD STAYED. THUS, THE ASSESSEE HAD NO RIGHT TO RECEIVE THE MONEY AND THEREFORE, IN OUR CONSIDERED OPINION, IT CANNOT BE SAID THAT AN AMOUNT OF RS. 29,77,168/- DECREED B Y THE CIVIL COURT 6 ITA NO 1212/PN/10 S.G. SAHASRABUDH E A.Y. 2002-03 VIDE ITS ORDER DATED 13-12-2001 RESULTED IN AN ACCR UAL OF ANY INCOME ASSESSABLE IN THE HANDS OF ASSESSEE FOR THE IMPUGNE D ASSESSMENT YEAR. 8. THE PLEA OF THE REVENUE THAT THE ORDER OF CIVIL COURT DATED 13-12-2001 HAD BEEN STAYED BY THE HONBLE BOMBAY HI GH COURT ON 19-9-2002 AND THAT AS ON 31-3-2002 THE ORDER OF THE CIVIL COURT WAS SUBSISTING AND THEREFORE, THE INCOME VESTED IN THE HANDS OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR. IN OUR CONSIDERED OPINION, THE AFORESAID ARGUMENT IS FALLACIOUS. FIR STLY, IN PURSUANCE TO THE ORDER OF CIVIL COURT DATED 13-12-2001 NO A MOUNT WAS ACTUALLY RECEIVED BY THE ASSESSEE; AND SECONDLY, TH OUGH THE HONBLE HIGH COURT STAYED THE ORDER PASSED BY THE CIVIL COU RT, PUNE ON 19- 9-2002, BUT IT IS WELL UNDERSTOOD THAT THE SAME REL ATES BACK TO THE DATE OF THE ORDER OF CIVIL COURT, PUNE I.E. 13-12-2 001. PERTINENTLY, AT THE TIME WHEN ASSESSABILITY OF SUCH AMOUNT HAS BEEN TAKEN UP BY THE REVENUE AUTHORITIES, IT IS QUITE CLEAR THAT THE OPERATION OF THE ORDER OF CIVIL COURT DATED 13-12-2001 STOOD STAYED. ACCORDINGLY, THE ASSESABILITY OF THE IMPUGNED AMOUNT CANNOT BE ADJUD ICATED WITHOUT CONSIDERING THE IMPORT OF THE APPEAL FILED BY MHADA BEFORE THE HONBLE HIGH COURT AND THE INTERIM ORDER PASSED BY THE HONBLE BOMBAY HIGH COURT DATED 19-9-2002. 9. IN VIEW OF THE AFORESAID DISCUSSION, WE THEREFOR E, UPHOLD THE PLEA OF THE ASSESSEE THAT THE AMOUNT OF RS. 29,77,1 68/- CANNOT BE BROUGHT TO TAX DURING THE YEAR UNDER CONSIDERATION AS THE SAME HAS NOT BEEN FINALLY DETERMINED BY THE COURT AND HENCE IT COULD NOT BE SAID TO HAVE ACCRUED IN THE HANDS OF THE ASSESSEE. 10. AS A RESULT, WE SET ASIDE THE ORDER OF THE CIT( A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITION. 7 ITA NO 1212/PN/10 S.G. SAHASRABUDH E A.Y. 2002-03 11. BEFORE PARTING, WE MAY NOTICE THAT THE ASSESSEE HAS ALSO RAISED A GROUND RELATING TO VALIDITY OF THE PROCEED INGS INITIATED BY THE ASSESSING OFFICER U/S 147/148 OF THE ACT. AS THE A SSESSEE HAS SUCCEEDED ON MERITS OF THE ADDITION, THE CHALLENGE TO THE VALIDITY OF IMPUGNED PROCEEDINGS IS RENDERED ACADEMIC AND IS TH EREFORE, NOT ADJUDICATED FOR THE PRESENT. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED AS ABOVE. DECISION PRONOUNCED IN THE OPEN COURT ON 31ST OCTOB ER 2012. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 31 ST OCTOBER 2012 ANKAM COPY TO:- 1. ASSESSEE 2. DEPARTMENT 3. THE CIT (A)-II PUNE 4. THE CIT-III PUNE 5. THE DEPARTMENTAL REPRESENTATIVE, A BENCH, I.T. A.T., PUNE. BY ORDER //TRUE COPY// SR. P.S. I.T.A.T., PUNE