M/s Sayyaparaju Engineering Constructions Ltd, Visakhapatnam V. The DCIT, Circle-4(1), Visakhapatnam, Visakhapatnam

ITA 256/VIZ/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0159 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-09-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 18-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G GURUSWAMY
• Keywords: Reopening of assessment; Capital asset; Business income; Deemed to accrue or arise in india; Question of law; Capital receipt; Reason to believe
• Section: 45(5); 234B; 147; 148; 28; 144

Judgement Text

ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . . . . , . . . . , $ $ $ $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NOS.256&257/VIZAG/2012 ( / ASSESSMENT YEARS : 2005-06 & 2008-09 ) SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD. VISAKHAPATNAM VS. DCIT CIRCLE - 4( 1 ) VISAKHAPATNAM [ PAN : AACCS 3995D ] ( & & & & / APPELLANT) ( '(& '(& '(& '(& / RESPONDENT ) & ) / APPELLANT BY : SHRI G.V.N. HARI, AR '(& ) / RESPONDENT BY : SHRI G. GURUSWAMY, DR ) - / DATE OF HEARING : 03.11.2015 ) - / DATE OF PRONOUNCEMENT : 04.12.2015 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THESE APPEALS FILED BY THE ASSESSEE ARE DIRECTED A GAINST THE COMMON ORDER OF CIT(A), VISAKHAPATNAM DATED 28.3.20 12 FOR THE ASSESSMENT YEARS 2005-06 & 2008-09. SINCE, THE ISS UE INVOLVED IN THESE APPEALS IS COMMON, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENI ENCE. ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PUBLIC LIMITED COMPANY, WHICH IS ENGAGED IN THE BUSINESS OF CIVIL ENGINEERING WORKS. THE ASSESSEE WAS AWARDED A CONTRACT WORK BY DIRECTO R GENERAL OF NAVAL PROJECTS (DGNP) FOR A TOTAL VALUE OF RS.13.06 CRORE S IN THE YEAR 1991-92. SINCE, THERE WAS A DISPUTE CROPPED UP BETWEEN THE A SSESSE CONTRACTOR AND THE PRINCIPALS I.E. DGNP, THE ABOVE CONTRACT WO RK WAS CANCELLED BY THE DGNP FOR THE REASONS THAT THE WORKS EXECUTED BY THE CONTRACTOR IS UNSATISFACTORY. THEREFORE, AGGRIEVED BY THE ACTION OF DGNP, THE ASSESSE CONTRACTORS REFERRED THE MATTER TO THE ARBITRATOR A S PER THE ARBITRATION CLAUSE IN THE CONTRACT AGREEMENT. THE ARBITRATOR P ASSED ARBITRATION AWARD ON 31.3.2000 AND THE MATTER WAS DECIDED IN FA VOUR OF THE ASSESSE CONTRACTOR BY AWARDING AN AMOUNT OF RS.7.99 CRORES ALONG WITH AN INTEREST OF RS.9.75 CRORES. AGGRIEVED BY THE AR BITRATION AWARD, THE DGNP CHALLENGED THE ARBITRATION AWARD BEFORE THE DI STRICT COURT, VISAKHAPATNAM. THE HONBLE DISTRICT COURT, VISAKHA PATNAM VIDE ITS ORDER DT.10.12.2002 CONFIRMED THE ARBITRATION AWARD PASSED BY THE ARBITRATOR. SUBSEQUENTLY, THE ASSESSEE COMPANY FIL ED AN EXECUTION PETITION BEFORE THE DISTRICT COURT, VISAKHAPATNAM F OR AN AMOUNT OF RS.14.14 CRORES. MEANWHILE, THE DGNP PREFERRED AN APPEAL BEFORE THE HONBLE HIGH COURT OF ANDHRA PRADESH AGAINST THE OR DER OF THE DISTRICT COURT. THE HONBLE HIGH COURT OF ANDHRA PRADESH VI DE ITS ORDER DATED ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 3 1.4.2003 PASSED AN INTERIM ORDER AND DIRECTED THE D GNP TO DEPOSIT A SUM OF RS.4,77,81,305/- WITH THE PRINCIPAL DISTRICT JUDGE, VISAKHAPATNAM, PENDING DISPOSAL OF THE CASE. THE H ONBLE ANDHRA PRADESH HIGH COURT PASSED ANOTHER INTERIM ORDER DIR ECTING THE DGNP TO DEPOSIT A FURTHER AMOUNT OF RS.2,29,95,752/-. THER EAFTER, THE HONBLE A.P. HIGH COURT, PENDING FINAL DISPOSAL OF THE CASE , ALLOWED THE ASSESSEE COMPANY TO WITHDRAW AN AMOUNT OF RS.3 CRORES ON 16. 11.2004 AFTER FURNISHING EQUAL AMOUNT OF SECURITY IN THE FORM OF TITLE DEEDS OF ANY PROPERTY. AS PER THE DIRECTIONS OF THE HONBLE HIG H COURT, THE ASSESSEE HAS RECEIVED FURTHER SUM OF RS.3 CRORES ON 15.7.200 7 AND A FURTHER SUM OF RS.2,82,47,142/- ON 13.8.2009. THE HONBLE ANDH RA PRADESH HIGH COURT FINALLY CONFIRMED THE ORDER OF THE DISTRICT C OURT, VISAKHAPATNAM TO THE EXTENT OF ARBITRATION AMOUNT BUT, MODIFIED THE AWARD TO THE EXTENT OF INTEREST, WHEREIN THE INTEREST RATE WAS BROUGHT DOWN FROM 17.5.% TO 12% PER ANNUM. 3. THE DGNP, AGGRIEVED BY THE ORDER OF THE HONBLE A.P. HIGH COURT, FILED A SPECIAL LEAVE PETITION BEFORE THE HONBLE S UPREME COURT. THE HONBLE SUPREME COURT ALLOWED THE DGNP TO WITHDRAWN THE SLP WITH A LIBERTY TO FILE REVIEW PETITION BEFORE THE HONBLE ANDHRA PRADESH HIGH COURT, SEEKING CLARIFICATION ON THE ISSUE RAISED BE FORE THE SUPREME ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 4 COURT. THE DGNP FILED A REVIEW PETITION AND REQUES TED THE HONBLE A.P. HIGH COURT TO REVIEW ITS ORDER DATED 1.4.2009 ALONG WITH A STAY PETITION PRAYING FOR STAY OF ALL FURTHER PROCEEDINGS TILL DI SPOSAL OF THE REVIEW PETITION BY THE HIGH COURT. BOTH THESE PETITIONS A RE PENDING BEFORE HIGH COURT AND HONBLE HIGH COURT NEITHER PASSED ANY INT ERIM ORDER NOR STAYED THE PROCEEDINGS. 4. THE ASSESSING OFFICER, BASED ON THE INFORMATION THAT THE ASSESSEE COMPANY HAS RECEIVED INTERIM AWARD AMOUNT OF RS.3 C RORES EACH IN ASSESSMENT YEAR 2005-06 & 2008-09, HAD REASONS TO B ELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS BEEN ESCAPED ASSESSMEN T, AS THE ASSESSEE DID NOT FILED RETURN FOR THE ABOVE TWO ASS ESSMENT YEARS OFFERING THE SAID RECEIPTS FOR TAXATION. THEREFORE , THE A.O. ISSUED NOTICE U/S 148 OF THE ACT DATED 20.1.2010 FOR THE ASSESSME NT YEAR 2005-06 WHICH WAS DULY SERVED ON 21.1.2010. SIMILARLY, NOT ICE U/S 148 OF THE ACT WAS ALSO ISSUED FOR THE ASSESSMENT YEAR 2008-09 ON 20.8.2009 WHICH WAS DULY SERVED ON THE ASSESSEE. IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT, THE ASSESSEE HAS FILED RETURN FOR T HE ASSESSMENT YEAR 2005-06 ON 17.3.2010 DECLARING NIL INCOME AND ALSO FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 11.3.2010 DECLARING LOSS OF RS.2,57,409/-. THE CASE WAS TAKEN UP FOR SCRUTINY. DURING THE COURSE ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 5 OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NO TICED THAT THE ASSESSEE HAS NOT OFFERED THE INTERIM AMOUNT RECEIVE D ON ACCOUNT OF ARBITRATION AWARD TO TAX, ISSUED A SHOW CAUSE NOTIC E AND ASKED TO EXPLAIN WHY THE AMOUNT OF AWARD RECEIVED FOR BOTH T HE ASSESSMENT YEARS I.E. 2005-06 & 2008-09 SHOULD NOT BE TREATED AS ITS INCOME. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE SUBMITT ED THAT IT HAD WITHDRAWN THE AMOUNTS AS PER THE DIRECTIONS OF THE HONBLE HIGH COURT OF ANDHRA PRADESH BY FURNISHING EQUAL AMOUNT OF SEC URITY. THEREFORE, THE SAME IS TREATED AS LIABILITY IN THE BOOKS OF AC COUNTS OF THE ASSESSEE COMPANY AS THE ARBITRATION PROCEEDINGS WAS NOT FINA L AT THE TIME OF RECEIPT OF AMOUNT. FURTHER, IT IS SUBMITTED THAT T ILL DATE THE ISSUE HAS NOT REACHED FINALITY AND THE ENTIRE AMOUNT IS DISPU TED, BECAUSE THE DGNP HAVE FILED FURTHER APPEAL AGAINST THE ORDER OF THE ARBITRATION. THE ASSESSE, FURTHER, SUBMITTED THAT IN THE EVENT OF TH E JUDGEMENT GOES AGAINST THE ASSESSEE BEFORE THE SUPREME COURT/ANDHR A PRADESH HIGH COURT, THE DISPUTED AMOUNT SHOULD BE PAID BACK TO T HE PRINCIPALS. THEREFORE, UNLESS THE ISSUE REACHED FINALITY, THE A SSESSEE DOES NOT HAVE ABSOLUTE RIGHT TO RECEIVE THE SAID AMOUNT. THE ASS ESSEE FURTHER STATED THAT THE AMOUNT RECEIVED AGAINST DEPOSITS OF TITLE DEEDS OF PROPERTIES AND ALSO ON PERSONAL GUARANTEE OF THE DIRECTORS OF THE COMPANY AND HENCE, IT DOES NOT HAVE ABSOLUTE RIGHT TO RECEIVE T HE AMOUNT, AS THE ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 6 MATTER IS STILL IN DISPUTE. UNDER THESE CIRCUMSTAN CES, MAKING ADDITIONS TOWARDS INTERIM AMOUNT RECEIVED IS INCORRECT. TO S UPPORT ITS ARGUMENTS, THE ASSESSEE HAS RELIED UPON THE HONBLE SUPREME CO URT JUDGEMENT IN THE CASE OF HINDUSTAN HOUSING AND LAND DEVELOPERS T RUST VS. CIT 161 ITR 524 AND ALSO PLACED ITS RELIANCE ON HONBLE A.P . HIGH COURT IN THE CASE OF CIT VS. DEVTA CHANDRA ROY & SONS 154 ITR 89 3. THE ASSESSING OFFICER, HOWEVER, DID NOT CONVINCED WITH THE REPLY FILED BY THE ASSESSEE HELD THAT EVEN THOUGH, THE ISSUE IS PENDING BEFORE THE COURT OF LAW, THE INTERIM RECEIPTS WILL BE ASSESSED IN THE HANDS OF T HE ASSESSEE IN THE YEAR OF RECEIPT, THEREFORE, MADE AN ADDITION OF RS.3 CRO RES EACH FOR THE ASSESSMENT YEAR 2005-06 & 2008-09. TO JUSTIFY HIS STAND, THE A.O. RELIED UPON JUDGEMENT OF HONBLE SUPREME COURT IN T HE CASE OF CIT VS. GHANSHYAM (HUF) 315 ITR 1 AND ALSO AP HIGH COURT JU DGEMENT IN THE CASE OF CIT VS. M. SAROJINI DEVI 250 ITR 759. 5. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSE, PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE CIT(A), THE ASSES SEE REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER. THE ASSESSEE FURTHER CONTENDED THAT THE AOS ACTION OF REOPENING THE ASS ESSMENT IS INVALID, AS THE AO DID NOT HAVE MATERIAL EVIDENCE BEFORE HIM TO COME TO THE CONCLUSION THAT INCOME HAD ESCAPED ASSESSMENT. HOW EVER, THE CIT(A), ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 7 AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSES SEE HELD THAT THE REOPENING OF ASSESSMENT IS VALID. AS FAR AS THE ISS UE OF TAXATION OF ARBITRATION AMOUNT IS CONCERNED, THE CIT(A) HELD TH AT IN VIEW OF THE FACT THAT THE ARBITRATION PROCEEDINGS HAVE REACHED FINAL ITY THE A.O., RIGHTLY LEVIED THE TAX ON INTERIM AMOUNT RECEIVED BY THE CO MPANY. THE CIT(A) FURTHER HELD THAT THE ASSESSEE HAD ABSOLUTE RIGHT T O RECEIVE THE AMOUNT AS A RESULT OF HIGH COURTS ORDER. THEREFORE, UPHE LD THE ADDITIONS MADE BY THE ASSESSING OFFICER AND DISMISSED THE ASSESSEE S APPEAL. AGGRIEVED BY THE CIT(A) ORDER, THE ASSESSEE IS IN APPEAL BEFO RE US AND RAISED THE FOLLOWING GROUNDS: 1. APPELLANT SUBMITS THAT THE COMMISSIONER OF INCOM E TAX (APPEALS) IS NOT JUSTIFIED IN HOLDING THAT THE PROCEEDINGS INITI ATED UNDER SECTION 148 ARE VALID AND ATTRACTED IN THE CASE OF THE APPELLAN T. 2.A. APPELLANT SUBMITS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN HOLDING THAT THE INTE RIM AMOUNT RECEIVED AMOUNTING TO RS.3.00 CRORES BY WAY OF WITHDRAWAL AG AINST DEPOSIT PENDING DISPUTE IN RESPECT THEREOF BEFORE HON'BLE C OURT OF LAW, IS LIABLE TO BE TAXED ON RECEIPT BASIS, THE SAME NOT HAVING ACCR UED AT ALL TO THE APPELLANT AND ONLY BEING A CONTINGENT RECEIPT. 2.B. WITHOUT PREJUDICE TO THE GROUND URGED UNDER 2.A. AB OVE, APPELLANT PRAYS THAT THE INTERIM AMOUNT RECEIVED AMOUNTING TO RS.3. 00 CRORES IS ONLY A CAPITAL RECEIPT NOT LIABLE TO LEVY OF INCOME TAX TR EATING THE SAME AS A REVENUE RECEIPT. 2.C. WITHOUT PREJUDICE TO THE ABOVE GROUNDS URGED UNDER 2.A. AND 2.B. ABOVE, APPELLANT SUBMITS THAT THE COMMISSIONER OF I NCOME TAX (APPEALS) IS NOT JUSTIFIED IN REJECTING THE CONTENTION OF THE APPELLANT THAT INTERIM AWARD COMPRISING OF INTEREST ELEMENT SHOULD BE SUBJ ECTED TO LEVY F INCOME TAX ON ACCRUAL BASIS ONLY BUT NOT ON RECEIPT BASIS. ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 8 3. APPELLANT SUBMITS THAT THE COMMISSIONER OF INCOME T AX (APPEALS) IS NOT JUSTIFIED IN UPHOLDING THE ACTION OF ASSESSING OFFI CER IN CONSIDERING AS INCOME LIABLE TO TAX, WAIVER OF THE BANK LOAN AMOUNTING TO RS.1,27,00,603/- UNDER THE PROVISIONS OF SECTION 28 (IV) OF THE INCOME TAX ACT. 4. APPELLANT SUBMITS THAT THE COMMISSIONER OF INCOME T AX (APPEALS) IS NOT JUSTIFIED IN UPHOLDING THE ACTION OF ASSESSING OFFICER IN LEV YING INTEREST UNDER SECTIONS 234A AND 234B OF THE INCOME TAX ACT. 6. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSE, SU BMITTED THAT THE ARBITRATION AWARD IS NOT REACHED FINALITY, AS THE P RINCIPALS HAVE CHALLENGED THE ARBITRATION AWARD BEFORE THE HONBLE ANDHRA PRADESH HIGH COURT. THE A.R. FURTHER SUBMITTED THAT THE HO NBLE HIGH COURT OF ANDHRA PRADESH ALLOWED THE ASSESSEE TO WITHDRAW THE INTERIM AMOUNT BY FURNISHING ADEQUATE SECURITY AND ALSO TAKING PER SONAL GUARANTEE OF THE DIRECTORS OF THE COMPANY, THEREFORE IN THE EVEN T OF THE HONBLE HIGH COURT REVERSE THE ORDER OF ARBITRATION, THEN, THE A SSESSEE HAVE TO REFUND THE ENTIRE AMOUNT TO THE PRINCIPALS. HENCE, UNTIL THE ARBITRATION AWARD REACHES FINALITY, THE INTERIM AMOUNT CANNOT BE CONS IDERED AS AN INCOME OF ASSESSEE ON RECEIPT BASIS. THE A.R. FURTHER SUB MITTED THAT THE ASSESSEE HAS RECEIVED THESE AMOUNTS IN THE FINANCIA L YEAR RELEVANT TO THE ASSESSMENT YEAR 2005-06 & 2008-09 AND DURING TH AT PERIOD THE MATTER WAS PENDING BEFORE THE HONBLE A.P. HIGH COU RT. THE HONBLE A.P. HIGH COURT VIDE ITS ORDER DATED 1.4.2009 CONFI RMED THE ORDER OF ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 9 DISTRICT COURT IN RESPECT OF PRINCIPAL AMOUNT, HOWE VER, MODIFIED THE INTEREST PAYABLE FROM 17.5% TO 12% PER ANNUM. THE A.R. FURTHER SUBMITTED THAT THE DGNP FILED FURTHER APPEAL AGAINS T THE ORDER OF THE HIGH COURT BEFORE THE HONBLE SUPREME COURT AND CHA LLENGED THE VERY BASIC APPLICABILITY OF ARBITRATION ACT. THOUGH, TH E HONBLE SUPREME COURT DID NOT GIVE ANY FINDINGS ON THE APPEAL, IT A LLOWS THE DGNP TO WITHDRAW THE APPEAL WITH A RIGHT TO FILE A REVIEW P ETITION BEFORE THE HONBLE HIGH COURT OF ANDHRA PRADESH, SEEKING CLARI FICATIONS ON THE SUBJECT MATTER. THEREFORE, IF A SITUATION DEVELOPS WHEREBY THE HONBLE HIGH COURT REVIEWS ITS JUDEMENTS IN FAVOUR OF THE D GNP, THE ASSESSE SHALL REPAY THE ALLEGED AMOUNT TO THE DGNP. UNDER THESE CIRCUMSTANCES, THERE IS NO MECHANISM PROVIDED UNDER THE ACT TO CLAIM REFUND OF TAXES COLLECTED. THEREFORE, THESE AMOUNT S CANNOT BE TAXED IN THE YEAR UNDER CONSIDERATION ON RECEIPT BASIS. TH E A.R. IN SUPPORT OF HIS ARGUMENTS RELIED UPON THE FOLLOWING JUDGEMENTS: 1. CIT VS. YATINDRA & COMPANY (2005) 149 TAXMAN 281 2. HINDUSTAN HOUSING & LAND DEVELOPMENT TRUST VS. C IT (1986) 161 ITR 524. 3. CIT VS. DEVATA CHANDRAIAH & SONS (1985) 154 ITR 893 (AP) 4. CIT VS. ABDUL MANNAN SHAH MOHAMMED (2001) 248 IT R 614 (BOMBAY) 5. CIT VS. JANATA COOPERATIVE SUGAR MILLS LTD. (199 8) 233 ITR 635 ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 10 6. DSL ENTERPRISES PVT. LTD. VS. NC CHANDRATRE VS. ITO & OTHERS (2013) 84 DTR (BOM) 451 7. COMMISSIONER OF WEALTH TAX VS. NAND LAL MOHAN LAL ETC. (2010) 232 CTR 185. 8. CIT VS. SARVATRA ROAD RUNNERS PVT. LTD. (2008) 3 01 ITRNM 443. 7. ON THE OTHER HAND, THE LD. D.R. STRONGLY SUPPORT ED THE ORDERS OF THE CIT(A). THE LD. D.R. FURTHER ARGUED THAT THE A .O. HAS RIGHTLY REOPENED THE ASSESSMENT, AS THERE IS A SUFFICIENT M ATERIAL BEFORE THE A.O. TO FORM A BELIEF THAT INCOME CHARGEABLE TO TAX HAS BEEN ESCAPED ASSESSMENT FROM THE INFORMATION THAT THE ASSESSEE H AS RECEIVED INTERIM AMOUNT. THE D.R. FURTHER SUBMITTED THAT AS FAR AS THE TAXABILITY OF ARBITRATION AMOUNT IS CONCERNED, IN VIEW OF THE JUD GEMENTS OF THE HONBLE A.P. HIGH COURT, THE ARBITRATION ORDER SHAL L BECOME FINAL, THEREFORE, THE ASSESSEE HAS OBSOLETE RIGHT OVER THE SAID AMOUNT. HENCE, INTERIM AMOUNT RECEIVED BY THE ASSESSEE OF RS.3 CRO RES EACH IN ASSESSMENT YEAR 2005-06 & 2008-09 IS TAXABLE ON REC EIPT BASIS. THEREFORE, HE URGED TO UPHOLD THE ORDER OF THE CIT( A). 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MA TERIALS AVAILABLE ON RECORD. WE ALSO GONE THROUGH THE CASE LAWS RELIED UPON BY THE PARTIES. THE FIRST ISSUE CAME UP FOR OUR CONSI DERATION IS, WHETHER THE A.O. IS RIGHT IN REOPENING THE ASSESSMENT. IN THIS CASE, THE A.O. HAS ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 11 REOPENED THE ASSESSMENT BASED ON THE INFORMATION TH AT THE ASSESSEE HAS RECEIVED RS.3 CRORES EACH IN ASSESSMENT YEAR 20 05-06 & 2008-09 TOWARDS INTERIM AMOUNT, IN VIEW OF THE DIRECTIONS O F THE HONBLE A.P. HIGH COURT. THE A.O. NOTICED THAT THE ASSESSEE HAD NOT OFFERED THE SAID AMOUNT FOR TAXATION, THEREFORE, THE INCOME CHARGEAB LE TO TAX HAS BEEN ESCAPED FOR THE ASSESSMENT YEARS UNDER CONSIDERATIO N, HENCE, ISSUED NOTICE U/S 148 OF THE ACT. FROM THE FACTS, IT IS C LEAR THAT THE A.O. HAS ISSUED NOTICES U/S 148 OF THE ACT, FOR BOTH THE ASS ESSMENT YEARS, WHICH ARE WITHIN THE TIME PRESCRIBED UNDER THE PROVISIONS OF THE ACT. FURTHER, IT IS ALSO CLEAR THAT THE A.O. HAS MATERIAL EVIDENC E BEFORE HIM TO FORM A BELIEF THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPE D ASSESSMENT. UNDER THE PROVISIONS OF SECTION 147 OF THE ACT, THE ASSESSING OFFICER IS AUTHORIZED TO ASSESS OR REASSESS INCOME CHARGEABLE TO TAX, IF HE HAS A REASON TO BELIEVE THAT THE INCOME FOR ANY ASSESSMEN T YEAR HAS ESCAPED ASSESSMENT. THE PRIMARY REQUIREMENT OF SECTION 147 OF THE ACT, IS THAT THERE SHOULD BE A FORMATION OF BELIEF BY THE ASSESS ING OFFICER COUPLED WITH MATERIAL EVIDENCE. THE A.O. AT THE TIME OF IS SUING NOTICE U/S 148 OF THE ACT, IS NOT NECESSARILY TO ESTABLISH THE FACT T HAT THERE IS ESCAPEMENT OF INCOME. BUT, WHAT IS NECESSARY IS THAT THERE MU ST BE SOME MATERIAL EVIDENCE, ON WHICH THE FORMATION OF OPINION IS ARRI VED AT BY THE A.O. IN THE INSTANT CASE, THE A.O. ISSUED NOTICE U/S 148, B ASED ON THE ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 12 INFORMATION THAT THE ASSESSEE HAS RECEIVED ARBITRAT ION AMOUNT WHICH WAS NOT OFFERED TO TAX, WHICH CONSTITUTE THE VALID REASON FOR REOPENING THE ASSESSMENT. THEREFORE, WE ARE OF THE VIEW THAT THE A.O. HAS RIGHTLY REOPENED THE ASSESSMENT. THE CIT(A), AFTER ELABORAT E DISCUSSIONS REJECTED THE ASSESSEE ARGUMENTS AND UPHELD THE VALI DITY OF REOPENING. THEREFORE, WE UPHELD THE REOPENING OF THE ASSESSMEN T AND REJECT THE GROUNDS RAISED BY THE ASSESSEE. 9. THE NEXT ISSUE, ARISES FOR OUR CONSIDERATION IS WHETHER THE CIT(A) IS RIGHT IN CONFIRMING THE ADDITIONS MADE BY THE A. O. TOWARDS INTERIM AMOUNT RECEIVED ON ACCOUNT OF ARBITRATION AWARD. T HE FACTUAL MATRIX OF THE CASE IS THAT THE ASSESSEE WAS AWARDED CONTRACT BY THE DGNP IN THE YEAR 1991. THERE WAS A DISPUTE CROPPED UP BETWEEN THE PARTIES, THEREFORE, THE DGNP HAS CANCELLED THE CONTRACT. AG GRIEVED BY THE DECISION OF THE DGNP, THE ASSESSEE HAS REFERRED THE MATTER TO THE ARBITRATION. THE ARBITRATOR VIDE HIS ORDER DATED 3 1.3.2010 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND AWARDED AN AMOU NT OF RS.7.99 CRORES ALONG WITH INTEREST OF RS.9.75 CRORES. THE DGNP HAS CHALLENGED THE ARBITRATION ORDER BEFORE THE DISTRICT COURT. T HE DISTRICT COURT VIDE ITS ORDER DATED 22.10.2002 CONFIRMED THE ARBITRATION AW ARD AND DISMISSED THE APPEAL FILED BY THE DGNP. THE DGNP FILED FURTH ER APPEAL AGAINST THE ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 13 ORDER OF THE DISTRICT COURT, BEFORE THE HONBLE A.P . HIGH COURT. MEAN TIME THE ASSESSEE COMPANY FILED A EXECUTION PETITIO N BEFORE THE HONBLE A.P. HIGH COURT. THE HONBLE A.P. HIGH COURT VIDE ITS JUDGEMENT DATED 14.10.2004 ORDERED THE DGNP TO DEPOSIT AN AMOUNT OF RS.4,77,81,305/- AND A FURTHER AMOUNT OF RS.2,29,00,752/- AND ALLOWE D THE ASSESSEE COMPANY TO WITHDRAW AN AMOUNT OF RS.3 CRORE EACH FO R THE YEAR UNDER CONSIDERATION ON FURNISHING ADEQUATE SECURITY IN TH E FORM OF TITLE DEEDS OF PROPERTY AND ALSO PERSONAL GUARANTEE OF THE DIRE CTORS OF THE COMPANY. THE ASSESSEE COMPANY, ON FURNISHING THE R EQUISITE SECURITY GOT AN AMOUNT OF RS.3 CRORES EACH IN THE ASSESSMENT YEAR 2005-06 & 2008-09. THE ASSESSING OFFICER BROUGHT TO TAX THE ABOVE SAID AMOUNTS IN THE ASSESSMENT YEAR 2005-06 & 2008-09. THE ASSE SSEES CONTENTION WAS THAT THE MATTER IS STILL PENDING BEFORE THE HON BLE A.P. HIGH COURT, THEREFORE, UNTIL THE MATTER REACHES FINALITY, THE I NTERIM AMOUNT RECEIVED BY IT CANNOT BE TAXED IN THE YEAR UNDER CONSIDERATI ON. 10. THE ISSUE BEFORE US IS WHETHER THE MATTER ATTAI N FINALITY OR NOT AND THE INTERIM AMOUNT RECEIVED BY THE ASSESSEE IS TAXA BLE ON RECEIPT BASIS FOR THE YEAR UNDER CONSIDERATION NEEDS TO BE EXAMIN ED IN THE LIGHT OF THE FACTS OF THE PRESENT CASE. THE SUBJECT MATTER OF W ORK STARTED IN THE YEAR 1991 AND BECAUSE OF DISPUTES BETWEEN THE ASSES SEE COMPANY AND ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 14 THE PRINCIPALS THE MATTER WENT TO ARBITRATION. THO UGH THE ARBITRATION AWARD WAS PASSED IN THE YEAR 2010, THE PRINCIPALS H AVE CHALLENGED THE ARBITRATION AWARD BEFORE THE DISTRICT COURT. THE D ISTRICT COURT VIDE ITS ORDER DATED 22.10.2002 HAVE DISMISSED THE APPEAL FI LED BY THE PRINCIPALS. THE DGNP FURTHER PREFERRED AN APPEAL B EFORE THE HONBLE A.P. HIGH COURT AND THE MATTER IS STILL PENDING AT THE TIME OF ASSESSEE RECEIVED THESE IMPUGNED AMOUNTS. ON PERUSAL OF THE FACTS, WE NOTICED THAT THE PRINCIPALS HAVE CHALLENGED THE APPLICABILI TY OF THE PROVISIONS OF ARBITRATION ACT AND CONTENDED THAT THE PRESENT ARBI TRATION AWARD PASSED UNDER THE AMENDED ARBITRATION ACT, 1996 IS INCORREC T, BECAUSE THE ARBITRATION PROCEEDINGS WAS STARTED IN THE YEAR 199 3. THEREFORE, THE ARBITRATOR SHOULD HAVE CONSIDERED THE ERSTWHILE ARB ITRATION ACT. UNDER THESE CIRCUMSTANCES, IT IS VERY DIFFICULT TO COME T O THE CONCLUSION THAT ARBITRATION AWARD PASSED BY THE ARBITRATOR IS FINAL AND THE ASSESSE HAS ABSOLUTE RIGHT TO RECEIVE THE AMOUNT. 11. IT IS AN ADMITTED FACT THAT AT THE TIME OF RECE IPT OF IMPUGNED AMOUNT, THE ARBITRATION AWARD WAS CHALLENGED BEFORE THE HONBLE A.P. HIGH COURT. THE HONBLE A.P. HIGH COURT NEITHER ST AYED THE OPERATION OF THE ARBITRATION AWARD NOR GRANTED ANY STAY FOR FURT HER PROCEEDINGS. THEREFORE, UNTIL THE ARBITRATION AMOUNT IS FINALLY ASCERTAINED OR ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 15 DETERMINED, THE AMOUNT RECEIVED BY THE ASSESSEE CAN NOT BE CONSIDERED AS INCOME IN THE YEAR OF RECEIPT. THEREFORE, IN OUR VIEW, IT WOULD BE TAXABLE AS A BUSINESS INCOME IN THE PREVIOUS YEAR I N WHICH THE SAID AMOUNT IS FINALLY DETERMINED. IT IS A TRITE LAW TH AT INCOME CAN BE HELD TO BE ACCRUED, ONLY WHEN THE ASSESSEE ACQUIRES ABSOLUT E RIGHT TO RECEIVE THE SAID INCOME. IN THE INSTANT CASE, THE COURT AL LOWED THE ASSESSEE TO WITHDRAW THE PORTION OF ARBITRATION AMOUNT WITH A C ONDITION THAT THE ASSESSEE SHOULD FURNISH ADEQUATE SECURITY TO COVER THE AMOUNT AND ALSO ON FURNISHING THE PERSONAL GUARANTEE OF THE DIRECTO RS. THEREFORE, IN OUR OPINION, THE AMOUNT RECEIVED BY THE COMPANY AFTER F URNISHING SECURITY AND ALSO ON THE CONDITION OF A PERSONAL GUARANTEE O F DIRECTORS IS ONLY A LIABILITY AND NOT A INCOME. ACCORDINGLY, THE WITHD RAWAL OF THE AMOUNT BY THE ASSESSEE IS CONTINGENT IN NATURE, BECAUSE THERE IS ALWAYS A POSSIBILITY OF THE SAID AMOUNT BEING REFUNDED BY TH E ASSESSEE IN THE EVENT OF THE REVIEW PETITION FILED BY DGNP IS ACCEP TED BY THE HONBLE A.P. HIGH COURT. THE ASSESSEE BEING A PUBLIC LIMIT ED COMPANY NECESSARILY FOLLOWED THE MERCANTILE SYSTEM OF ACCOU NTING AND PRESENTED ITS ACCOUNTS ON ACCRUAL SYSTEM. ON PERUSAL OF THE FINANCIAL STATEMENT FILED BY THE ASSESSEE, IT WAS NOTICED THAT THE AMOU NT RECEIVED BY THE ASSESSE FROM COURT WAS KEPT UNDER CURRENT LIABILITI ES, THEREFORE, A.O. WAS ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 16 NOT RIGHT IN COMING TO THE CONCLUSION THAT THE SAID RECEIPTS ARE CONSTRUED AS INCOME ACCRUED TO THE ASSESSE FOR THE YEAR UNDER CONSIDERATION. 12. THE ARBITRATION PROCEEDING IS STILL UNDER CHALL ENGE BEFORE THE HONBLE A.P. HIGH COURT. THEREFORE, THE AMOUNT REC EIVED BY THE ASSESSEE ON FURNISHING SECURITY, CANNOT BE AT ANY S TRETCH OF IMAGINATION TREATED AS INCOME OF THE ASSESSEE ON RECEIPT BASIS FOR THE YEAR UNDER CONSIDERATION, BECAUSE OF THE REASON THAT THE PRINC IPALS HAVE CHALLENGED THE VERY BASIC APPLICABILITY OF ARBITRATION ACT BEF ORE THE SUPREME COURT. THOUGH THE SUPREME COURT DID NOT GIVE ANY FINDING O N THE ISSUE RAISED BY THE DGNP, IT ALLOWED THE DGNP TO WITHDRAW ITS AP PEAL, WITH A RIGHT TO SEEK CLARIFICATION FROM THE HONBLE A.P. HIGH COURT ON THE APPLICABILITY OF THE PROVISIONS OF ARBITRATION ACT. IN THE EVENT, T HE HONBLE A.P. HIGH COURT REVIEWED ITS ORDER AND DECIDED THE ISSUE IN F AVOUR OF DGNP, THEN, THE WHOLE AMOUNT INCLUDING THE AMOUNT RECEIVED BY T HE ASSESSEE IS TO BE REFUNDED TO THE PRINCIPALS. THEREFORE, IN OUR O PINION, THE AD-HOC AMOUNT RECEIVED BY THE ASSESSEE, AFTER FURNISHING S ECURITY CANNOT BE CONSIDERED AS INCOME OF THE ASSESSEE ON RECEIPT BAS IS. ON PERUSAL OF THE FACTS, IT IS NOTICED THAT THE INTERIM AMOUNT WA S PERMITTED TO WITHDRAW WHEN THE CASE WAS PENDING BEFORE THE HONB LE A.P. HIGH COURT. THE HONBLE A.P. HIGH COURT DELIVERED ITS F INAL VERDICT ON 2009, ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 17 WHEREIN IT HAS UPHELD THE ARBITRATION AWARD AMOUNT BUT, MODIFIED THE INTEREST PAYABLE FROM 17.5% TO 12%. THEREFORE, FRO M THESE FACTS IT IS VERY CLEAR THAT UNLESS THE ISSUE REACHES FINALITY I N THE COURT OF LAW, THE SAID AMOUNT CANNOT BE TREATED AS INCOME OF THE ASSE SSEE. ON GOING THROUGH THE FACTS OF THE PRESENT CASE, WE NOTICED T HAT THE HONBLE A.P. HIGH COURT PASSED ITS FINAL ORDER ON 18.6.2014 AND DISMISSED THE REVIEW PETITION FILED BY THE PRINCIPALS. THEREFORE, IN OU R CONSIDERED OPINION, THE AMOUNT IS TAXABLE IN THE ASSESSMENT YEAR 2015-16 AN D NOT IN THE ASSESSMENT YEAR 2005-06 & 2008-09. 13. THE A.R. OF THE ASSESSEE CONTENDED THAT THE ASS ESSING OFFICER HAS OBSERVED THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. UNDER MERCANTILE SYSTEM OF ACCOUNTING, ALL INCOME A ND EXPENDITURES SHOULD BE RECOGNIZED WHEN THE INCOME IS ACCRUED. T HEREFORE, THE IMPUGNED AMOUNT RECEIVED BY THE ASSESSEE IS NOT TAX ABLE FOR THE YEAR UNDER CONSIDERATION, BECAUSE THE IMPUGNED AMOUNTS W ERE NOT ACCRUED IN BOTH THE ASSESSMENT YEARS. IF AT ALL IT IS TAXAB LE, IT SHOULD BE TAXED IN THE YEAR 2010-11, WHEN THE ARBITRATION AWARD WAS PA SSED. WE FIND FORCE IN THE ARGUMENTS OF THE LD. A.R. THAT, THE A. O. HIMSELF ADMITTED THAT THE ASSESSE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, THEREFORE, THESE RECEIPTS CANNOT BE TAXED ON RECEIPT BASIS. TH E CORRECT DATE IS TO ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 18 BE RECKONED FOR RECOGNIZING THE SAID RECEIPT IS, WH EN THE ARBITRATION AWARD IS PASSED I.E. ON 13.3.2010 WHICH COMES UNDER THE ASSESSMENT YEAR 2010-11. THEREFORE, IN OUR OPINION, IF AT ALL THE AMOUNT IS TAXABLE, IT CAN BE TAXED EITHER IN THE YEAR OF ARBITRATION A WARD WAS PASSED OR IN THE YEAR THE ARBITRATION PROCEEDINGS WAS FINALLY UP HELD BY THE HIGH COURT I.E. ASSESSMENT YEAR 2015-16. BUT, IT CANNOT BE TA XED FOR THE A.Y. 2005- 06 AND 2008-09 UNDER ANY CIRCUMSTANCES. 14. THE REVENUE AUTHORITIES HEAVILY PLACED THEIR RE LIANCE UPON THE HONBLE SUPREME COURT JUDGEMENT IN THE CASE OF CIT VS. GHANSHYAM (HUF) (2009) 315 ITR 1 AND DISTINGUISHED THE HONBL E SUPREME COURT JUDGEMENT REFERRED BY THE ASSESSEE IN HINDUSTAN HOU SING AND LAND DEVELOPMENT TRUST LTD. VS. CIT 161 ITR 524. ON PER USAL OF THE FACTS OF BOTH THE CASES, WE ARE OF THE VIEW THAT THE JUDGEME NT REFERRED BY THE A.O. IN THE CASE OF CIT VS. GHANSHAM (HUF)(SUPRA) I S DELIVERED UNDER DIFFERENT CONTEXT, I.E. KEEPING IN VIEW OF THE PROV ISIONS OF SECTION 45(5) OF THE ACT, WHEREIN THE STATUTE ITSELF PROVIDES FOR TAXATION OF ENHANCED COMPENSATION RECEIVED ON ACCOUNT OF COMPULSORY ACQU ISITION OF LAND IN THE YEAR OF RECEIPT. THE HONBLE SUPREME COURT, AF TER REFERRING THE PROVISIONS OF SECTION 45 AND CONDITIONS FOR THE CHA RGEABILITY OF THE AMOUNT UNDER THE HEAD CAPITAL GAINS, THE COURT STAT ED THAT THE CAPITAL ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 19 GAIN IS AN ARTIFICIAL INCOME. FROM THIS SCHEME OF SECTION 45, IT IS CLEAR THAT THE CAPITAL GAIN IS NOT AN INCOME WHICH ACCRUE S FROM DAY TO DAY DURING THE SPECIFIC PERIOD, BUT IT ARISES AT A FIXE D POINT OF TIME NAMELY ON THE DATE OF TRANSFER. ACCORDING TO THE HONBLE SUPR EME COURT SECTION 45 DEFINES CAPITAL GAINS, IT MAKES THEM CHARGEABLE TO TAX AND IT ALLOTS AN APPROPRIATE YEAR FOR SUCH CHARGE AND SECTION 45 LAY S DOWN THE MODE OF COMPUTATION AFTER CAPITAL GAIN AND DEDUCTIONS THERE IN. THEREFORE, IN OUR CONSIDERED OPINION THE CASE LAW RELIED UPON BY THE REVENUE IS NOT AT ALL APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE A SSESSEE HAS RELIED ON THE HONBLE SUPREME COURT JUDGEMENT IN THE CASE OF CIT VS. HINDUSTAN HOUSING AND LAND DEVELOPMENT TRUST VS. CIT (SUPRA) WHEREIN IT WAS HELD THAT WHEN THE STATE IS IN APPEAL AGAINST THE O RDER OF THE ENHANCED COMPENSATION AND INTEREST THEREON, THE RECEIPT OF S UCH AMOUNT IS NOT TAXABLE AS INCOME, AS THE SAID TWO ITEMS ARE DISPUT ED BY THE GOVERNMENT IN APPEAL. ON GOING THROUGH THE FACTS O F THE PRESENT CASE, IT WAS NOTICED THAT THE ASSESSEE HAS RECEIVED AN AR BITRATION AMOUNT FOR THE WORKS EXECUTED BY IT IN A SPECIFIC CONTRACT, TH EREFORE, IT CANNOT BE COMPARED WITH COMPENSATION OR ENHANCED COMPENSATION RECEIVED ON ACCOUNT OF COMPULSORY ACQUISITION OF LAND UNDER THE LAND ACQUISITION ACT. ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 20 15. NOW COMING TO THE CASE LAWS, RELIED BY THE ASSE SSEE COUNSEL. THE ASSESSEE COUNSEL, AT THE TIME OF HEARING RELIED UPO N PLETHORA OF CASE LAWS IN SUPPORT OF HIS CONTENTIONS. THE A.R. RELIE D UPON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN HOUS ING AND LAND DEVELOPMENT TRUST VS. CIT 161 ITR 524, WHEREIN THE HONBLE COURT OBSERVED AS UNDER: HELD, AFFIRMING THE DECISION OF THE HIGH COURT, THA T ALTHOUGH THE AWARD WAS MADE BY THE ARBITRATOR ON JU LY 29,1955, ENHANCING THE AMOUNT OF COMPENSATION PAYAB LE 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 RE SPONDENT WAS NOT PERMITTED TO WITHDRAW THE AMOUNT DEPOSITED BY THE STATE GOVERNMENT WITHOUT FURNISHING A SECURITY BOND FOR REFUNDING THE AMOUNT IN THE EVENT OF THE APPEAL BEI NG ALLOWED. THERE WAS NO ABSOLUTE RIGHT TO RECEIVE THE AMOUNT A T THAT STAGE. IF THE APPEAL WERE ALLOWED IN ITS ENTIRETY, THE RIGHT TO PAYMENT OF ENHANCED COMPENSATION WOULD HAVE FALLEN ALTOGETHER. THE EXTRA AMOUNT OF COMPENSATION OF ` 7,24,914/- WAS NOT INCOME ARISING OR ACCRUING TO THE RESPONDEN T DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1 956-57. BY THE COURT: THERE IS A CLEAR DISTINCTION BETWEE N CASES SUCH AS THE PRESENT ONE, WHERE THE RIGHT TO R ECEIVE PAYMENT IS IN DISPUTE AND IT IS NOT A QUESTION OF M ERELY QUANTIFYING THE AMOUNT TO BE RECEIVED, AND CASES WH ERE THE RIGHT TO RECEIVE PAYMENT IS ADMITTED AND THE QUANTI FICATION ONLY OF THE AMOUNT PAYABLE IS LEFT TO BE DETERMINED IN A CCORDANCE WITH SETTLED OR ACCEPTED PRINCIPLES. ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 21 16. THE HONBLE BOMBAY HIGH COURT, IN THE CASE OF D SL ENTERPRISES PVT. LTD. VS. MRS. N.C. CHANDRATRE ITO & OTHERS (20 13) 84 DTR 451 (BOM), UNDER SIMILAR CIRCUMSTANCES HELD AS UNDER: HELD THE FACTS WOULD INDICATE THAT THE CHALLENGE TO THE ARBITRAL AWARD IS PENDING APPEAL AND (HE AWARD IS YET TO ATTAIN FINALITY. THERE CAN BE NO MANNER OF DISPUTE EVEN AS A MATTER OF FIRST P RINCIPLE, ABOUT THE FACT THAT THE AMOUNT OF RS. 65 CRORES WHICH WAS PERMITTE D TO BE WITHDRAWN AGAINST A BANK GUARANTEE FOR AN EQUIVALENT AMOUNT D OES NOT REPRESENT INCOME WHICH HAS ACCRUED TO THE ASSESSEE. SO LONG A S THE CHALLENGE TO THE ARBITRAL AWARD IS ALIVE AND IS PENDING, AND THE LEGALITY OF THE ARBITRAL AWARD HAS NOT ATTAINED FINALITY, THE AMOUNT WHICH H AS BEEN AWARDED DOES NOT REPRESENT INCOME WHICH HAS ACCRUED. UPON THE WI THDRAWAL OF THE AMOUNT BY THE ASSESSEE, THE AMOUNT HAS BEEN INVESTED IN A FIXED DEPOSIT OF BANK WHICH HAS MARKED A LIEN TO THE EXTENT OF RS . 65 CRORES; THIS CORRESPONDS TO THE AMOUNT OF THE BANK GUARANTEE WHI CH IT HAS FURNISHED. THE INTEREST WHICH HAS ACCRUED ON THE AMOUNT OF THE FIXED DEPOSIT CANNOT BE REGARDED AT THIS STAGE AS INCOME WHICH HAS ACCRUED TO THE ASSESSEE. (PARA 10) THE SCOPE OF THE APPEAL BEFORE THE DIVISION BENCH I S THE VALIDITY OF THE ORDER OF THE SINGLE JUDGE DISMISSING THE OBJECTION TO THE ARBITRAL AWARD AND IT IS NOT ONLY THE QUANTUM OF COMPENSATION WHICH IS IN DISPUTE IN THE APPEAL THAT HAS BEEN FILED AGAINST THE ORDER OF THE SINGLE JUDGE. MOREOVER, IT WOULD BE FALLACIOUS TO POSTULATE THAT THE ASSESSEE HAS ABSOLUTE OWNERSHIP OF THE FUNDS TO THE EXTENT OF RS. 65 CRORES. EVEN T HE IMPUGNED ORDER OF THE ITO PROCEEDED ON THE FALLACIOUS ASSUMPTION THAT THE ASSESSEE HAS AN ABSOLUTE RIGHT TO RECEIVE AN AMOUNT OF INTEREST. SO LONG AS AN APPEAL AGAINST THE ORDER OF THE SINGLE JUDGE ON THE ARBITR ATION PETITION IS PENDING, THE ASSESSEE DOES NOT HAVE AN ABSOLUTE ENT ITLEMENT EITHER TO RETAIN THE AMOUNT OF RS. 65 CRORES OR THE INTEREST WHICH HAS BEEN REALISED IN RESPECT OF THE FIXED DEPOSIT PLACED WITH INDIAN BAN K. (PARA 11) THE INTEREST ON THE FIXED DEPOSIT DOES NOT REPRESEN T A CRYSTALLISED ENTITLEMENT OF THE ASSESSEE DURING THE FINANCIAL YE AR IN QUESTION. THE ASSESSEE WOULD HAVE AN INDEFEASIBLE ENTITLEMENT IN RESPECT OF THE PRINCIPAL AMOUNT OF RS. 65 CRORES AS WELL AS THE INTEREST EAR NED ONLY IF THE PROCEEDINGS WHICH ARE PENDING IN REGARD TO THE CHAL LENGE TO THE ARBITRAL AWARD CONCLUDE IN ITS FAVOUR. UNLESS THOSE PROCEEDI NGS ATTAIN FINALITY, THE ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 22 ASSESSEE WOULD BE SUBJECT TO A POSSIBLE ORDER OF RE STITUTION NOT MERELY IN RESPECT OF THE PRINCIPAL AMOUNT OF RS. 65 CRORES, B UT ALSO THE INTEREST WHICH HAS BEEN GENERATED ON THE AMOUNT WITHDRAWN IN VIEW OF THE MANDATE OF S. 144 OF THE CPC, 1908 TO PROVIDE RESTITUTION IF A DE CREE IS MODIFIED IN APPEAL. IN THAT VIEW OF THE MATTER, IT WOULD BE WHO LLY UNREASONABLE TO DEDUCT TAX AT SOURCE ON AN AMOUNT WHICH HAS NOT ACC RUED TO THE ASSESSEE AS INCOME DURING THE FINANCIAL YEAR IN QUE STION, THE ENTITLEMENT OF THE ASSESSEE BEING CONTINGENT ON THE OUTCOME OF THE CHALLENGE TO THE ARBITRAL AWARD. MOREOVER, IT HAS ALSO NOT BEEN DISP UTED ON BEHALF OF THE ASSESSEE AND ITS FAIRLY CONCEDED BY COUNSEL FOR THE ASSESSEE THAT IF THE CHALLENGE TO THE ARBITRAL AWARD ENDS IN FAVOUR OF T HE ASSESS--E, THE REVENUE WOULD BE ENTITLED TO BRING TO TAX THE AMOUN T ACCRUED IN THE CORRESPONDING YEAR. THE ITO WAS NOT JUSTIFIED IN DE NYING A CERTIFICATE UNDER S. 197 DESPITE THE FACT THAT SUCH A CERTIFICATE HAS BEEN ISSUED EARLIER FOR THREE PRECEDING FINANCIAL YEARS 2009-10, 2010-11 AN D 2011-12. FIRST RESPONDENT IS DIRECTED TO ISSUE A CERTIFICATE UNDER S.197 FOR FINANCIAL YEAR 2012-13. 17. IN YET ANOTHER CASE, THE HONBLE HIGH COURT OF DELHI, IN THE CASE OF CIT VS. SARVATRA ROAD RUNNERS PVT. LTD. (2008) 301 ITR 443, WHILE DEALING WITH SIMILAR ISSUE HELD AS UNDER: ON A READING OF THE INTERIM ORDERS PASSED BY THE MA DHYA PRADESH HIGH COURT ON 14 TH OCT., 1996 AND 13 TH DEC., 1996, IT IS QUITE CLEAR THAT THE ASSESSEE HAD NO RIGHT TO RECEIVE THE MONEY IN T HE SENSE THAT NO RIGHT HAD ACCRUED OR VESTED IN THE ASSESSEE IN THIS REGARD. IN THE EVENT SECL SUCCEEDED IN THE APPEAL FILED BY IT, THE ASSES SEE WAS OBLIGED TO RETURN THE AMOUNT BY WAY OF RESTITUTION UNDER S. 14 4 OF THE CPC. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT B OTH THE CIT(A) AS WELL AS THE TRIBUNAL WERE CORRECT IN LAW IN DELE TING THE ADDITION OF RS.3,28,65,728 MADE BY THE ASSESSING OFFICER. NO SUBSTANTIAL QUESTION OF LAW ARISES FOR CONSIDER ATION. THE APPEAL IS DISMISSED. ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 23 18.THE HONBLE DELHI HIGH COURT, IN THE CASE OF PAR AGON CONSTRUCTIONS (I) PVT. LTD. VS. CIT & ANR (2005) 274 ITR 413 (DEL ) HELD AS UNDER: IN THE INSTANT CASE IT IS VERY CLEAR THAT IT WAS ON LY IN VIEW OF THE ORDER MADE BY THE COURT THAT THE AMOUNT WAS PERMITT ED TO BE WITHDRAWN AND THAT TOO ON THE FURNISHING OF A BANK GUARANTEE OF A NATIONALIZED BANK AND THE APPELLANT WAS REQUIRED TO REFUND THE AMOUNT WITH INTEREST TO THE RESPONDENT IN CASE THE RESPOND ENT SUCCEEDED. THEREFORE, THE DETERMINATIVE DATE WOULD BE THE DATE ON WHICH THE DECISION WAS RENDERED BY THE COURT AND IT IS FOR TH AT RELEVANT YEAR THAT THE INCOME-TAX WILL HAVE TO BE ASSESSED AS IT CAN B E SAID THAT THE AMOUNT ACCRUED ON THAT DATE ONLY. 19. THE HONBLE A.P. HIGH COURT IN THE CASE OF CIT VS. DEVATHA CHANDRAIAH & SONS (1985) 154 ITR 893, UNDER SIMILAR CIRCUMSTANCES HELD AS UNDER: HELD, THAT THE MONEY REPRESENTING THE SALES TAX HAD BEEN RECEIVED BY THE ASSESSEE IN A FIDUCIARY CAPACI TY. THE MONEY RECEIVED TOWARDS SALES TAX BY THE ASSESSEE FR OM THE PURCHASERS WAS RECEIVED ON BEHALF OF THE AGRICULTUR IST PRINCIPALS AND THE SAME DID NOT CONSTITUTE TRADING RECEIPTS IN THE HANDS OF THE ASSESSEE. IN ANY EVENT, SINCE THE ASSESSEE FOL LOWED THE MERCANTILE SYSTEM OF ACCOUNTING WHICH CREATED A LIA BILITY TO REPAY THE SALES TAX TO ITS PRINCIPALS, AS AND WHEN IT WAS REFUNDED, THE SAME COULD NOT BE INCLUDED IN ITS INC OME. 20. NOW COMING TO THE CASE LAWS RELIED UPON BY THE LD. DR. THE LD. DR RELIED UPON THE HONBLE SUPREME COURT JUDGEMENT IN THE CASE OF CIT VS. GHANSHAM (HUF) (2009) 315 ITR 1. THE HONBLE S UPREME COURT IN THE ABOVE CASE HELD AS UNDER: ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 24 UNDER S. 45(1), PROFITS OR GAINS ARISING FROM THE TRANSF ER OF A CAPITAL ASSET EFFECTED IN THE PREVIOUS YEAR IS TAKE N TO BE THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER T OOK PLACE AND SUCH PROFITS ARE CHARGEABLE TO TAX UNDER THE HE AD 'CAPITAL GAINS'. HOWEVER, IT WAS NOTICED THAT IN CASES WHERE CAPITAL GAINS ACCRUED OR AROSE BY WAY OF COMPULSORY ACQUISI TION, THE ADDITIONAL COMPENSATION STOOD AWARDED IN SEVERAL ST AGES BY DIFFERENT APPELLATE AUTHORITIES WHICH NECESSITATED RECTIFICATION OF THE ORIGINAL ASSESSMENT AT EACH STAGE. TO PROVID E FOR RECTIFICATION OF THE ASSESSMENT OF THE YEAR IN WHIC H CAPITAL GAINS WAS ORIGINALLY ASSESSED, S. 155 (7A) WAS ALSO INTRO DUCED. HOWEVER, SINCE ADDITIONAL COMPENSATION UNDER THE LA ND ACQUISITION ACT, 1894 WAS AWARDED IN SEVERAL STAGES MULTIPLE RECTIFICATIONS HAD TO BE MADE TO THE ORIGINAL ASSES SMENT WHICH CAUSE GREAT DIFFICULTY IN CARRYING OUT THE REQUIRED RECTIFICATION AND IN EFFECTING THE RECOVERY OF ADDITIONAL DEMAND. IT WAS ALSO NOTICED THAT REPEATED RECTIFICATIONS OF ASSESSMENT ON ACCOUNT OF ENHANCEMENT OF COMPENSATION BY DIFFERENT COURTS OFTEN RESULTED IN MISTAKES IN COMPUTATION OF TAX. THEREFO RE, WITH A VIEW TO REMOVE THESE DIFFICULTIES, THE FINANCE ACT, 1987 INSERTED S. 45(5) TO PROVIDE FOR TAXATION OF ADDITIONAL COMPENS ATION IN THE YEAR OF RECEIPT INSTEAD OF IN THE YEAR OF TRANSFER OF THE CAPITAL ASSET. (PARA 16 & 18) INTEREST UNDER S. 28 OF LAND ACQUISITION ACT, 1894, UNLIKE INTEREST UNDER S. 34 IS AN ACCRETION TO THE VALUE, HENCE IT IS A PART OF ENHANCED COMPENSATION OR CONSIDERATION WHICH IS NOT THE CASE WITH INTEREST UNDER S. 34. SO ALSO ADDITIONAL AMOUN T UNDER S. 23(1A) AND SOLATIUM UNDER S. 23 (2) FORM PART OF EN HANCED COMPENSATION UNDER S. 45(5)(B). CONTENTION THAT S. 45(5)(B) DEALS ONLY WITH REWORKING, ITS OBJECT IS NOT TO CON VERT THE AMOUNT OF ENHANCED COMPENSATION INTO DEEMED INCOME ON RECEIPT IS NOT SUSTAINABLE. THE SCHEME OF 5. 45(5) WAS INSERTED W.E.F. 1ST APRIL, 1988 AS AN OVERRIDING PROVISION. AS STATED ABOVE, COMPENSATION UNDER THE L.A. ACT, 1894, ARISES AND I S PAYABLE IN MULTIPLE STAGES WHICH DOES NOT HAPPEN IN CASES OF T RANSFERS BY SALE ETC. HENCE, THE LEGISLATURE HAD TO STEP IN AND SAY THAT AS AND WHEN THE ASSESSEE-CLAIMANT IS IN RECEIPT OF ENH ANCED COMPENSATION IT SHALL BE TREATED AS 'DEEMED INCOME' AND TAXED ON RECEIPT BASIS. THIS IS SUPPORTED BY INSERTION OF CL. (C) IN S. 45(5) W.E.F. 1ST APRIL, 2004 AND S. 155(16) WHICH R EFERS TO A SITUATION OF A SUBSEQUENT REDUCTION BY THE COURT, T RIBUNAL OR OTHER AUTHORITY AND RECOMPUTATION/AMENDMENT OF THE ASSESSMENT ORDER. SEC. 45(5) READ AS A WHOLE [INCLUDING CL. (C )] NOT ONLY DEALS WITH REWORKING AS URGED ON BEHALF OF THE ASSESSEE BUT ALSO WITH THE CHANGE IN THE FULL VALUE OF THE CONSI DERATION (COMPUTATION) AND SINCE THE ENHANCED COMPENSATION/CONSIDERATION (INCLUDING INTEREST UNDE R S. 28 OF THE 1894 ACT) BECOMES PAYABLE/PAID UNDER 1894 AC T AT ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 25 DIFFERENT STAGES, THE RECEIPT OF SUCH ENHANCED COMPENSATION/CONSIDERATION IS TO BE TAXED IN THE YE AR OF RECEIPT SUBJECT TO ADJUSTMENT, IF ANY, UNDER S. 155(16), LA TER ON. HENCE, THE YEAR IN WHICH ENHANCED COMPENSATION IS RECEIVED IS THE YEAR OF TAXABILITY. CONSEQUENTLY, EVEN IN CASES WHERE PENDING APPEAL, THE COURT/TRIBUNAL/AUTHORITY BEFORE WHICH APPEAL IS PENDING, PERMITS THE CLAIMANT TO WITHDRAW AGAINST SECURITY OR OTHERWISE THE ENHANCED COMPENSATION (WH ICH IS IN DISPUTE), THE SAME IS LIABLE TO BE TAXED UNDER S. 4 5(5). THIS IS THE SCHEME OF S. 45(5) AND S. 155(16). EVEN BEFORE THE INSERTION OF S. 45(5)(C) AND S. 155(16) W.E.F. 1ST APRIL, 2004, THE RECEIPT OF ENHANCED COMPENSATION UNDER S. 45(5) (B) WAS TAXABLE IN THE YEAR OF RECEIPT WHICH IS ONLY REINFO RCED BY INSERTION OF CL. (C) BECAUSE THE RIGHT TO RECEIVE P AYMENT UNDER THE 1894 ACT IS NOT IN DOUBT. CIT VS. GHANSHYAM (H UF) (JUDGMENT OF THE PUNJAB & HARYANA HIGH COURT DT. 16TH MAY, 20 07 IN I T A P P E A L N O . 2 2 2 O F 2 0 0 5 ) , C H A N D I R A M & O R S . V S . C I T ( 2 0 0 8 ) 2 1 7 C T R ( P & H ) 1 1 3 A N D C I T V S . DEHRADUN TEA CO. (JUDGMENT OF THE UTTARANCHAL HIGH COURT DT. 23RD MARCH, 2007 IN IT APPEAL NO. 117 OF 2003) SET ASIDE; CIT VS. HINDUSTAN HOUSING&LAND DEVELOPMENT TRUST LTD. (1986) 58 CTR (SC) 179 : (1986) 161 ITR 524 (SC) DISTINGUISHED . 21. THE HONBLE M.P. HIGH COURT IN THE CASE OF CIT VS. CENTRAL INDIA ELECTRIC SUPPLY COMPANY LTD. (1993) 114 CTR (MP)160 , HELD AS UNDER: THE MAIN POINT FOR CONSIDERATION IS WHETHER THE MA RKET PRICE OF PLANT AND MACHINERY OF THE ASSESSEE TAKEN OVER BY T HE BOARD UNDER THE INDIAN ELECTRICITY ACT, HAD BECOME PAYABL E AND DUE IN THE FINANCIAL YEAR 1969-70 RELEVANT TO THE ASST. YR . 1970-71. IN THE TWO EXPRESSIONS 'PAYABLE' AND 'DUE' THERE IS DIFFERENCE ONLY OF DEGREE AND TIME. THE MONEY IS PA YABLE IMMEDIATELY ON THE DATE OF ACQUISITION OR SALE UNDE R THE ACT, BUT IT BECOMES DUE FOR PAYMENT AT SOME FUTURE DATE, IF THE RE IS A DISPUTE ABOUT THE PRICE. IN THE EVENT OF DISPUTE ABOUT THE PRICE, QUANTIFICATION OF THE PRICE IS DONE ONLY THROUGH TH E AWARD OF THE ARBITRATOR. IN THE PARTICULAR FACTS AND CIRCUMSTANC ES OF THIS CASE, ON ACQUISITION OF THE PLANT AND THE MACHINERY OF THE ASSESSEE, ITS PRICE UNDER S. 7A OF THE ELECTRICITY ACT HAD BECOME PAYABLE ON THE DATE OF THE ACQUISITION AND IT WAS Q UANTIFIED WHEN THE UMPIRE RESOLVED THE DISPUTE BETWEEN THE PARTIES AND MADE THE AWARD, BUT IT BECAME DUE ONLY WHEN THE DECREE IN TE RMS OF THE AWARD WAS PASSED BY THE CIVIL COURT UNDER S. 17 OF THE ARBITRATION ACT. WHEN AN AWARD IS PASSED AND IS FILED IN THE CO URT, THE AWARD AS SUCH IS NOT ENFORCEABLE AND THE AMOUNT AWARDED T HEREIN DOES NOT ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 26 BECOME RECOVERABLE TILL THE CIVIL COURT PUTS ITS SEAL ON IT AND MAKES A RULE BY PASSING A DECREE IN TERMS THEREOF. THE AWARD WHE N FILED IN THE COURT IS LIABLE TO BE CONFIRMED, REMITTED FOR RECONSIDERATIO N NO OR SET ASIDE, UNDER THE PROVISIONS OF THE ACT. WHERE THE ARBITRAT ION IS NOT WITH THE INTERVENTION OF THE COURT, IT MAY BE CONTE NDED THAT PASSING OF THE AWARD ITSELF MAKES THE AMOUNT AWARDE D DUE. THE FACT THAT THE JUDGMENT AND THE DECREE OF THE CIVIL COURT PASSED ON THE AWARD WAS PENDING CONSIDERATION IN APPEAL BE FORE THE HIGH COURT IS ALSO NOT A GOOD GROUND TO CONTEND THA T THE PRICE WAS NOT DUE TILL THE LITIGATION WITH REGARD TO THE AWARD WAS NOT OVER. THERE IS NO DOUBT THAT IN LAW THE MONEY PAYAB LE UNDER A DECREE BECOMES DUE FOR PAYMENT ON THE DATE OF PASSI NG OF THE DECREE AND NONETHELESS IT IS SO EVEN IF THE DECREE IS APPEALED AGAINST AND THERE IS LIKELIHOOD OF THE DECREE BEING SET ASIDE, MODIFIED OR CONFIRMED IN APPEAL. THE PRICE, THEREFO RE, DUE FOR PAYMENT TO THE ASSESSEE ON THE DATE OF THE PASSING OF THE DECREE WAS TAXABLE IN THE RELEVANT SUCCEEDING ASSESSMENT YEAR TO THE FINANCIAL YEAR, IN WHICH THE DECREE WAS PASSED, EVE N THOUGH THE AMOUNT UNDER THE DECREE MAY NOT HAVE BEEN ACTUA LLY PAID OR RECEIVED BY THE ASSESSEE. IN THE SCHEME OF THE IT A CT, I.E. TAXABLE EVENT IS ON 'ACCRUAL OF INCOME' AND NOT ON ACTUAL RECEIPT THEREOF. PENDENCY OF LITIGATION IN RESPECT OF AN AM OUNT OR PRICE DUE HAS NO RELEVANCY SO FAR AS THE TAXABILITY OF SUCH ACCRUED INCOME IS CONCERNED. THE LIKELIHOOD OF THE INCOME BEING REDUCED IN THE SUBSEQUENT ASSESSMENT YEAR AS A RESU LT OF THE LITIGATION MAY GIVE RISE TO RESORT TO OTHER REMEDIE S AVAILABLE IN THE ACT FOR RECTIFICATION AND REFUND OF THE TAX, BU T ON THAT GROUND IT CANNOT BE HELD THAT NO INCOME HAD ACCRUED TO THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR. THE LIAB ILITY TO PAY INCOME-TAX ARISES IN THE RELEVANT FINANCIAL YEAR ON ACCRUAL OF INCOME IN THAT YEAR AND IF THE INCOME IS ASCERTAINA BLE AND QUANTIFIED, IT CAN BE BROUGHT TO TAX IN THE RELEVAN T ASSESSMENT YEAR. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THIS CASE, THE TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THAT NO INCOM E ACCRUED TO THE ASSESSEE UNDER S. 41(2) OF THE IT ACT IN THE AS ST. YR. 1970- 71.CIT VS. SHESHAPPA HEGDE (1984) 39 CTR (KAR) 174 (1984) 150 IT. 164 (KAR) DISTINGUISHED ; KESORAM INDUSTRIES & COTTON MILLS LTD. VS. CWT (1966) 59 ITR 767 (SC) : AIR 1966 SC 1370 RELIED ON 22. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO APPLYING THE RATIOS OF THE JUDGEMENTS CITED ABOVE, WE ARE OF THE OPINION, THAT THE INTERIM AMOUNT RECEIVED TOWARDS A RBITRATION AWARD ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 27 AFTER FURNISHING SECURITY AND ALSO ON PERSONAL GUAR ANTEE OF THE DIRECTORS OF THE COMPANY, CANNOT BE TREATED AS INCOME OF THE ASSESSEE ON RECEIPT BASIS IN THE YEAR OF RECEIPT. ON GOING THROUGH THE FACTS OF THE PRESENT CASE, WE NOTICED THAT ISSUE IS NOT YET FINAL. THE HONBLE A.P. HIGH COURT, FINALLY DISMISSED THE REVIEW PETITION FILED BY THE DGNP ON 18.6.2014 AND UPHELD THE ARBITRATION AWARD. THEREFORE, IN OUR OP INION, THE ASSESSEE HAS GOT ABSOLUTE RIGHT TO RECEIVE THE AMOUNT, WHEN THE HONBLE A.P. HIGH COURT FINALLY UPHELD THE ARBITRATION AWARD AND NOT IN THE IMPUGNED ASSESSMENT YEARS. UNDER THESE CIRCUMSTANCES, INTER IM AMOUNT RECEIVED BY THE ASSESSEE CANNOT BE BROUGHT TO TAX AS INCOME OF THE ASSESSE FOR THE ASSESSMENT YEARS 2005-06 & 2008-09. THEREFORE, WE DIRECT THE A.O. TO DELETE THE ADDITIONS OF RS. 3 CRORE EACH MADE FO R THE A.Y. 2005-06 AND 2008-09. 23. THE NEXT ISSUE CAME UP FOR OUR CONSIDERATION, I S THE TAXABILITY OF A WAIVER OF BANK LOAN AMOUNTING TO RS.1,27,00,603/-. DURING THE COURSE OF HEARING, THE A.R. OF THE ASSESSEE DID NOT PRESS THE GROUND. THEREFORE, WE DISMISS THE GROUND RAISED BY THE ASSE SSEE AS NOT PRESSED. 24. THE NEXT ISSUE AGITATED BY THE ASSESSE, IS LEVY OF INTEREST U/S 234A AND 234B OF THE ACT. LEVY OF INTEREST U/S 234A & 2 34B IS MANDATORY AND CONSEQUENTIAL, WHEREVER THERE IS TAX LIABILITY AND THE A.O. DOES NOT ITA NOS.256&257/VIZAG/2012 SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., VSKP 28 HAVE ANY DISCRETIONARY POWER. THEREFORE, WE DISMISS THE GROUND RAISED BY THE ASSESSEE. 25. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED . THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 4 TH DEC15. SD/- SD/- ( . ) ( . . . . ) ( (( ( V. DURGA RAO ) )) ) ( G. MANJUNATHA) / // / JUDICIAL MEMBER / // / ACCOUNTANT MEMBER /VISAKHAPATNAM: 3 / DATED : 4.12.2015 VG/SPS ) ' 4 / COPY OF THE ORDER FORWARDED TO :- 1. & / THE APPELLANT M/S. SAYYAPARAJU ENGINEERING CONSTRUCTIONS LTD., 10 2, D.NO.50-1-54/15, ASR NAGAR, SEETAMMADHARA, VISAKHAP ATNAM. 2. '(& / THE RESPONDENT THE DCIT, CIRCLE-4(1), VISAKHAPATNAM 3. 5 / THE CIT-2, VISAKHAPATNAM 4. 5 () / THE CIT (A), VISAKHAPATNAM 5. ' , , / // / DR, ITAT, VISAKHAPATNAM 6 . . . . / GUARD FILE / BY ORDER // TRUE COPY // 9: ( SR.PRIVATE SECRETARY ) , / // / ITAT, VISAKHAPATNAM