The Deputy Commissioner of Income tax, Jalandhar V. Sh. Ashwani Chopra, Jalandhar

ITA 465/ASR/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5674 (ITAT-AMRITSAR)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 07-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: Y K SUD
• Keywords: Business income; Set aside; Capital Gains
• Section: 208

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.L. KARWA, VICE PRESIDENT AND SH. MEHAR SINGH, ACCOUNTANT MEMBER I.T.A. NO. 465(ASR)/2010 ASSESSMENT YEAR:2007-08 PAN : THE DY. COMMR. OF INCOME-TAX, VS. SH. ASHWANI CHOPR A, CIR.III, JALANHDAR. JALANDHAR. (APPELLANT) (RESPONDENT) I.T.A. NO. 466(ASR)/2010 ASSESSMENT YEAR:2007-08 PAN : THE DY. COMMR. OF INCOME-TAX, VS. SH. ASHWANI CHOPR A (HUF), CIR.III, JALANHDAR. JALANDHAR. (APPELLANT) (RESPONDENT) I.T.A. NO. 467(ASR)/2010 ASSESSMENT YEAR:2007-08 PAN : THE DY. COMMR. OF INCOME-TAX, VS. SH. ARVIND CHOPRA , CIR.III, JALANHDAR. JALANDHAR. (APPELLANT) (RESPONDENT) I.T.A. NO. 468(ASR)/2010 ASSESSMENT YEAR:2007-08 PAN : THE DY. COMMR. OF INCOME-TAX, VS. SH. ARVIND CHOPRA (HUF), CIR.III, JALANHDAR. JALANDHAR. (APPELLANT) (RESPONDENT) 2 DEPARTMENT BY: SH. TARSEM LAL, DR ASSESSEE BY:SH. Y.K. SUD, CA ORDER PER MEHAR SINGH, AM, THESE FOUR APPEALS FOR THE ASSESSMENT YEAR 2007-08 FILED BY THE REVENUE ARE DIRECTED AGAINST SEPARATE ORDER(S) OF CIT(A), JALANDHAR, EACH DATED 15.09.2010, PASSED UNDER SECTION 250(6) OF TH E INCOME-TAX ACT 1961 ( HEREINAFTER REFERRED TO IN SHORT (THE ACT). SINCE , THE ISSUE INVOLVED IN ALL THESE APPEALS IS COMMON (EXCEPT VARIATION IN AMOUNT S), THE SAME WERE HEARD TOGETHER. CONSEQUENTLY, SUCH APPEALS ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. AS THE ISSUE RAISED BY THE REVENUE IN THESE APPE ALS IS COMMON, (EXCEPT VARIATION IN AMOUNTS), THE GROUNDS TAKEN IN ITA NO.466(SR)/2010 IN THE CASE OF SH. ASHWANI CHOPRA (HUF),JALANDHAR, FOR THE ASSESSMENT YEAR 2007-08, ARE REPRODUCED HEREUNDER FOR THE SAKE OF C ONVENIENCE: 1. THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.2,09,47,604/- MADE BY THE AO AS LONG TERMS CAPIT AL GAIN IN COMPENSATION OF RS.2,11,44,228/- RECEIVED BY THE AS SESSEE BEING A SHAREHOLDER OF THE COMPANY. 2. WHILE DOING SO, THE LD. CIT(A), FAILED TO APPREC IATE THE FACTS. (I) THAT THE DISPUTE IN THE PRESENT CASE IS ONLY REGARD ING EFFECTIVE DATE OF DETERMINING THE SHAREABLE ASSETS AND LIABILITIES BETWEEN TWO GROUPS. THEREFORE, THE CAS E LAW OF CIT VS. HINDUSTAN HOUSING AND LAND DEVELOPMENT TRUST 161 ITR 324 IS NOT APPLICABLE. IN FACT, THERE IS NO DISPUTE REGARDING AMOUNT OF COMPENSATION. IN THE CA SE OF VK SOOD ENGINEERS AND CONTRACTORS (P) LTD 208 ITR 3 41 3 (P&H) ALSO THE DISPUTE WAS REGARDING AWARD OF COMPENSATION. THUS, IT IS ALSO DISTINGUISHABLE. (II) THAT THE HONBLE SUPREME COURT HAS ORDERED STATUS Q UO AND KEEPING THE AMOUNT OF FDR. THE ASSESSEE IS SHOW ING THE INCOME FROM INTEREST ON THE FDRS . AS STATUS Q UO IS MAINTAINED, THE BOTH GROUPS ARE CONTROLLING SEPARAT E UNITS AND TERRITORIES. THUS, THE AMOUNT HAS ACCRUED TO T HE ASSESSEE IN ABSOLUTE TERMS DURING THE YEAR. 3. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND HAT OF THE A.O. RESTORED. 4. THE APPELLANT REQUESTS FOR LEAVE TO ADD OR AMEND OR ALTER THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DI SPOSED OF. 3. THE LD. CIT(A), HAS PASSED A DETAILED AND WELL-R EASONED ORDER, IN THE CASE OF SH. ASHWANI CHOPRA (HUF), JALANDHAR, IN ITA NO.466(ASR)/2010 AND FOLLOWED THE SAME ORDER, IN THE CASE OF OTHER A SSESSEES I.E. SH. ASHWANI KUMAR, SH. ARVIND CHOPRA & SH. ARVIND CHOPRA (HUF). HENCE, THE CASE OF SH. ASHWANI CHOPRA (HUF) TAKEN UP AND THE FINDING T HEREIN WOULD BE APPLICABLE TO ALL THESE APPEALS. 4. A BARE PERUSAL OF GROUNDS OF APPEALS RAISED IN T HESE FOUR DIFFERENT APPEALS REVEALS COMMON GROUND AGAINST DELETION OF T HE ADDITION MADE BY THE A.O., AS LONG-TERM CAPITAL GAIN, ON ACCOUNT OF COMP ENSATION RECEIVED BY THESE ASSESSEES, BEING SHAREHOLDER OF THE COMPANY. IN ALL THESE FOUR APPEALS GROUND NO.3 & 4 ARE PURELY GENERAL IN NATURE.. HOWE VER, GROUND NOS. 1 & 2 ARE CO-GROUNDS OF APPEAL RAISED BY THE REVENUE IN A LL THESE APPEALS. 5. THE BRIEF FACTS OF THE CASE AS CULLED OUT FROM T HE RELEVANT RECORD ARE THAT THE ASSESSEE-APPELLANT IS ONE OF THE SHAREHOLD ERS OF THE COMPANY M/S. HIND SAMACHAR LIMITED, HOLDING 10254 CLASS A SHAR ES OF THE COMPANY. DISPUTES SPRANG UP BETWEEN THE SUCCESSORS OF LATE J AGAT NARAIN IN THIS COMPANY, WHO WERE DIVIDED INTO TWO GROUPS. ONE GROU PS OF SHAREHOLDERS OF 4 THE COMPANY, CALLED AS GROUP A AND WHICH IS BASED AT NEW DELHI, HEADED BY SMT. SUDARSHAN CHOPRA AND ANOTHER GROUPS CALLED GROUPS B OF SHAREHOLDERS, IS BASED AT JALANDHAR AND HEADED BY SH. VIJAY KUMAR CHOPRA. BOTH THE GROUPS HOLD EQUAL AMOUNT OF SHARES IN THE COMPANY. GROUP A WAS LOOKING AFTER THE BRANCH OFFICE AT NEW DELHI WH EREAS GROUP B WAS CONTROLLING THE HEAD OFFICE AT JALANDHAR. THE DISPU TE BETWEEN THESE TWO GROUPS WAS TAKEN TO COMPANY LAW BOARD (IN SHORT CL B). THE CLB DIRECTED PREPARATION OF LOTS IN RESPECT OF ALL THE ASSETS AND LIABILITIES OF THE COMPANY BY GROUP B AND GROUP A, WAS ASKED TO CHOOSE ONE OF THE LOTS. THERE BEING SOME MODIFICATION IN THE LOTS PREPARED AND PRESENTED BY GROUP B, HENCE, THE DIVISION COULD NOT TAKE PLACE AT THAT TIME. THE CLB PASSED AN ORDER DATED 17.5.21004, IN THE MATTER LAYING DOWN T HE PARAMETERS IN THE DIVISION OF THE COMPANY. THE GROUPS CHALLENGED THE ORDER OF THE CLB BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT. THE HONBL E HIGH COURT, VIDE ORDER DATED 19.10.2005, RECORDED A SETTLEMENT BETWE EN THE PARTIES AND RELEGATED THE PARTIES TO THE COMPANY CLB, TO ENFORC E THE IMPLEMENTATION OF THE SETTLEMENT. GROUP A CHOSE 2 LOT WHICH INCLUDED THE DELHI AND JAIPUR UNITS; ONE OF THE TERMS OF SETTLEMENT WAS THAT GROU P B WOULD DEPOSIT A SUM OF RS.24 CRORES WITH THE CLB, FOR ONWARD TRANSM ISSION TO THE GROUP A. HOWEVER, MORE DISPUTES WERE RAISED BY THE PART IES BEFORE THE CLB AND THE CLB KEPT THE AMOUNT OF RS.24 CRORES, IN ITS CUS TODY, IN THE FORM OF FIXED DEPOSITS, IN THE FAVOUR OF THE HINDUSTAN SAMACHAR L TD. THE CLB SUBSEQUENTLY, PASSED AN ORDER DATED 1.8.2006, DISP OSING OFF THE PETITIONS PENDING IN THE MATTER AND RELEASED THE AMOUNT OF RS .24 CRORES, TO THE MEMBERS OF GROUP A, WHICH INCLUDED THE ASSESSEE-A PPELLANT. GROUP B HOWEVER, PREFERRED APPEAL BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT AGAINST THE ORDER, DATED 1.8.2006 OF CLB, AND VIDE INTERIM ORDER, DATED 5 10.08.2006 THE HONBLE HIGH COURT HELD THAT THE AM OUNT OF RS.24 CRORES RELEASED TO THE MEMBERS OF GROUP A WOULD NOT BE U TILIZED IN ANY MANNER OR CHARGED BY GROUP A TILL THE MATTER WAS CONCLUD ED. THE HONBLE HIGH COURT REJECTED THE APPEAL OF GROUP B AND ALLOWED THE APPEAL OF GROUP A VIDE ORDER DATED 4.11.2008. THE HONBLE HIGH COURT, ON THE PETITION OF GROUPS A DIRECTED THAT THE CUT OFF DATE FOR DI VISION OF THE COMPANY BE TAKEN AS 31.3.2006 AS AGAINST 31.3.2000, FIXED BY T HE CLB. HOWEVER, GROUP B PREFERRED S.L.P., IN THE HONBLE SUPREME COURT AGAINST THIS ORDER OF THE HONBLE HIGH COURT. THE HONBLE APEX COURT, HAVE VI DE THEIR INTERIM ORDER DATED 18.1.2009, DIRECTED THE PARTIES TO MAINTAIN S TATUS QUO AND HAVE FURTHER ORDERED TO KEEP THE AMOUNT RELEASED IN AN FDR IF NO T ALREADY DONE SO. 6. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO WAS OF THE OPINION THAT THE ASSESSEE BEING A MEMBER OF GROUP A, WAS NOT AGGRIEVED WITH THE AMOUNT OF COMPENSATION OF RS. 24 CRORES, PAID TO I T, BY GROUPS B AND THAT THE GROUP HAD EXERCISED THE OPTION OF ACCEPTING T HE DEPOSIT OF RS.24 CRORES BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT. THE AO WAS OF THE OPINION THAT THERE WAS NO DISPUTE REGARDING COMPENS ATION OF RS. 24 CRORES AT ANY LEVEL. THE AO WAS OF THE OPINION THAT EVEN IF T HE QUANTUM OF COMPENSATION IS IN DISPUTE, IT IS LIABLE TO TAX, AS IT IS THE MINIMUM COMPENSATION AND THERE WAS NO SCOPE FOR REDUCTION IN SUCH AMOUNT, AS IT WAS NOT AN ISSUE BEFORE THE COURT, TO REDUCE SUCH C OMPENSATION. THE AO, FURTHER, OBSERVED THAT COMPENSATION WAS BASED ON TH E NUMBER OF SHARES HELD BY THE ASSESSEE AND IT WAS ATTRIBUTABLE TO THE DI MINUTION OF ITS RIGHTS IN THE COMPANY. THE AO HELD THAT THE COMPENSATION WAS CAP ITAL RECEIPT AND WAS EXIGIBLE TO CAPITAL GAINS TAX, IN THE HANDS OF IND IVIDUAL SHARE HOLDERS WHO RECEIVED THE AMOUNT. THUS, THE AMOUNT OF COMPENSATI ON RECEIVED BY THE 6 ASSESSEE WAS TREATED BY THE AO, AS FULL VALUE OF CO NSIDERATION OF THE SHARES OF THE COMPANY. THE AO AFTER REDUCING THE INDEX COS T OF ACQUISITION OF THE SHARES, THE LONG TERM CAPITAL GAINS WAS COMPUTED A T RS.2,09,47,604/-. AGGRIEVED WITH THE ORDER, THE ASSESSEE FILED AN APP EAL BEFORE THE TRIBUNAL. 7. THE LD. CIT(A), WAS OF THE OPINION THAT IT WAS A CASE OF DIVISION OF COMPANY/BUSINESS AND FAMILY SETTLEMENT AND THE DISP UTE HAS NOT BEEN CONCLUSIVELY SETTLED. THEREFORE, AMOUNT OF COMPENS ATION IS NOT EXIGIBLE TO TAX. HE ALSO SUBMITTED THAT THERE WAS NO TRANSFER O F SHARES AND UNLESS THERE IS TRANSFER OF SHARES, THERE IS NO QUESTION OF EXIGIBI LITY OF SUCH AMOUNT AS CAPITAL GAIN. 7.1 THE LD. DR, PLACED RELIANCE ON THE ORDER OF T HE ASSESSING OFFICER AND REFERRED TO PARA 10 OF THE ASSESSMENT ORDER. HE PLACED RELIANCE ON THE DECISION OF THE JURISDICTIONAL HIGH COURT, IN THE C ASE OF CIT VS. SURINDER MOHAN JALOTA (2010) 43 DTR (P&H) 146 AND HONBLE AN DHRA PRADESH HIGH COURT IN THE CASE OF CIT VS. K.C. P. LIMITED (1995) 216 ITR 602. THE LD. DR CONTENDED THAT THE ASSESSEE DECLARED INTEREST INCOME ON FDRS. CONSEQUENTLY, THE CONDUCT OF THE ASSESSEE SHOWS TH AT THE ISSUE IS SETTLED. 8. THE LD. AR ON THE OTHER HAND, PLACED RELIANCE ON THE ORDER OF THE CIT(A), AND CASE LAWS CITED BEFORE HIM AND REITERAT ED THE SUBMISSIONS MADE BEFORE HIM. HE PLACED RELIANCE ON THE FOLLOWING DEC ISIONS: I) NEW FRIENDS CO-OPERATIVE HOUSE BUILDING SOCIETY LTD. VS. C.I.T. AND ANOTHER (2010) 327 ITR 39 (P&H). II) C.I.T. VS. HARDWARI LAL, HUF (2009) 312 ITR 151 (P&H) 7 9. WE HAVE CAREFULLY PERUSED AND CONSIDERED THE RIV AL SUBMISSIONS, FACT SITUATION OF THE CASE AND THE RELEVANT RECORDS. FIR STLY, WE WOULD DISCUSS THE SUBMISSIONS MADE BY THE LD. DR. THE LD. DR PLACED RELIANCE ON THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT, IN THE CASE OF CIT VS. SURINDER MOHAN JALOTA (2010) 43 DTR 146, WHEREIN IT HAS BEEN HELD AS UNDER : BUSINESS INCOME - PROFIT CHARGEABLE TO TAX UNDER S. 41(1)-REFUND OF CUSTOMS DUTY REFUND OF CUSTOMS DUTY RECEIVED BY T HE ASSESSEE IN PURSUANCE OF ORDER OF THE HIGH COURT IS CHARGEABLE TO TAX UNDER S. 41(1) NOTWITHSTANDING PENDENCY OF THE APPEAL FILED BY THE GOVERNMENT AGAINST THE ORDER OF THE HIGH COURT. 9.1. THE FACT SITUATION OF THE PRESENT CASE ARE DIF FERENT AND DISTINGUISHABLE, AS IN THE PRESENT CASE, THOUGH A SUM OF RS. 24 CROR ES WAS DIRECTED TO BE RELEASED TO THE SHAREHOLDERS OF GROUP A BY THE C. L.B. VIDE THEIR ORDER DATED 1.8.2006. THE HONBLE PUNJAB & HARYANA HIGH C OURT, VIDE ORDER DATED 10.8.2006, HELD THAT THE AMOUNT OF R. 24 CROR ES RELEASED TO THE MEMBERS OF GROUP A WOULD NOT BE UTILIZED IN ANY M ANNER. THE HONBLE SUPREME COURT, DIRECTED FOR MAINTENANCE OF STATUS QUO. CONSEQUENTLY, SHAREHOLDERS OF GROUP A DO NOT ENJOY ABSOLUTE RIG HT OVER RS.24 CRORES, TO ENABLE THEM TO UTILIZE THE SUM AS INTENDED TILL THE DISPOSAL OF THE PETITION, PENDING BEFORE THE HONBLE APEX COURT. THUS, EVEN T HOUGH, THE AMOUNT OF RS. 24 CRORES WAS DIRECTED TO BE RELEASED TO THE ME MBERS OF GROUP A, THEY WERE UNDER DIRECTION NOT TO USE THIS SUM OR TO CREA TE ANY LIEN ON THE SAME, BY THE ORDER OF THE HONBLE PUNJAB & HARYANA HIGH COURT. SIMILARLY, THE HONBLE SUPREME COURT HAVE ALSO DIRECTED IN THEIR DATED 19.1.2009 THAT THE BOTH THE GROUPS WOULD MAINTAIN THEIR ACCOUNTS OF THE ASSETS ALLOCATED TO THEM WITHOUT PREJUDICE TO THEIR RIGHTS IN THE SP ECIAL LEAVE PETITION FILED BEFORE THE HONBLE COURT. FURHER, A SUM OF RS.24 CR ORES HAS ALSO BEEN 8 DIRECTED BY THE HONBLE APEX COURT TO BE INVESTED I N FDRS IN NATIONALIZE BANK. IN VIEW OF THIS, SUCH DISTRIBUTION OF THE A SSETS BETWEEN THE TWO GROUPS CANNOT BE SAID AS CONCLUSIVE AND FINAL, BUT, STILL SURVIVES IN A FLUID SITUATION. IN VIEW OF THIS, THE DECISION QUOTED BY THE LD. DR, IS NOT APPLICABLE TO THE FACT SITUATION OF THE CASE. THE A SSESSEE HAS RECEIVED CUSTOM DUTY REFUND IN THE CASE RELIED UPON BY THE DR IN PURSUANCE OF THE ORDER OF THE HIGH COURT. THE INTENT AND TEXT OF SECTION 41(1 ) ARE ON DIFFERENT FOOTINGS. THEREFORE, THIS DECISION IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCE OF THE PRESENT CASE. 9.2. THE LD. DR, FURTHER, PLACED RELIANCE ON THE DECISION OF HONBLE ANDHRA PRADESH HIGH COURT, IN THE CASE OF C.I.T. V S. K.C.P. LIMITED.(1995) 216 ITR 602. THE HEAD NOTE OF THE DECISION, AS RELI ED UPON BY THE ASSESSEE IS REPRODUCED AS UNDER: HELD, THAT THE ASSESSEE;S COLLECTION WAS TAXABLE A S A TRADING RECEIPT IN THE RELEVANT YEAR AND IF AND WHEN IT PAYS THE EX CESS AMOUNT COLLECTED TO THE FINAL KNOWN AS LEVY SUGAR PRICE E QUALISATION FUND OF 1976 IT WOULD BE ENTITLED TO CLAIM APPROPRIATE DEDUCTIONS FOR THE ASSESSMENT YEAR DURING WHICH THE AMOUNT OUGHT TO HA VE BEEN PAID IN THE AID FUND. AS DISCUSSED IN THE EARLIER CASE ABOVE, THE FACT SI TUATION OF THE PRESENT CASE IS ENTIRELY DIFFERENT AND DISTINGUISHABLE. HENCE, THE DECISION RELIED UPON BY THE DR IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANC ES OF THE PRESENT CASE. 9.3. NOW, WE TURN TO DISCUSS THE SUBMISSIONS OF TH E LD. AR AND THE CASE LAWS RELIED UPON BY HIM. THE CONTENTION OF THE LD. AR, REMAINED UNREBUTTED, AS TO THE ISSUE OF NON-TRANSFER OF SHAR ES AND, HENCE, NON- EXIGIBILITY OF CAPITAL GAIN, IN SUCH A FACT SITUATI ON. SIMILARLY, THE CONTENTION 9 OF THE LD. AR THAT IT WAS A FAMILY SETTLEMENT REM AINS UNREBUTTED BY THE REVENUE. FURTHER, HE PLACED RELIANCE ON THE DECISI ON OF THE JURISDICTIONAL HIGH COURT IN HE CASE OF NEW FRIENDS CO-OPERATIVE H OUSE BUILDING SOCIETY LT. VS. COMMISSIONER OF INCOME-TAX AND ANOTHER (201 0) 327 ITR 39. THE CORE RATIO OF THE DECISION, IN THE PRESENT CASE IS REPRODUCED HEREUNDER: CAPITAL GAINS COMPULSORY ACQUISITION OF LAND E NHANCED COMPENSATION AND INTEREST RECEIVED - AMOUNT RECEIV ED CAN BE TAXED ONLY AFTER FINAL DISPOSAL OF CASE - INCOME TAX ACT , 1961 S. 45(5). THE LAND ACQUIRED BY THE ASSESSEE WAS COMPULSORY A CQUIRED BY THE GOVERNMENT. THE ASSESSEE RECEIVED ENHANCED COMPENSA TION COMPRISING OF ADDITIONAL COMPENSATION AND INTEREST DURING THE ASSESSMENT YEAR 2001-02. THE ASSESSING OFFICER HELD THAT THE ENTIRE AMOUNT OF ENHANCED COMPENSATION WAS TAXABLE IN THE ASSESSMENT YEAR 2001-02. THE COMMISSIONER (APPEALS) HELD THAT THE E NHANCED COMPENSATION AND THE INTEREST THEREON COULD NOT BE CHARGED TO TAX UNTIL IT HAD ATTAINED FINALITY FROM THE HIGHEST COU RT ON THE FINDING THAT THE ASSESSEE HAD NOT ACQUIRED ANY ABSOLUTE RIGHT ON THE ENHANCED COMPENSATION RECEIVED AS IT WAS RECEIVED WITH CONDI TIONS AND SINCE THE ASSESSEE DID NOT ACQUIRE ANY RIGHT OVER THE EN HANCED COMPENSATION AND THE INTEREST THEREON, IT COULD NOT BE CHARGED TO TAX IN THE HANDS OF THE ASSESSEE. THE TRIBUNAL DIRECTED THE ASSESSING OFFICER TO TAX THE COMPENSATION IN THE YEAR OF RECE IPT AND THE INTEREST ON THE ENHANCED COMPENSATION IN THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH IT WAS FINALLY DETERMINED. ON APPEAL: HELD, ALLOWING THE APPEAL, THAT THE AMOUNT RECEIV ED BY THE ASSESSEE WAS TAXABLE ONLY AFTER ATTAINING FINALITY FROM THE HIGHEST COURT. 9.4. THE LD. AR, FURTHER, PLACED RELIANCE ON THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT, IN THE CASE OF C.I.T. VS. HARDWARI LAL, HUF (2009) 312 ITR 151 (P&H), WHEREIN IT HAS BEEN HELD AS UNDER: 10 INCOME ACCRUAL OF INCOME INTEREST ACQUISITIO N OF LAND QUANTUM OF ENHANCED COMPENSATION PENDING CONSIDERAT ION BEFORE COURT INTEREST CAN BE TAXED ONLY ON COMPENSATION BEING DETERMINED FINALLY INTEREST TO BE SPREAD OVER ON AN ANNUAL B ASIS FROM DATE OF DELIVERY TILL DATE OF ORDER INCOME-TAX ACT, 1961,S . 45(5)(B). HELD, DISMISSING THE APPEALS, THAT THE INTEREST ON ENHANCED COMPENSATION WOULD NOT ACCRUE TILL THE ISSUE OF ENH ANCED COMPENSATION WAS FINALLY DECIDED BY THE COURT. THE INTEREST ACCRUED TO THE ASSESSEE HAD TO BE SPREAD OVER ON AN ANNUAL BASIS FROM THE DATE OF DELIVERY OF POSSESSION TILL THE DATE OF THE ORDE R OF THE COURT ON TIME BASIS. 9.5. WE HAVE CAREFULLY PERUSED THE RATIO OF THE DE CISIONS RELIED UPON BY THE LD. AR AND FOUND THE SAME APPLICABLE TO THE FAC TS OF THE PRESENT CASE. 9.6. WE HAVE ALSO REFERRED TO THE ORDER OF THE ORDE R OF THE HONBLE APEX COURT, WHO VIDE ORDER DATED 19.1.2009, ORDERED THAT STATUS QUO SHOULD CONTINUE. IT WAS, FURTHER, DIRECTED AS UNDER: TILL FURTHER ORDERS, WE MAKE IT CLEAR THAT THE PA RTIES WILL MAINTAIN THE ACCOUNTS OF THEIR RESPECTIVE ALLOCATED UNITS DURING THE PENDENCY OF THIS SPECIAL LEAVE PETITION IN THIS COURT. WE ARE INFORM ED THAT IN ALL THERE ARE FOUR UNITS. DELHI AND JAIPUR UNITS HAVE BEEN AL LOCATED TO THE RESPONDENTS HEREIN, WHEREAS JALANDHAR AND AMBALA UN ITS HAVE BEEN ALLOCATED TO THE RESPONDENTS HEREIN, WHEREAS JALAND HAR AND AMBALA UNITS HAVE BEEN ALLOCATED TO THE PETITIONERS. BOTH ARE EXPLOITING THEIR RESPECTIVE ASSETS. THEREFORE, BOTH WILL MAINTAIN TH EIR ACCOUNTS WITHOUT PREJUDICE TO THEIR RIGHTS IN THE SPECIAL LEAVE PETI TION. THESE ACCOUNTS WILL BE TAKEN INTO ACCOUNT AT THE TIME OF FINAL HEA RING OF THE SPECIAL LEAVE PETITION. 11 WE ALSO MAKE IT CLEAR THAT IF AN INSPECTION IS SOUG HT OF THE ACCOUNTS TO BE MAINTAINED DURING THE PENDENCY OF THE SPECIAL LE AVE PETITION, THE SAME SHALL BE FURNISHED TO THE APPLICANT. IN THE MEANTIME, THE AUDITORS OF THE COMPANIES ARE ALSO DIRECTED TO AUDIT THE COMPANIES ACCOUNTS FOR THE PERIOD COMMENC ING FROM IST APRIL, 1999 TO 31 ST MARCH, 2006 WHICH WERE TOLD HAVE NOT BEEN AUDITED. FURTHER, A SUM OF RS.24,00,00,000/- (RUPEES TWENTY FOUR CRORES), IF NOT INVESTED IN F.D.R. SHALL BE INVESTED IN A NATI ONALIZED BANK. 9.7. THE CORE ISSUE AND THE CONTENTION OF THE ASSES SEE REVOLVES AROUND THREE ISSUES , AS CRYSTALLIZED BY THE LD. CIT(A) IN PARA -5. (I) THAT INCOME HAD NOT ACCRUED TO THE ASSESSEE ON RECEIPT OF ITS SHARE OF THE SUM OF RS.24 CRORES AS THE RECEIPT AND FAMILY SETTLEMENT WAS DISPUTED; (II) THAT THERE WAS NO TRANSFER OF SHARES AS THE AS SESSEE CONTINUED TO HOLD THE SHARES TILL THE MATTER WAS RESOLVED; AND (III) THAT, IN ANY CASE, NO CAPITAL GAINS WOULD ARI SE ON THE RECEIPT OF MONEY AS THE SAME WAS PART OF A FAMILY SETTLEMENT. 9.8. IT WOULD BE PERTINENT TO REPRODUCE THE DETAILE D AND WELL-REASONED FINDING OF THE CIT(A), IN THE MATTER. 7. AS NOTED EARLIER, THOUGH THE AMOUNT OF RS.24 CR ORES WAS DIRECTED TO BE RELEASED TO THE MEMBERS OF GROUP A, THEY WERE UNDER DIRECTIONS NOT TO UTILIZE THE AMOUNT OR TO C REATE ANY LIEN ON THE SAME BY THE ORDER OF THE HONBLE PUNJAB & HARYA NA HIGH COURT. THE HONBLE APEX COURT HAVE ALSO DIRECTED IN THEIR ORDER DATED 19.1.2009 (SUPRA) THAT BOTH THE GROUPS WOULD MAINTAIN THEIR ACCOUNTS OF THE RESPECTIVE ASSETS ALLOCATED TO THEM WITHOUT PREJUDICE TO THEIR RIGHTS IN THE SPECIAL LEAVE PETI TION FILED BEFORE THE HONBLE APEX COURT. THE SUM OF RS.24 CRORES HAS ALSO BEEN 12 DIRECTED BY THE HONBLE APEXCOURT TO BE INVESTED IN FDRS IN A NATIONALIZED BANK. IN LIGHT OF THE ORDER OF HONBLE APEX COURT, IN MY OPINION, THE DISTRIBUTION OF THE ASSETS BETWEEN THE TWO GROUPS CANNOT BE HELD TO BE FINAL. AS A RESULT OF THE PEND ING APPEAL, THE AMOUNT RECEIVED OR RECEIVABLE BY THE TWO GROUPS MAY UNDERGO CHANGE. SINCE SHAREHOLDERS OF GROUP A HAVE NOT BEEN ALLOWED THE USE OF THE SUM OF RS.24 CRORES, THEIR RIGHT TO THIS MONEY REMAINS SUSPENDED TILL THE FINAL ADJUDICATION OF THE APPEAL S. IN THE CASE OF CIT VS. HINDUSTAN HOUSING & LAND DEVELOPMENT TRUST LTD. (SUPRA), THE HONBLE APEX COURT HAVE HELD THAT WHEN THERE WAS NO ABSOLUTE RIGHT TO RECEIVE THE AMOUNT, INCOME COU LD NOT BE SAID TO HAVE ACCRUED TO THE ASSESSEE. THE HONBLE APEX C OURT HELD THAT WHERE THE RIGHT TO RECEIVE THE PAYMENT ITSELF WAS I N DISPUTE, THE AMOUNT COULD NOT BE SUBJECT TO TAX. IN THE CASE OF V.K. SOOD ENGG. & CONTRACTORS (P) LTD. VS. CIT 208 ITR 341 ( P&H) A N ARBITRATION AWARD WAS PASSED IN FAVOUR OF THE ASSE SSEE AGAINST STATE OF PUNJAB. THE STATE FILED APPEAL AGAINST THE AWARD WHICH WAS PENDING. THE ASSESSEE WITHDREW THE AMOUNTS AWAR DED UNDER THE AWARD BUT WAS DIRECTED TO DEPOSIT THE SAME IN T HE APPEALS FILED BY THE STATE. THE REVENUE TAXED THE AWARD AMO UNT. ON A WRITE FILED BY THE ASSESSEE AGAINST THE ACTION OF T HE AO, THE HONBLE JURISDICTIONAL HIGH COURT HELD THAT TILL TH E DISPUTE PENDING BEFORE THE HIGH COURT WAS FINALLY DISPOSED OFF, IT COULD NOT BE SAID THAT THE AMOUNT, THOUGH RECEIVED, ACCRU ED AS INCOME OF THE PETITIONERS. 7.1. EVEN THOUGH A AFORESAID DECISIONS ARE WITH RES PECT TO COMPULSORY ACQUISITION OF LAND BY THE STATE, THE PR INCIPLE WHICH EMERGES IS THAT UNLESS THE ASSESSEE HAS AN ABSOLUTE RIGHT TO THE AMOUNT RECEIVED OR RECEIVABLE BY HIM, INCOME IN RES PECT OF THE SAID AMOUNT CANNOT BE SAID TO HAVE ACCRUED TO THE A SSESSEE. IN THE PRESENT CASE, SINCE THE ASSESSEE DOES NOT HAVE THE ABSOLUTE RIGHT OVER THE PART OF SUM OF RS.24 CRORES RECEIVED BY IT , IT CANNOT BE SAID THAT INCOME IN RESPECT OF THE AMOUNT RECEIVED AND DEPOSITED IN FDRS HAD ACCRUED TO THE ASSESSEE. IT IS IMMATERI AL, IN MY OPINION, THAT THE ASSESSEE HAS NOT DISPUTED THE SUM OF RS.24 CRORES AS PART OF THE SETTLEMENT. THE ORDERS OF THE HONBL E HIGH COURT DURING THE RELEVANT PREVIOUS YEAR RESTRAINING THE A PPELLANT FROM UTILIZING THE MONEY RECEIVED BY IT MEANT THAT THE M ONEY WAS RECEIVED BY THE ASSESSEE IN TRUST. EVEN THOUGH THIS AMOUNT WAS 13 RECEIVED AS PROVIDED IN THE LETTER DATED 7.3.2000 I N EXERCISE OF THE RELEVANT OPTION BY GROUP A, THE TERMS OF THE SETTLE MENT IMPLEMENTED BY THE HONBLE CLB UNDER WHICH THE SUM OF RS.24 CRORES WAS RECEIVED BY GROUP A HAVING BEEN CHALLENG ED BEFORE THE HONBLE HIGH COURT AND THE HONBLE HIGH COURT HAVIN G RESTRAINED UTILIZATION OF THIS SUM IN ANY MANNER. SINCE THE ASSESSEE COULD NOT UTILIZE THE SUM RECEIVED BY HIM UNDER THESE CIRCUMSTANCES, THE INCOME COULD NOT BE SAID TO HAV E ACCRUED TO THE ASSESSEE. ACCRUAL DENOTES A VESTED RIGHT IN THE AMOUNT RECEIVED/RECEIVABLE WITH AN ACKNOWLEDGMENT OF THE D EBT BY THE GIVER, WHICH THE APPELLANT DID NOT POSSESS DURING THE YEAR IN LIGHT OF THE DISPUTES RAISED AT HIGHER LEVELS AND THE CON SEQUENT RESTRAIN ORDERS. 7.2. IN THE LIGHT OF THE DISCUSSION ABOVE, I AM OF THE OPINION THAT THE DISTRIBUTION OF THE ASSETS, INCLUDING THE SUM O F RS.24 CRORES, WAS NOT COMPLETE DURING THE YEAR SINCE THE MATTER W AS SUBJUDICE AND THE ASSESSEE WAS NOT ALLOWED TO USE OF THE MONE Y BY ORDER OF THE HONBLE HIGH COURT. HENCE, I HOLD THAT INCOME I N RESPECT OF THE SUM OF RS.24 CRORES TRANSFERRED TO THE APPELLAN T AND OTHER MEMBERS OF GROUPS A DID NOT ACCRUE TO THIS GROUPS, INCLUDING THE APPELLANT. THE AO WAS, THEREFORE, NOT JUSTIFIED IN COMPUTING THE INCOME UNDER THE HEAD LONG TERM CAPITAL GAINS ON TH E SUM OF RS.2,11,44,228/- RECEIVED BY THE APPELLANT. GROUND NO.1 OF THE APPEAL IS, THEREFORE, ALLOWED. 9.9. WE HAVE ALSO PERUSED AND CONSIDERED THE DECIS ION OF THE HONBLE APEX COURT, IN THE CASE OF CIT VS. HINDUSTAN HOUSI NG AND LAND DEVELOPMENT TRUST LTD. (1986) 161 ITR 524, WHEREIN THE HONBLE COURT, CONSIDERED THE ISSUE OF ACCRUAL OF RIGHT TO RECEIV E COMPENSATION AND THE PERIOD OF TAXABILITY. IN THIS CASE, THE HONBLE SUP REME COURT HELD, THAT THE ENTIRE AMOUNT OF ENHANCED COMPENSATION WAS IN DISP UTE IN VIEW OF THE APPEAL MADE BY THE STATE GOVT. THE DISPUTE WAS REGARDED AS REAL AND SUBSTANTIAL IN VIEW OF THE FACT THAT THE ASSESSEE WAS ALLOWED TO WITHDRAW 14 THE AMOUNT DEPOSITED BY THE STATE GOVT. ONLY ON FUR NISHING OF THE SECURITY BOND. THUS, NO ABSOLUTE RIGHT TO RECEIVE ENHANCED COMPENSATION VESTED IN THE ASSESSEE TILL THE APPEAL MADE BY THE STATE WAS DISMISSED. THE FACTS OF THE PRESENT CASE ARE IDENTICAL AS TH ERE IS COMPLETE EMBARGO ON UTILIZATION OF THE IMPUGNED AMO UNT BY THE ASSESSEE. IN SUCH A FACT SITUATION, THERE DOES NOT VEST ANY RIG HT WITH THE ASSESSEE TO UTILIZE THE SAME AS PER HIS CHOICE. THEREFORE, THE FACTS OF THE CASE ARE SQUARELY COVERED BY THE DECISION OF THE HONBLE SUP REME COURT, AS RIGHTLY OBSERVED BY THE CIT(A) ALSO. 9.10 NEEDLESS TO SAY THAT THERE IS A CLEAR DISTINCT ION BETWEEN A CASE WHERE THE RIGHT TO RECEIVE THE PAYMENT WAS DISPUTED AND A CASE WHERE THE RIGHT TO RECEIVE PAYMENT WAS ADMITTED, PENDING ONLY QUANTIFI CATION OF THE AMOUNT PAYABLE. IN SUCH A SITUATION, IT IS IMPERATIVE TO H IGHLIGHT, THAT IN A FACT- SITUATION WHERE THE LIABILITY TO SALES-TAX AROSE IM MEDIATELY ON A DEALER EFFECTING SALES WHICH WERE SUBJECT TO SALES TAX AN D WHAT REMAINED TO BE DONE WAS A MERE QUANTIFICATION OF THAT LIABILITY. I N THE PRESENT CASE, THE ASSESSEE HAS ONLY INCOHATE RIGHT TO RECEIVE THE IM PUGNED AMOUNT, AS THE SAME DEPENDENT ON THE FINAL OUTCOME OF THE DECISION OF THE HONBLE APEX COURT . THE REVENUE HAS FAILED TO APPRECIATE THE CLEAR DI STINCTION BETWEEN CASES, WHERE THE RIGHT TO RECEIVE PAYMENT IS IN DIS PUTE AND IT IS NOT A MERE QUESTION OF MERELY QUANTIFICATION OF THE AMOUNT TO BE RECEIVED. 10. IN THE LIGHT OF OUR DETAILED FACTUAL AND LEGL D ISCUSSIONS AND HAVING REGARDING TO THE FINDINGS OF THE LD. CIT(A), AS AL SO THE CASE LAWS RELIED UPON BY ASSESSEE, WE ARE OF THE CONSIDERED OPINION THAT THERE IS NO REASON 15 TO INTERFERE WITH THE FINDINGS OF THE CIT(A). HENCE , THE SAME ARE UPHELD. ACCORDINGLY, ALL THE FOUR APPEALS FILED BY THE REVE NUE ARE DISMISSED. 11. IN THE RESULT, ALL THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 24TH JUNE, 2011. SD/- SD/- (H.L. KARWA) (MEHAR SINGH) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 24TH JUNE, 2011 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE: (I) SH. ASHWANI CHOPRA, (II) SH. ASHW ANI CHOPRA (HUF), (III)SH. ARVIND CHOPRA (IV) SH. ARVIND CHOPR A (HUF) 2. THE DCIT, CIR.III, JALANDHAR. 3. THE CIT(A), JALANDHAR. 4. THE CIT, JALANDHAR. 5. THE SR DR, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH : AMRITSAR.