ACIT, New Delhi V. M/s. Jagat Ram Trehan & Sons, New Delhi

ITA 5404/DEL/2011

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6368 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 28-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 02-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UMESH CHAND DUBEY
• Keywords: Capital asset; Source of fund; Capital receipt
• Section: 142(1); 12; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER I.T.A. NO. 5404 /DEL/201 1 A.Y. : 20 0 7 - 08 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 38(1), ROOM NO. 212, CR BUILDING, NEW DELHI VS. M/S JAGAT RAM TREHAN & SONS, 507, AVANTIKA BUILDING, J-BLOCK, SAKET, NEW DELHI (PAN: AAAFJ3420D) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) DEPARTMENT BY : SH. UMESH CHAND DUBEY, SR. DR ASSESSEE BY : SH. R. S. SINGHVI, CA & SH. SATYAJIT GOEL, CA ORDER ORDER ORDER ORDER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXVIII, NEW DE LHI DATED 07.9.2011 PERTAINING TO ASSESSMENT YEAR 2007-08 ON THE FOLLOW ING GROUNDS:- 1. THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION M ADE BY AO OF RS. 46,37,887/- ON ACCOUNT OF ARBITRATION AWARD REC EIVED FROM DDA BY THE ASSESSEE AS ESCALATION DAMAGE AND INTERE ST ON SUCH DAMAGES HOLDING THE SAME AS CAPITAL RECEIPT SINCE T HE AWARD WAS RECEIVED ON ACCOUNT OF ESCALATION AND DELAYS I N COMPLETING THE PROJECT AND NOT FOR LOSS OF PROFIT MAKING APPAR ATUS AS SEEN 2 FROM THE ARBITRATION AWARD. IT IS ALSO IN DISREGAR D TO THE PROVISION OF SECTION 28(VA) OF THE I.T. ACT, 1961. 2. THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION M ADE BY THE AO OF RS. 77,73,520/- ON ACCOUNT OF ARBITRATION AWA RD RECEIVED FROM DDA BY THE ASSESSEE FOR CONSTRUCTION 416 HOUSES AT ALAKNANDA AND SINCE THE SAID AWARD WAS CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THE AWARD WAS ALSO CONFIRMED BY SINGLE BENCH OF HONBLE DELHI HIGH COU RT. 3. THE APPELLANT CRAVES TO ADD, AMEND OR MODIFY THE G ROUNDS OF APPEAL AT ANY TIME. 2. AT THE TIME OF HEARING, LD. SR. DR FILED AN ADJ OURNMENT APPLICATION DATED 28.3.2017 STATING THEREIN THAT THE GROUNDS OF APPEAL NEED BE REVISED TO RAISE THE GROUNDS OF APPEAL NEED BE REVISED TO RAISE THE GROUNDS OF APPEAL NEED BE REVISED TO RAISE THE GROUNDS OF APPEAL NEED BE REVISED TO RAISE ADDITIONAL GROUND ADDITIONAL GROUND ADDITIONAL GROUND ADDITIONAL GROUND. . . . BUT THE LD. COUNSEL OF THE ASSESSEE STRONGLY OBJECT ED THE ADJOURNMENT APPLICATION OF THE LD. SR. DR AND STATE D THAT THE REVENUE HAS FILED THE PRESENT APPEAL IN 2011 AND HAS NOT FILED ANY AD DITIONAL GROUND TILL DATE. HE FURTHER STATED THAT EVEN THE AO HAS NOT REQUESTED T HE LD. DR TO FILE ANY ADDITIONAL GROUND. THEREFORE, LD. COUNSEL OF THE A SSESSEE STATED THAT THE REQUEST OF THE LD. SR. DR IS NOT TENABLE AND NEEDS TO BE REJECTED. HE FURTHER STATED THAT THE ISSUE IN DISPUTE HAS ALREADY BEEN D ECIDED BY THE ITAT IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE FOR THE ASSESSM ENT YEAR 2003-04. 3 THEREFORE, LD. COUNSEL OF THE ASSESSEE REQUESTED TH AT THE APPEAL OF THE REVENUE MAY BE DISMISSED. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORDS, WE FIND FORCE IN THE ASSESSEES COUNSEL CONTENTION THA T THE REVENUE HAS FILED THE PRESENT APPEAL IN 2011 AND HAS NOT FILED ANY ADDITI ONAL GROUND TILL DATE. WE FURTHER NOTE THAT EVEN THE AO HAS NOT REQUESTED THE LD. DR TO FILE ANY ADDITIONAL GROUND, HENCE, THE REQUEST FOR ADJOURNMENT ON THE R EASONS MENTIONED IN THE APPLICATION DATED 28.3.2017 IS HEREBY REJECTED AND WE PROCEED TO DECIDE THIS APPEAL ON MERITS, AFTER HEARING BOTH THE PARTIES. 4. THE BRIEF FACTS OF THE CASE ARE THAT RETURN OF I NCOME IN THIS CASE WAS FILED ON 22.10.2007 DECLARING INCOME AT RS. 15,13,330/-. THE RETURN OF INCOME WAS PROCESSED U/S. 143(1) OF THE I.T. ACT, 1961 ON THE SAME INCOME. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. FIR ST NOTICE U/S. 143(2) WAS ISSUED ON 18.7.2008 AND AGAIN NOTICES U/S. 142(1) A ND 143(2) ALONGWITH DETAILED QUESTIONNAIRE WERE ISSUED TO THE ASSESSEE. IN RESPONSE THERETO, THE ASSESSEES AR ATTENDED THE ASSESSMENT PROCEEDINGS FROM TIME TO TIME AND RELEVANT INFORMATION WERE FILED. DURING THE YEAR U NDER CONSIDERATION THE ASSESSEE HAS RECEIVED ARBITRATION AWARDS FROM DDA I N RESPECT OF WORK DONE BY IT IN THE EARLIER YEARS AND IT WAS OBSERVED THEREON TH AT IN THE RETURN OF INCOME THE ASSESSEE FIRM HAS SHOWN CONTRACT RECEIPT AT RS. 29 ,53,349/- AS AGAINST RECEIPT 4 OF RS. 75,91,236/-. THUS THE ASSESSEE HAS SHOWN LE SS CONTRACT RECEIPT BY RS. 46,37,887/- (RS. 75,91,236/- = RS. 29,53,349/-). DU RING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO EX PLAIN THE REASONS FOR NOT SHOWING CONTRACT RECEIPTS OF RS. 46,37,887/-. ACCOR DINGLY, THE AO ASSESSED THE INCOME OF THE ASSESSEE AT RS. 1,39,20,740/- AND MADE THE ADDITIONS OF RS. 46,33,887/- & RS. 77,73,520/- ON ACCOUNT OF DAMAGE S AND INTEREST RECEIVED FROM DDA VIDE HIS ORDER DATED 29.12.2009 PASSED U/S .143(3) OF THE I.T. ACT, 1961. AGGRIEVED WITH THE ADDITION, ASSESSEE FILE D THE APPEAL BEFORE THE LD. CIT(A) WHO VIDE HIS IMPUGNED ORDER DATED 07.9.2016 DELETED THE ADDITIONS BY ALLOWING THE APPEAL OF THE ASSESSEE. 5. AGGRIEVED WITH THE IMPUGNED ORDER OF THE LD. CIT (A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS, ESPECIALLY THE ORDER OF THE LD. CTI(A). WE FIND T HAT LD. FIRST APPELLATE AUTHORITY HAS ELABORATELY DISCUSSED AND ADJUDICATED THE ISSU E NO. 1 VIDE PARA NO. 6 AT PAGE NO. 7 TO 8 OF THE IMPUGNED ORDER AND ISSUE NO. 2 VIDE PARA NO. 9 & 10 AT PAGE NO. 13 TO 15 OF THE IMPUGNED ORDER BY CONSIDE RING THE SUBMISSIONS OF THE 5 LD. COUNSEL OF THE ASSESSEE. THE RELEVANT FINDIN GS OF THE LD. CIT(A) ARE REPRODUCED AS UNDER:- 6. I HAVE GONE THROUGH THE ORDER OF THE ASSESSIN G OFFICER AND WRITTEN SUBMISSION OF THE APPELLANT. IN THE YEAR UNDER CONS IDERATION, APPELLANT RECEIVED ARBITRATION AWARDS FROM DDA IN RESPECT OF CONSTRUCTION OF HOUSES, AT ROHINI, MOTIA KHAN AND VASANT KUNJ FOR EARLIER Y EARS. THE ONLY RECEIPT ON WHICH ASSESSMENT WAS COMPLETED WAS RECEIPT OF AW ARD DURING THE YEAR AND THERE WAS NO OTHER INCOME. APPELLANT WAS O UT OF THE CONTRACT BUSINESS DUE TO THE DISPUTE WITH DDA, THEREFORE, DA MAGES SO RECEIVED WERE FOR LOSS OF BUSINESS AND NOT MERELY LOSS OF PR OFIT, SAME WAS CAPITAL IN NATURE. THE BUSINESS OF APPELLANT WAS TOTALLY PARAL YZED. THE NATURE OF DISPUTE UNDER CONSIDERATION IS SIMILAR TO DISPUTE I N AY 2003-04. RELEVANT EXTRACT OF ORDER OF DELHI ITAT IN APPELLANT'S OWN C ASE FOR ASSTT. YEAR 2003-04 IS REPRODUCED AS UNDER: GROUND NO. 1 THERE IS S NO DISPUTE TO THE WELL SETTLED LEGAL PR OPOSITION THAT DAMAGES RECEIVED ON LOSS OF SOURCES OF INCOME AMOUN TS TO CAPITAL RECEIPT. HONBLE SUPREME COURT 'IN THE CASE OF OBEROI HOTELS-236 ITR 903 HELD THAT AMOUNT RECEIVED ON LOSS OF SOURCE OF INCOME IS A CAPITAL RECEIPT. THE DAMAGES SO 6 RECEIVED WERE NOT ON 'ACCOUNT: OF ANY WORK DONE OR LIKELY TO BE DONE, BUT FOR LOSS OF INCOME EARNING APPARATUS. DAMAGES WERE FOR INJURY INFLICTED ON INCOME EARNING APPARAT US OF ASSESSEE. HON'BLE SUPREME COURT IN THE CASE OF P. H . DIVECHA & ANR. VS CIT - 48 ITR 222 HELD THAT COMPEN SATION RECEIVED ON TERMINATION OF AGENCY WAS CAPITAL RECEI PT NOT TAXABLE AS REVENUE RECEIPT. HON'BLE MADRAS HIGH COU RT IN THE CASE OF CIT VS. T. 1. & M. SALES LTD, 259 ITR 1 16 HELD THAT COMPENSATION FOR IMPAIRMENT OF PROFIT MAKING APPARA TUS WAS CAPITAL RECEIPT. IT WAS ALSO OBSERVED BY HON'BLE SU PREME COURT IN THE CASE OF REPORTED AT 236 ITR 903 THAT COMPENSATION RECEIVED FOR THE DESTRUCTION OR STERIL IZATION OF CAPITAL ASSET WERE NOTHING BUT CAPITAL RECEIPT. IN THE INSTANT CASE ALSO, AFTER THE DISPUTE WITH DDA, ASSESSEE WAS OUT OF SAID CONTRACT AND THE BUSINESS OF THE ASSESSEE WAS TOTALLY PARALYZED, WHICH AMOUNTS TO LOSS OF SOURCE OF INCOM E, THEREFORE THE AMOUNT RECEIVED ONLY TOWARDS DAMAGES WAS CAPITAL IN NATURE. IN THE YEAR UNDER CONSIDERATION THE ISSUE IN DISPUTE IS THE SAME. THERE WAS NO BUSINESS ACTIVITY DURING THE 7 YEAR AND THE ONLY RECEIPT WAS FROM DDA TOWARDS DAMA GES WHICH IS CAPITAL IN NATURE AND THEREFORE, NOT TAXAB LE. FOLLOWING THE JUDGEMENT OF DELHI ITAT IN THE APPELL ANT'S OWN CASE FOR THE ASSTT.YEAR 2003-04, I DELETE THE ADDIT ION OF RS. 46,37,887/- MADE BY THE ASSESSING OFFICER WHO TREA TED THE-SAME AS REVENUE RECEIPT. GROUND NO. 2 9. THE CIT(A) IN THE CASE OF APPELLANT IN THE ASSES SMENT YEAR 2003-04 HAS HELD THAT INTEREST RECEIVED DURING THE YEAR WAS NOT LIABLE TO TAX IN THE YEAR OF RECEIPT, BUT IS REQUIRED TO BE SPREAD OVER THE PERIOD / RESPECTIVE YEARS TO WHICH SUCH INTEREST PERTAINS AND THIS FIND ING HOLD GOOD IN THE YEAR UNDER CONSIDERATION ALSO. THE ORDER OF THE CIT(A) H AS ATTAINED FINALITY AS THIS WAS NOT CHALLENGED BY THE REVENUE IN ITS APPEA L FOR THE RELEVANT ASSTT. YEAR BEFORE DELHI ITAT. IN VIEW OF THIS FINDING THE ASSESSING OFFICER IS DIRECTED TO APPORTION THE INTEREST COMPONENT FOR DI FFERENT ASSTT. YEARS AND TAX IT ACCORDINGLY. AS FAR AS THE DISPUTED AWARD OF RS. 77,73,520/-- IS CONCERNED, IT WAS AWARDED BY THE ARBITRATOR AND THE AWARD WAS PRESENT ED BEFORE THE SINGLE BENCH OF DELHI HIGH COURT FOR MAKING IT RULE OF COU RT. IT WAS DECIDED IN FAVOUR OF THE APPELLANT. HOWEVER, DDA PREFERRED TO CHALLENGE THIS 8 PAYMENT BEFORE THE DOUBLE BENCH OF DELHI HIGH COURT . DURING THE COURSE OF ASSESSMENT PROCEEDINGS ,THE APPELLANT HAD BROUGH T THIS FACT TO THE KNOWLEDGE OF THE ASSESSING OFFICER. AS PER THE COPY OF ORDER OF JUSTICE H.R. MALHOTRA, DELHI HIGH COURT IT WAS HELD THAT'.. ..... SINCE THERE IS NO STAY AGAINST THE EXECUTION OF THE DECREE LET THIS A MOUNT BE PAID TO THE DECREE HOLDER SUBJECT TO FURNISHING AN AFFIDAVIT TO THE EFFECT THAT IN CASE THE JUDGEMENT DEBTOR SUCCEEDS IN THE APPEAL, THIS AMOUN T SHALL BE REFUNDED TO THE JUDGEMENT DEBTOR WITHIN ONE WEEK AFTER THE D ECISION OF THE APPEAL'. THE APPELLANT HAS SHOWN THE AMOUNT OF RS. 77,73,520 /- AS LIABILITY IN ITS BALANCE SHEET. IT HAS BEEN STATED THAT WHEN THIS MATTER WILL BE DECIDED BY THE SAME AMOUNT SHALL BE SHOWN IN THE P& L ACCOUNT OR WOULD BE REFUNDED TO DDA AS PER THE DIRECTION OF THE COUR T. THE APPELLANT HAS PLACED RELIANCE ON THE FOLLOWI NG JUDGEMENTS: IN THE CASE OF COMMISSIONER OF WEALTH-TAX/INCOME-TA X VS. SMT. T. GIRIJA AMMAL [2006] 154 TAXMAN 211 (MAD.) I T HAS BEEN HELD THAT '..... DURING PENDENCY OF SAID APPEAL, ASSESSI NG OFFICER BROUGHT TO TAX INTEREST ON ADDITIONAL COMPENSATION IN EACH OF RELEVANT ASSESSMENT YEARS ON ACCRUAL BASIS - WHETHER ADDITIONAL COMPENS ATION RECEIVED COULD NOT BE TREATED AS PART OF COMPENSATION RECEIVED FOR TRANSFER OF LAND UNTIL IT 9 WAS FINALLY DETERMINED BY HIGH COURT OR SUPREME COU RT AND IF APPEAL OF STATE GOVERNMENT AGAINST ENHANCED COMPENSATION RECE IVED BY ASSESSEE WAS ALLOWED, ASSESSEE WAS BOUND TO REFUND AMOUNT AN D, HENCE, SAME COULD NOT BE ASSESSED BEFORE REACHING FINALITY'. IN THE CASE OF CIT V. SARVARTRA ROAD RUNNERS PVT. LTD. 301 ITR 443(DEL.) IT IS HELD THAT AMOUNT WITHDRAWN BY ASSES SEE PENDING APPEAL AGAINST ARBITRATION AWARDS FROM DEPOSITS MADE IN CO URT FOLLOWING INTERIM ORDER OF COURT COULD NOT BE TREATED AS INCOME ACCRU ED TO THE ASSESSEE. IN THE CASE OF CIT V. BHOOP RAM DAGAR HUF (2008) 17 3 TAXMAN 8 (P&H) HIGH COURT, IT HAS BEEN HELD THAT INTEREST ON ENHANCED COMPENSATION CANNOT BE TAXABLE TILL THE ISSUE RELAT ING TO IT ATTAINS FINALITY AS THE SAME WOULD ACCRUE TO ASSESSEE AT THAT TIME O NLY. FURTHER IN THE CASE OF CIT V. KARANBIR SINGH (2008) 169 TAXMAN 85 (P&H) HIGH COURT, IT WAS HELD THAT REVENUE WAS NOT ENTITLE TO TAX AMOUNT OF INTEREST RECEIVED BY THE ASSESSEE TILL SUCH TIME PR OCEEDINGS IN REFERENCE TO COMPENSATION ATTAIN FINALITY. IN THE CASE OF COMMISSIONER OF WEALTH TAX V. GIRIJA AMMAL (2006) 154 TAXMAN 211 (MAD.) IT WAS HELD THAT ADDITIONAL C OMPENSATION RECEIVED COULD NOT BE TREATED AS PART OF COMPENSATION RECEIV ED FOR TRANSFER OF LAND UNTIL IT WAS FINALLY DETERMINED BY HIGH COURT OR SU PREME COURT AND 'IF THE 10 APPEAL OF STATE GOVT. AGAINST ENHANCED COMPENSATIO N RECEIVED BY ASSESSEE WAS ALLOWED, ASSESSEE WAS BOUND TO REFUND AMOUNT AND, HENCE, SAME COULD NOT BE ASSESSED BEFORE REACHING F INALITY. 10. IN VIEW OF THE FACTS AND FINDINGS OF THE CASE A ND THE LEGAL PROPOSITION RELIED UPON BY THE APPELLANT, THE ISSUE RELATING TO DAMAGES AND INTEREST OF RS. 77,73,520/ - BEING STILL SUBJUDICE CANNOT BE BR OUGHT TO TAX IN THE YEAR UNDER CONSIDERATION. THE FINDING OF THE ASSESSING O FFICER IN THIS RESPECT THAT IF THE ASSESSEE FAILS IN APPEAL BY THE JUDGEME NT OF HON'BLE HIGH COURT THEN THE SAME WILL BE DEDUCTED FROM ITS INCOME IS N OT JUSTIFIED. AFTER CONSIDERING THE RELEVANT FACTS OF CASE AND IN VIEW OF THE LEGAL PROPOSITION CITED IN CASES RELIED UPON BY THE APPELLANT, I DELE TE THE ADDITION OF RS. 77,73,520/ -. ONCE THE ORDER OF AWARD ATTAINS FINAL ITY, THE SAME SHALL BE TAKEN INTO CONSIDERATION IN THE YEAR OF THE JUDGEME NT. 7.1 ON GOING THROUGH THE AFORESAID FINDING OF THE L D. CIT(A), WITH REGARD TO GROUND NO. 1 RELATING ADDITION OF RS. 46,37,887/- I S CONCERNED, WE FIND THAT IN THE YEAR UNDER CONSIDERATION, ASSESSEE RECEIVED ARB ITRATION AWARDS FROM DDA IN RESPECT OF CONSTRUCTION OF HOUSES, AT ROHINI, MOTIA KHAN AND VASANT KUNJ FOR EARLIER YEARS. THE ONLY RECEIPT ON WHICH ASSESSMENT WAS COMPLETED WAS RECEIPT OF AWARD DURING THE YEAR AND THERE WAS NO OTHER INC OME. ASSESSEE WAS OUT OF THE CONTRACT BUSINESS DUE TO THE DISPUTE WITH DDA, THEREFORE, DAMAGES SO 11 RECEIVED WERE FOR LOSS OF BUSINESS AND NOT MERELY L OSS OF PROFIT, SAME WAS CAPITAL IN NATURE. THE BUSINESS OF ASSESSEE WAS TOTALLY PAR ALYZED. THE NATURE OF DISPUTE UNDER CONSIDERATION IS SIMILAR TO DISPUTE IN AY 200 3-04. RELEVANT EXTRACT OF ORDER OF DELHI ITAT IN ASSESSEE'S OWN CASE FOR ASST T. YEAR 2003-04 IS REPRODUCED AS UNDER: THERE IS S NO DISPUTE TO THE WELL SETTLED LEGAL PR OPOSITION THAT DAMAGES RECEIVED ON LOSS OF SOURCES OF INCOME AMOUN TS TO CAPITAL RECEIPT. HONBLE SUPREME COURT 'IN THE CASE OF OBEROI HOTELS-236 ITR 903 HELD THAT AMOUNT RECEIVED ON LOSS OF SOURCE OF INCOME IS A CAPITAL RECEIPT. THE DAMAGES SO RECEIVED WERE NOT ON 'ACCOUNT: OF ANY WORK DONE OR LIKELY TO BE DONE, BUT FOR LOSS OF INCOME EARNING APPARATUS. DAMAGES WERE FOR INJURY INFLICTED ON INCOME EARNING APPARAT US OF ASSESSEE. HON'BLE SUPREME COURT IN THE CASE OF P. H . DIVECHA & ANR. VS CIT - 48 ITR 222 HELD THAT COMPEN SATION RECEIVED ON TERMINATION OF AGENCY WAS CAPITAL RECEI PT NOT TAXABLE AS REVENUE RECEIPT. HON'BLE MADRAS HIGH COU RT IN THE CASE OF CIT VS. T. 1. & M. SALES LTD, 259 ITR 1 16 HELD THAT COMPENSATION FOR IMPAIRMENT OF PROFIT MAKING APPARA TUS WAS CAPITAL RECEIPT. IT WAS ALSO OBSERVED BY HON'BLE SU PREME 12 COURT IN THE CASE OF REPORTED AT 236 ITR 903 THAT COMPENSATION RECEIVED FOR THE DESTRUCTION OR STERIL IZATION OF CAPITAL ASSET WERE NOTHING BUT CAPITAL RECEIPT. IN THE INSTANT CASE ALSO, AFTER THE DISPUTE WITH DDA, ASSESSEE WAS OUT OF SAID CONTRACT AND THE BUSINESS OF THE ASSESSEE WAS TOTALLY PARALYZED, WHICH AMOUNTS TO LOSS OF SOURCE OF INCOM E, THEREFORE THE AMOUNT RECEIVED ONLY TOWARDS DAMAGES WAS CAPITAL IN NATURE. IN THE YEAR UNDER CONSIDERATION THE ISSUE IN DISPUTE IS THE SAME. THERE WAS NO BUSINESS ACTIVITY DURING THE YEAR AND THE ONLY RECEIPT WAS FROM DDA TOWARDS DAMA GES WHICH IS CAPITAL IN NATURE AND THEREFORE, NOT TAXAB LE. 7.2 WE FURTHER FIND THAT LD. CIT(A) BY FOLLOWING TH E DECISION OF DELHI ITAT IN THE ASSESSEE'S OWN CASE FOR THE ASSTT.YEAR 2003-04, RIG HTLY DELETED THE ADDITION OF RS. 46,37,887/- MADE BY THE ASSESSING OFFICER WHO TREATED THE-SAME AS REVENUE RECEIPT, WHICH DOES NOT NEED ANY INTERFERE NCE ON OUR PART, HENCE, WE UPHOLD THE ACTION OF THE LD. CIT(A) ON THE ISSUE I N DISPUTE AND DISMISS THE GROUND NO. 1 RAISED BY THE REVENUE. 7.3 ON GOING THROUGH THE AFORESAID FINDING OF THE L D. CIT(A), WITH REGARD TO GROUND NO. 2 RELATING ADDITION OF RS. 77,73,520/- I S CONCERNED, WE FIND THAT IN THE CASE OF ASSESSEE IN THE ASSESSMENT YEAR 2003-04 THE LD. CIT(A) HAS HELD 13 THAT INTEREST RECEIVED DURING THE YEAR WAS NOT LIAB LE TO TAX IN THE YEAR OF RECEIPT, BUT IS REQUIRED TO BE SPREAD OVER THE PERIOD / RESP ECTIVE YEARS TO WHICH SUCH INTEREST PERTAINS AND THIS FINDING HOLD GOOD IN THE YEAR UNDER CONSIDERATION ALSO. THE ORDER OF THE CIT(A) HAS ATTAINED FINALITY AS TH IS WAS NOT CHALLENGED BY THE REVENUE IN ITS APPEAL FOR THE RELEVANT ASSTT. YEAR BEFORE DELHI ITAT. IN VIEW OF THIS FINDING THE ASSESSING OFFICER WAS DIRECTED TO APPOR TION THE INTEREST COMPONENT FOR DIFFERENT ASSTT. YEARS AND TAX IT ACCORDINGLY. 7.4 WE FURTHER FIND THAT AS FAR AS THE DISPUTED AWA RD OF RS. 77,73,520/-- IS CONCERNED, IT WAS AWARDED BY THE ARBITRATOR AND THE AWARD WAS PRESENTED BEFORE THE SINGLE BENCH OF DELHI HIGH COURT FOR MAK ING IT RULE OF COURT. IT WAS DECIDED IN FAVOUR OF THE APPELLANT. HOWEVER, DDA PR EFERRED TO CHALLENGE THIS PAYMENT BEFORE THE DOUBLE BENCH OF DELHI HIGH COURT . DURING THE COURSE OF ASSESSMENT PROCEEDINGS ,THE APPELLANT HAD BROUGHT T HIS FACT TO THE KNOWLEDGE OF THE ASSESSING OFFICER. AS PER THE COPY OF ORDER OF JUSTICE H.R. MALHOTRA, DELHI HIGH COURT IT WAS HELD THAT'....... SINCE THERE IS NO STAY AGAINST THE EXECUTION OF THE DECREE LET THIS AMOUNT BE PAID TO THE DECREE HO LDER SUBJECT TO FURNISHING AN AFFIDAVIT TO THE EFFECT THAT IN CASE THE JUDGEMENT DEBTOR SUCCEEDS IN THE APPEAL, THIS AMOUNT SHALL BE REFUNDED TO THE JUDGEMENT DEBT OR WITHIN ONE WEEK AFTER THE DECISION OF THE APPEAL. 14 7.5 THE ASSESSEE HAS SHOWN THE AMOUNT OF RS. 77,73, 520/- AS LIABILITY IN ITS BALANCE SHEET. IT HAS BEEN STATED THAT WHEN THIS MA TTER WILL BE DECIDED BY THE SAME AMOUNT SHALL BE SHOWN IN THE P&L ACCOUNT OR WO ULD BE REFUNDED TO DDA AS PER THE DIRECTION OF THE COURT. 7.6 THE ASSESSEE HAS PLACED RELIANCE ON THE FOLLOWI NG JUDGEMENTS: IN THE CASE OF COMMISSIONER OF WEALTH-TAX/INCOME-TA X VS. SMT. T. GIRIJA AMMAL [2006] 154 TAXMAN 211 (MAD.) I T HAS BEEN HELD THAT '..... DURING PENDENCY OF SAID APPEAL, ASSESSI NG OFFICER BROUGHT TO TAX INTEREST ON ADDITIONAL COMPENSATION IN EACH OF RELEVANT ASSESSMENT YEARS ON ACCRUAL BASIS - WHETHER ADDITIONAL COMPENS ATION RECEIVED COULD NOT BE TREATED AS PART OF COMPENSATION RECEIVED FOR TRANSFER OF LAND UNTIL IT WAS FINALLY DETERMINED BY HIGH COURT OR SUPREME COU RT AND IF APPEAL OF STATE GOVERNMENT AGAINST ENHANCED COMPENSATION RECE IVED BY ASSESSEE WAS ALLOWED, ASSESSEE WAS BOUND TO REFUND AMOUNT AN D, HENCE, SAME COULD NOT BE ASSESSED BEFORE REACHING FINALITY'. IN THE CASE OF CIT V. SARVARTRA ROAD RUNNERS PVT. LTD. 301 ITR 443(DEL.) IT IS HELD THAT AMOUNT WITHDRAWN BY ASSES SEE PENDING APPEAL AGAINST ARBITRATION AWARDS FROM DEPOSITS MADE IN CO URT FOLLOWING INTERIM ORDER OF COURT COULD NOT BE TREATED AS INCOME ACCRU ED TO THE ASSESSEE. 15 IN THE CASE OF CIT V. BHOOP RAM DAGAR HUF (2008) 17 3 TAXMAN 8 (P&H) HIGH COURT, IT HAS BEEN HELD THAT INTEREST ON ENHANCED COMPENSATION CANNOT BE TAXABLE TILL THE ISSUE RELAT ING TO IT ATTAINS FINALITY AS THE SAME WOULD ACCRUE TO ASSESSEE AT THAT TIME O NLY. FURTHER IN THE CASE OF CIT V. KARANBIR SINGH (2008) 169 TAXMAN 85 (P&H) HIGH COURT, IT WAS HELD THAT REVENUE WAS NOT ENTITLE TO TAX AMOUNT OF INTEREST RECEIVED BY THE ASSESSEE TILL SUCH TIME PR OCEEDINGS IN REFERENCE TO COMPENSATION ATTAIN FINALITY. IN THE CASE OF COMMISSIONER OF WEALTH TAX V. GIRIJA AMMAL (2006) 154 TAXMAN 211 (MAD.) IT WAS HELD THAT ADDITIONAL C OMPENSATION RECEIVED COULD NOT BE TREATED AS PART OF COMPENSATION RECEIV ED FOR TRANSFER OF LAND UNTIL IT WAS FINALLY DETERMINED BY HIGH COURT OR SU PREME COURT AND 'IF THE APPEAL OF STATE GOVT. AGAINST ENHANCED COMPENSATIO N RECEIVED BY ASSESSEE WAS ALLOWED, ASSESSEE WAS BOUND TO REFUND AMOUNT AND, HENCE, SAME COULD NOT BE ASSESSED BEFORE REACHING F INALITY. 7.7 IN VIEW OF THE FACTS AND FINDINGS OF THE CASE A ND THE LEGAL PROPOSITION RELIED UPON BY THE ASSESSEE, THE ISSUE RELATING TO DAMAGES AND INTEREST OF RS. 77,73,520/ - BEING STILL SUBJUDICE CANNOT BE BROUGH T TO TAX IN THE YEAR UNDER CONSIDERATION. THE FINDING OF THE ASSESSING OFFICER IN THIS RESPECT THAT IF THE ASSESSEE FAILS IN APPEAL BY THE JUDGEMENT OF HON'BL E HIGH COURT THEN THE SAME 16 WILL BE DEDUCTED FROM ITS INCOME IS NOT JUSTIFIED. AFTER CONSIDERING THE RELEVANT FACTS OF CASE AND IN VIEW OF THE LEGAL PROPOSITION CITED IN CASES RELIED UPON BY THE ASSESSEE, THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS. 77,73,520/, WHICH DOES NOT NEED ANY INTERFERENCE ON MY PART, HENCE, I UPHOLD THE ACTION OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND DISMISS THE GROUND NO. 2 RAISED BY THE REVENUE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/03/2017. S SS SD DD D/ // /- -- - S SS SD DD D/ // /- -- - (L.P. SAHU) (L.P. SAHU) (L.P. SAHU) (L.P. SAHU) ( (( (H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU] ]] ] ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER DATE 29/03/2017 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES