ITO, Hyderabad V. G.H.Reddy Associates Constructiion Pvt.Ltd., Hyderabad

ITA 813/HYD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61831 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 25-06-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: C P RAMASWAMY
• Keywords: Business expenditure; Retrospective amendment
• Section: 45(5); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A. NO. 813/HYD/2009 (ASSESSMENT YEAR : 2006-07) INCOME TAX OFFICER WARD 2(2) HYDERABAD VS. M/S. G.H. REDDY & ASSOCIATES CONSTRUCTION PVT. LTD. HYDERABAD PAN: AACCG4254B A PPELLANT RESPONDENT A PPELLANT BY: MR. V. SRINIVAS RESPONDENT BY: MR. C.P. RAMASWAMY DATE OF HEARING: 20 .03.2012 DATE OF PRONOUNCEMENT: 11 .0 4 .2012 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-III, HYDERABAD DATED 29.4.2009. 2. THE REVENUE RAISED THE GROUND WITH REGARD TO DELETI ON OF ADDITION OF RS. 3 CRORES RECEIVED BY THE ASSESSEE I N THE ASSESSMENT YEAR UNDER CONSIDERATION IN PURSUANCE TO THE INTERI M ORDER PASSED BY THE HIGH COURT OF KARNATAKA VIDE JUDGEMENT DATED 21.12.2005. 3. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE-COMP ANY WAS AWARDED A WORK CONTRACT BY M/S. KRISHNA BHAGYA JAL NIGAM LTD. (KBJNL) VIDE AGREEMENT DATED 13.12.1989 FOR CONSTRU CTION OF CANAL. DURING THE COURSE OF EXECUTION OF WORK, THE ASSESSEE RAISED AN ARBITRATION CLAIM ON KBJNL WHICH WAS NOT ACCEPTE D. THE MATTER WAS REFERRED TO THE ARBITRATOR WHO AWARDED T HE CLAIMS OF THE ASSESSEE VIDE ORDER DATED 24.1.2003. ON APPEAL FILED BY THE KBJNL, DISTRICT COURT CONFIRMED THE AWARD PARTIALLY . ON FURTHER APPEAL FILED IN THE HONBLE KARNATAKA HIGH COURT, T HE HONBLE I.T.A. NO. 813/HYD/2009 M/S. GH REDDY & ASSOCIATES CONSTRUCTION PVT. LTD. ====================== 2 COURT VIDE ITS INTERIM ORDER DATED 21.12.2005 STAYE D THE ORDER OF THE DISTRICT COURT AND ALSO ASKED KBJNL TO REMIT A SUM OF RS. 3 CRORES TO THE ASSESSEE IN THE INTERIM. ACCORDINGLY, KBJNL PAID THE SAID AMOUNT TO THE ASSESSEE AFTER EFFECTING TDS THE RE FROM. THE ASSESSEE CLAIMED THAT THE SAID RECEIPTS WERE NOT TA XABLE IN THE YEAR OF RECEIPT SINCE THE SAME DID NOT ACCRUE TO TH E ASSESSEE AS INCOME. IT WAS AN AD-HOC AND INTERIM PAYMENT, PEND ING FINAL ADJUDICATION ON MERITS. THE ASSESSING OFFICER DID NOT CONCUR WITH THE CLAIM OF THE ASSESSEE AND HELD THAT SINCE THE H ONBLE HIGH COURT DID NOT ATTACH ANY CONDITIONS OR RIDERS WITH THE PAYMENT, THE SAID RECEIPTS WERE TAXABLE AS INCOME OF THE ASS ESSEE IN THE YEAR OF RECEIPT. 4. THE LEARNED DR SUBMITTED THAT THE ASSESSEE ADMITTED LY RECEIVED A SUM OF RS. 3,00,00,000 IN PURSUANCE TO T HE ORDER OF THE KARNATAKA HIGH COURT DATED 21.12.2005. THE HIGH CO URT STAYED THE ORDER OF THE DISTRICT JUDGE SUBJECT TO THE COND ITION THAT A SUM OF RS. 3,00,000 SHALL BE MADE OVER WITHIN THREE WEE KS FROM THE DATE OF THE ORDER AND THE REMAINING AMOUNT SHALL BE MADE OVER WITHIN THREE WEEKS THEREAFTER. ACCORDING TO THE LE ARNED DR, NO CONDITION WAS ATTACHED FOR PAYMENT OF RS. 3,00,00,0 00 IN PURSUANCE TO THE ORDER OF THE HIGH COURT. THEREFOR E, THE JUDGEMENT OF THE APEX COURT IN THE CASE OF HINDUSTA N HOUSING & LAND DEVELOPMENT TRUST LTD., 161 ITR 524, MAY NOT B E APPLICABLE TO THE FACTS OF THIS CASE. ACCORDING TO THE DR, TH E AMOUNT OF RS. 3,00,00,000 RECEIVED BY THE ASSESSEE WITHOUT ANY CO NDITION OR RIDER ATTACHED TO IT, IS CHARGEABLE TO TAX FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THEREFORE, THE CIT(A) IS NOT JUSTIFIED IN CONCLUDING THAT THE RECEIPT OF RS. 3,00,00,000 IS N OT LIABLE FOR TAXATION FOR THE ASSESSMENT YEAR UNDER CONSIDERATIO N. I.T.A. NO. 813/HYD/2009 M/S. GH REDDY & ASSOCIATES CONSTRUCTION PVT. LTD. ====================== 3 5. FURTHER THE DR RELIED ON THE JUDGEMENT OF JURISDICT IONAL HIGH COURT IN THE CASE OF CIT VS. SMT. M. SAROJINI DEVI, 260 ITR 759 WHEREIN THE COURT HELD AS UNDER: 'LANDS BELONGING TO THE ASSESSEE HAD BEEN ACQUIRED BY THE GOVERNMENT IN THE YEAR 1966 AND COMPENSATION WAS AWARDED BY THE LAND ACQUISITION OFFICER. THE ASSESSEE WAS AWARDED ENHANCED COMPENSATION BY THE HIGH COURT AND WAS ENTITLED TO AN INTEREST OF RS. 43,642. THE STATE GOVERNMENT APPEALED AGAINST THE ENHANCEMENT TO THE SUPREME COURT. THE APPEAL WAS PENDING BEFORE THE SUPREME COURT. THE INCOME-TAX OFFICER HELD THAT THE ENTIRE AMOUNT OF INTEREST SHO ULD BE BROUGHT TO TAX. THE APPELLATE ASSISTANT COMMISSIONE R AND THE TRIBUNAL HELD THAT SINCE THE MATTER HAD NOT BECOME FINAL, THE AMOUNT COULD NOT BE TAXED. ON A REFERENCE : HELD , THAT, IN ANY CASE, IF THE JUDGMENT ENHANCING THE COMPENSATION IN FAVOUR OF THE ASSESSEE WAS REVERSED BY THE SUPREME COURT, THEN THE ASSESSEE EVEN AFTER PAYMENT OF THE TAX ON THE ACCRUED INTEREST, COULD S EEK REFUND OF THE TAX PAID, BY MAKING APPROPRIATE APPLICATION FOR RECTIFICATION OF ASSESSMENT. THEREF ORE, THE ASSESSING OFFICER NEED NOT WAIT FOR THE FINAL DISPOSAL OF THE APPEAL BY THE SUPREME COURT TO TAX THE INTEREST ACCRUED IN THE ACQUISITION MATTER.' 6. THE LEARNED DR ALSO RELIED ON THE JUDGEMENT OF SUPR EME COURT IN THE CASE OF POLYFLEX (INDIA) PVT. LTD. VS. CIT, REPORTED IN 257 ITR 343 WHEREIN IT WAS HELD AS UNDER: 'IN 1986 THE ASSESSEE HAD PAID EXCISE DUTY ON CERTA IN GOODS. PURSUANT TO THE DECISION OF THE CEGAT A SUM OF RS. 9,64,206 WAS REFUNDED IN SEPTEMBER, 1988. THEREAFTER THE EXCISE DEPARTMENT FILED AN APPEAL TO THE HIGH COURT AND, ON THE APPEAL BEING DISMISSED, A PETITION FOR SPECIAL LEAVE TO APPEAL TO THE SUPREME COURT ; BUT THE FATE OF THAT PETITION WAS NOT KNOWN. FOR THE ASSESSMENT YEAR 1989-90, THE ASSESSING OFFICER BROUGHT TO TAX THE AMOUNT BY INVOKING SECTION 41(1) OF THE INCOME-TAX ACT, 1961, BUT THE APPELLATE AUTHORI TY AND THE APPELLATE TRIBUNAL HELD THAT THERE WAS NO REMISSION OR CESSATION OF TRADING LIABILITY SO LONG AS THE I.T.A. NO. 813/HYD/2009 M/S. GH REDDY & ASSOCIATES CONSTRUCTION PVT. LTD. ====================== 4 PETITION FOR SPECIAL LEAVE TO APPEAL WAS PENDING IN THE SUPREME COURT. THE HIGH COURT, ON A REFERENCE, HELD THAT THE AMOUNT WAS ASSESSABLE TO TAX BUT OBSERVED, ON THE BASIS OF COUNSELS ARGUMENT, THAT THE TRIBUN AL OUGHT TO CONSIDER THE QUESTION WHETHER THE EXCISE D UTY WAS ACTUALLY REFUNDED TO THE ASSESSEE OR NOT AND PA SS PROPER ORDERS IN THE LIGHT OF ITS FINDING. THE ASSE SSEE PREFERRED AN APPEAL TO THE SUPREME COURT : HELD , AFFIRMING THE DECISION OF THE HIGH COURT, THAT WHERE A STATUTORY LEVY IS DISCHARGED BY THE ASSESSE E AND SUBSEQUENTLY THE AMOUNT PAID IS REFUNDED, IT WI LL BE A CASE WHERE THE ASSESSEE HAS OBTAINED ANY AMOUNT IN RESPECT OF SUCH EXPENDITURE WITHIN THE MEANING OF SECTION 41(1) OF THE INCOME-TAX ACT, 196 1 ; IT WILL NOT BE A CASE OF BENEFIT BY WAY OF REMISSION OR CESSATION OF A TRADING LIABILITY. WHERE EXPENDITUR E IS ACTUALLY INCURRED BY REASON OF PAYMENT OF DUTY ON GOODS AND THE DEDUCTION OR ALLOWANCE IS GIVEN IN TH E ASSESSMENT OF AN EARLIER PERIOD, THE ASSESSEE IS LI ABLE TO DISGORGE THAT BENEFIT AS AND WHEN HE OBTAINS REF UND OF THE AMOUNT SO PAID. WHETHER THERE IS A POSSIBILI TY OF THE REFUND BEING SET AT NAUGHT ON A FUTURE DATE IS NOT A RELEVANT CONSIDERATION. ONCE THE ASSESSEE GETS BACK THE AMOUNT WHICH WAS CLAIMED AND ALLOWED AS BUSINESS EXPENDITURE DURING AN EARLIER YEAR, THE DEEMING PROVISION IN SECTION 41(1) COMES INTO PLAY AND IT I S NOT NECESSARY THAT THE REVENUE SHOULD AWAIT THE VERDICT OF A HIGHER COURT OR TRIBUNAL. IF THE HIGHER COURT OR TRIBUNAL UPHOLDS THE LEVY AT A LATER DATE THE ASSESSEE IS NO T WITHOUT A REMEDY TO GET BACK THE RELIEF. THE CORRECT WAY OF UNDERSTANDING SECTION 41(1) IS T O READ THE LATTER CLAUSE, SOME BENEFIT IN RESPECT OF SUCH TRADING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF AS A DISTINCT AND SELF-CONTAINED PROVISION .' 7. ON THE OTHER HAND, THE LEARNED AR SUBMITTED THAT TH E IMPUGNED RECEIPT IS THE SUBJECT MATTER OF APPEAL BE FORE THE SUPREME COURT AND THE RECEIPT CANNOT BE LIABLE FOR TAXATION. IT IS ONLY AN INTERIM RECEIPT. IN ANY CASE, IF THE ISSUE IS DECIDED AGAINST THE ASSESSEE, THE ASSESSEE HAS TO REFUND THE SAME. HE SUBMITTED THAT IN THE CASE OF THE ASSESSEE FOR THE A.Y. 2003- 04 WHEN THE ASSESSEE EXISTED IN THE STATUS OF PARTNERSHIP UNDER THE NAME OF I.T.A. NO. 813/HYD/2009 M/S. GH REDDY & ASSOCIATES CONSTRUCTION PVT. LTD. ====================== 5 M/S. GH REDDY ASSOCIATES, THE ASSESSEE RECEIVED RS. 3 CRORES FROM M/S. KBJNL AS PER THE DIRECTION OF HONBLE KARNATAK A HIGH COURT. THE ASSESSING OFFICER TAXED THE SAME FOR A.Y. 2003- 04. HOWEVER, THE ADDITION WAS DELETED BY THE CIT(A)-VI, CHENNAI VIDE HIS ORDER DATED 23.5.2007 IN I.T.A. NO. 39/2006-07. THE ENTI RE AWARD OF RS. 29 CRORES WAS OFFERED TO TAX BY THE ASSESSEE IN A.Y . 2007-08 AFTER THE HONBLE APEX COURT DECIDED THE MATTER. BEING S O, IT IS IMPROPER TO TAX THE INTERIM RECEIPT. HE RELIED ON THE JUDGEMENT OF SUPREME COURT IN THE CASE OF HINDUSTAN HOUSING & LA ND DEVELOPMENT TRUST LTD. (161 ITR 524)(SC), GODHRA EL ECTRICITY COMPANY LTD. (225 ITR 746)(SC), HIGHWAY CONSTRUCTIO N COMPANY (225 ITR 52) (GAUHATI), DARAPANENI CHINNA KRISHNAIA H (HUF) VS. CIT (291 ITR 98)(AP) AND PADMASUNDRA RAO (DECD.) VS STATE OF TAMIL NADU (SC) (255 ITR 147 AT 153). 8. HE FURTHER SUBMITTED THAT THERE WAS AN AMENDMENT TO SECTION 45(5) BUT THERE IS NO CORRESPONDING AMENDME NT TO SECTION 28. BEING SO, ACCORDING TO HIM, WHAT IS STATED IN SECTION 45(5) CANNOT BE IMPORTED FOR THE PURPOSE OF APPLICATION O F SECTION 28 WHERE THE INCOME IS ASSESSED UNDER THE HEAD 'INCOME FROM BUSINESS OR PROFESSION'. 9. WE HAVE HEARD BOTH PARTIES AND PERUSED MATERIAL OR RECORD. ACCORDING TO SHRI C.P. RAMASWAMY, LEARNED COUNSEL F OR THE ASSESSEE, THE AMOUNT WAS COLLECTED BY THE ASSESSEE IN TERMS OF INTERIM ORDERS OF THE COURT. THE AMOUNT THOUGH RECE IVED BY THE ASSESSEE , COULD NOT HAVE BEEN APPROPRIATED BY IT A S ITS OWN. THE RECEIPT DID NOT ACCRUE TO THE ASSESSEE. IT WAS LIAB LE TO BE REFUNDED TO THE CONCERNED PARTY IN THE EVENT OF THE JUDGEMEN T OF SUPREME COURT AGAINST THE ASSESSEE AND, THEREFORE, IT WAS A LIABILITY OF THE ASSESSEE-COMPANY. THE INCOME-TAX OFFICER HAS ERRED IN TREATING THE AMOUNT AS TRADING RECEIPT OF THE COMPANY. THE L EARNED DR., I.T.A. NO. 813/HYD/2009 M/S. GH REDDY & ASSOCIATES CONSTRUCTION PVT. LTD. ====================== 6 HAS, ON THE OTHER HAND, SUBMITTED THAT THE AMOUNT W AS REALISED BY THE ASSESSEE DURING THE COURSE OF ITS TRADING A CTIVITIES AND, THEREFORE, IT HAS BEEN RIGHTLY HELD BY THE ASSESSIN G OFFICER TO BE A TRADING RECEIPT OF THE ASSESSEE. 10. WE WILL REFER TO THE LAW LAID DOWN IN A FEW CASES B Y BY VARIOUS COURT. IN CHOWRINGHEE SALES BUREAU P. LTD. V. CIT [1973] 87 ITR 542 (SC), THE ASSESSEE AS AN AUCTIONEER EF FECTED SALES OF FURNITURE AND REALISED FROM THE BUYERS IN ADDITION TO THE COMMISSION RS. 32,986 AS SALES TAX. THE ASSESSEE NE ITHER PAID THIS AMOUNT TO THE ACTUAL OWNER OF THE GOODS ON WHO SE BEHALF THE GOODS WERE AUCTIONED NOR DEPOSITED THE SAME IN THE STATE EXCHEQUER UPON THE PLEA THAT THE STATUTORY PROVISIO N CREATING THAT LIABILITY UPON IT WAS NOT VALID. THE AMOUNT WAS ALS O NOT REFUNDED TO THE PERSONS FROM WHOM IT HAD BEEN COLLECTED. THI S COURT HELD THE AMOUNT OF RS. 32,986 TO BE THE TRADING OR BUSIN ESS RECEIPTS OF THE AUCTIONEER (ASSESSEE). 11. TO THE SAME EFFECT ARE THE DECISIONS OF THIS COURT IN SINCLAIR MURRAY AND CO. PVT. LTD. V. CIT [1974] 97 ITR 615 AND CIT V. BAZPUR CO-OPERATIVE SUGAR FACTORY LTD. [1988] 172 ITR 321. IN THESE CASES IT HAS BEEN THE CONSISTENT VIEW OF THIS COURT THAT IF A RECEIPT IS A TRADING RECEIPT THE FACT THAT IT IS NO T SO SHOWN IN THE ACCOUNT BOOKS OF THE ASSESSEE WOULD NOT PREVENT THE ASSESSING AUTHORITY FROM TREATING IT AS A TRADING RECEIPT. IT IS THE TRUE NATURE AND QUALITY OF THE RECEIPT AND NOT THE HEAD UNDER W HICH IT IS ENTERED IN THE ACCOUNT BOOKS WHICH ARE DECISIVE. TH IS COURT HAS FURTHER OBSERVED THAT EVENTUALLY IF THE AMOUNT SO C OLLECTED IS PASSED ON TO THE STATE GOVERNMENT OR REFUNDED TO TH E PURCHASERS, THE ASSESSEE WOULD BE ENTITLED TO CLAIM DEDUCTION O F THE SUM WHEN SO PAID OR REFUNDED. I.T.A. NO. 813/HYD/2009 M/S. GH REDDY & ASSOCIATES CONSTRUCTION PVT. LTD. ====================== 7 12. IN PUNJAB DISTILLING INDUSTRIES LTD. V. CIT [1959] 35 ITR 519 (SC), THE ASSESSEE CARRIED ON BUSINESS AS A DISTILL ER OF COUNTRY LIQUOR AND SOLD THE PRODUCE TO LICENSED WHOLESALERS . THE GOVERNMENT DEVISED A SCHEME ENTITLING THE DISTILLER S TO CHARGE THE WHOLESALERS A PRICE FOR THE BOTTLES IN WHICH THE LI QUOR WAS SUPPLIED, AT THE RATES FIXED BY THE GOVERNMENT WHIC H PRICE WAS BOUND TO BE REPAID ON RETURN OF THE BOTTLES. THE DI STILLER COLLECTED FROM THE WHOLESALERS CERTAIN AMOUNT AS SECURITY DEP OSITS THOUGH NOT AUTHORISED BY THE GOVERNMENT SCHEME. THIS SECUR ITY DEPOSIT WAS ALSO RETURNED AS AND WHEN THE BOTTLES WERE RETU RNED. THIS ADDITIONAL SUM WAS ENTERED BY THE ASSESSEE UNDER TH E HEADING EMPTY BOTTLES RETURN DEPOSIT ACCOUNT. A QUESTION AROSE WHETHER THE ASSESSEE COULD BE ASSESSED TO TAX ON THE BALANC E OF THE AMOUNTS OF THESE ADDITIONAL SUMS LEFT WITH THE ASSE S- SEE AFTER THE REFUNDS WERE MADE. THIS COURT HELD THAT IN REALISIN G THE ADDITIONAL AMOUNT DESCRIBED AS SECURITY DEPOSIT, THE ASSESSEE WAS REALLY CHARGING AN EXTRA PRICE FOR THE BOTTLES. THE ADDITI ONAL AMOUNTS TAKEN WERE AN INTEGRAL PART OF THE COMMERCIAL TRANS ACTION OF THE SALE OF LIQUOR AND BOTTLES AND WHEN THEY WERE REALI SED THEY WERE THE MONEYS OF THE ASSESSEE AND REMAINED THEREAFTER THE MONEYS OF THE ASSESSEE. THEY WERE THE ASSESSEES TRADING RECE IPTS AND, THEREFORE, THE BALANCE OF THESE ADDITIONAL SUMS LEF T IN THE HANDS OF THE ASSESSEE AFTER THE REFUNDS WERE ASSESSABLE TO T AX. THIS COURT FURTHER HELD THAT IT DID NOT MAKE ANY DIFFERENCE TH AT THE ADDITIONAL AMOUNT WAS ENTERED IN A SEPARATE LEDGER UNDER THE H EAD EMPTY BOTTLES RETURN DEPOSIT ACCOUNT AS THE ASSESSEES S TYLE OF WRITING UP THE ACCOUNT BOOKS IN A PARTICULAR MANNER COULD N OT ALTER THE REAL NATURE OF THE RECEIPTS. 13. IN JONNALLA NARASIMHARAO AND CO. V. CIT [1993] 200 ITR 588 (SC), THE ASSESSEE, A COMMISSION AGENT, COLLECTED IN THE ASSESSMENT YEAR 1968-69 CERTAIN AMOUNTS BY WAY OF SALES TAX I.T.A. NO. 813/HYD/2009 M/S. GH REDDY & ASSOCIATES CONSTRUCTION PVT. LTD. ====================== 8 UNDER THE NAME RUSUM INASMUCH AS IT DISPUTED ITS LIABILITY TO PAY SALES TAX BY FILING VARIOUS LEGAL PROCEEDINGS. THE ACCOUNTS WERE MAINTAINED ON THE MERCANTILE SYSTEM. IN 1970, THERE WAS A RETROSPECTIVE AMENDMENT IN THE RELEVANT SALES TAX L AW AS A RESULT OF WHICH THE ASSESSEES LIABILITY WAS UPHELD BY THE COURTS. THE TAX (I.E., THE AMOUNT OF RUSUM) WAS REMITTED TO THE S TATE LATER ON AND CONSEQUENT UPON THE SAID AMENDMENT. THIS COURT HELD THAT IN SO FAR AS THE ASSESSMENT YEAR 1968-69 WAS CONCERNED TH E AMOUNTS COLLECTED IN THE NAME OF RUSUM CONSTITUTED BUSINE SS RECEIPTS OF THE ASSESSEE. 14. IN THE CASE AT HAND, THE AMOUNT OF RS. 3 CRORES WA S REALISED BY THE ASSESSEE IN THE ORDINARY MANNER OF ITS BUSINESS ACTIVITIES. THE AMOUNT WAS RETAINED BY THE ASSESSEE AS TRADING RECEIPT THOUGH THE RIGHT OF THE ASSESSEE -COMPANY T O REALISE THE AMOUNT WAS THE SUBJECT OF DISPUTE. THE INTERIM ORDE R OF THE HIGH COURT, LOOKING TO THE PHRASEOLOGY EMPLOYED THEREIN, WOULD NOT MAKE ANY DIFFERENCE IN THE NATURE OF RECEIPTS BY TH E ASSESSEE. THOUGH LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE AMOUNT WAS RETAINED AS A LIABILITY, THAT WOULD ALS O NOT MAKE ANY DIFFERENCE IN OUR OPINION. FIRSTLY, THE CONSISTENT VIEW OF VARIOUS COURTS, AS NOTICED HEREINABOVE, IS THAT MERELY MAIN TAINING AS LIABILITY UNDER A HEADING GIVEN BY THE ASSESSEE WOU LD NOT ALTER THE NATURE OF THE RECEIPT IF IT ACTUALLY BE A TRADING R ECEIPT. SECONDLY, NOTHING IS AVAILABLE ON RECORD TO FIND OUT HOW AND IN WHAT MANNER IT WAS MAINTAINED BY THE ASSESSEE. 15. LEARNED COUNSEL FOR THE ASSESSEE RELIED ON VARIOUS DECISIONS BY DIFFERENT COURTS AND SUBMITTED THAT IN IDENTICAL FACTS AND CIRCUMSTANCES IT WAS HELD NOT TO BE A TRADING RECE IPT OF THE ASSESSEE AND HENCE NOT LIABLE TO TAX. WE HAVE CAR EFULLY PERUSED THE DECISIONS. IT IS CLEAR FROM THE FACTS STATED BY THE COURTS THAT IN I.T.A. NO. 813/HYD/2009 M/S. GH REDDY & ASSOCIATES CONSTRUCTION PVT. LTD. ====================== 9 EACH OF THE CASES THE ASSESSEES RIGHT TO REALISE T HE AMOUNT WAS THE SUBJECT-MATTER OF DISPUTE PENDING IN THE HIGH C OURT AND THE HIGH COURTS HAD PASSED DIFFERENT INTERIM ORDERS PUR SUANT TO WHICH THE RESPECTIVE ASSESSEES WERE COLLECTING THE EXCESS AMOUNT. THOUGH THE INTERIM ORDERS OF THE HIGH COURTS ARE DI FFERENTLY WORDED IN THESE CASES, ONE COMMON FEATURE OF ALL TH E ORDERS IS THAT THE REALISATION OF THE AMOUNT BY THE RESPECTIVE ASS ESSEES WAS HEDGED BY SEVERAL CONDITIONS ONE OF WHICH WAS THAT THE ASSESSEE SHALL REFUND THE AMOUNT RECEIVED IN EXCESS OF THE A MOUNT IN THE EVENT OF THE PENDING DISPUTE BEING DECIDED ADVERSEL Y TO THE ASSESSEE BY THE COURT. THUS THE RECEIPT OF THE AMOU NT BY THE ASSESSEE WAS CLEARLY ASSOCIATED WITH A LIABILITY TO REFUND THE AMOUNT, WHICH LIABILITY WAS ASCERTAINABLE AND QUANT IFIED. SUCH IS NOT THE CASE AT HAND. WE HAVE ALSO GONE THROUGH TH E JUDGMENT OF SUPREME COURT IN THE CASE OF CIT V. HINDUSTAN HOUS ING AND LAND DEVELOPMENT TRUST LTD. [1986] 161 ITR 524. THE FAC TS OF THE CASE BEFORE THE SUPREME COURT WERE THAT CERTAIN LANDS BE LONGING TO THE ASSESSEE-COMPANY WERE FIRST REQUISITIONED AND THEN COMPULSORILY ACQUIRED BY THE STATE GOVERNMENT. ON AN APPEAL PREF ERRED BY THE RESPONDENT-COMPANY, THE ARBITRATOR MADE AN AWARD DI RECTING COMPENSATION TO BE PAID FOR REQUISITION AND ACQUISI TION. THE ARBITRATORS AWARD WAS PROMPTLY CHALLENGED BY THE S TATE GOVERNMENT BEFORE THE HIGH COURT. PENDING THE APPE AL, THE STATE GOVERNMENT DEPOSITED THE AMOUNT IN THE COURT WHICH THE ASSESSEE-COMPANY WAS PERMITTED TO WITHDRAW ON FURNI SHING A SECURITY BOND FOR REFUNDING THE AMOUNT IN THE EVENT OF THE APPEAL PREFERRED BY THE STATE GOVERNMENT BEING DECIDED IN ITS FAVOUR. THIS COURT FOUND THAT THE ENTIRE AMOUNT WAS IN DISP UTE IN THE APPEAL FILED BY THE STATE GOVERNMENT; THAT THE DISP UTE WAS REAL AND SUBSTANTIAL; AND THAT THE AMOUNT DEPOSITED BY THE STATE GOVERNMENT WAS PERMITTED TO BE WITHDRAWN BY THE ASS ESSEE SUBJECT TO A SECURITY BOND FOR REFUNDING THE AMOUNT IN THE EVENT OF I.T.A. NO. 813/HYD/2009 M/S. GH REDDY & ASSOCIATES CONSTRUCTION PVT. LTD. ====================== 10 THE APPEAL BEING ALLOWED. ON THESE FACTS, SUPREME C OURT HELD THAT THERE WAS NO ABSOLUTE RIGHT TO RECEIVE THE ENHANCED AMOUNT AT THAT STAGE AND IF THE APPEAL WAS ALLOWED AND IN ITS ENTIRETY, THE RIGHT TO PAYMENT OF ENHANCED AMOUNT WOULD HAVE FALL EN ALTOGETHER. THE PRINCIPLE OF LAW LAID DOWN BY THIS COURT IN THE CASE OF HINDUSTAN HOUSING AND LAND DEVELOPMENT TRUST LIM ITED [1986] 161 ITR 524 IS TO BE READ IN THE LIGHT OF THE FACTS OF THAT CASE. THUS NONE OF THE DECISIONS RELIED ON BY LEARNED SEN IOR COUNSEL FOR THE ASSESSEE IS OF ANY ASSISTANCE TO HIM. 16. IN OUR, OPINION, THE IMPUGNED RECEIPT WILL HAVE TO BE BROUGHT TO TAX AS TRADING RECEIPT IN THIS ASSESSMEN T YEAR AND IF AND WHEN THE ASSESSEE PAYS THE SAID IMPUGNED AMOUNT BACK TO THE CONCERNED PARTY, IT WOULD BE ENTITLED TO CLAIM DEDUCTION FOR THE ASSESSMENT YEAR DURING WHICH THE AMOUNT OUGHT HAVE BEEN PAID/ REFUNDED TO THE SAID PARTY. FOR THIS PROPOSITION, WE PLACE RELIANCE ON THE JUDGMENT ON THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KCP LTD. (216 ITR 602) (AP) & KCP LTD. VS. CIT (245 ITR 421)(SC) AND CIT VS. M. SAROJINI DEVI (250 ITR 759 ) (AP) 17. FOR THE FOREGOING REASONS, WE FIND OURSELVES IN AGREEMENT WITH THE VIEW TAKEN BY THE ASSESSING OFFICER. WE A CCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THAT OF T HE ASSESSING OFFICER. 18. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH APRIL, 2012. SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 11 TH APRIL, 2012 I.T.A. NO. 813/HYD/2009 M/S. GH REDDY & ASSOCIATES CONSTRUCTION PVT. LTD. ====================== 11 COPY FORWARDED TO: 1. INCOME TAX OFFICER, WARD - 2(2), ROOM NO. 836, C - BLOCK, 8 TH FLOOR, I.T. TOWERS, A.C. GUARDS, HYDERABAD. 2. M/S. GH REDDY & ASSOCIATES CONSTRUCTION PVT. LTD., 201, REGENCY HOUSE, 680, SOMAJIGUDA, HYDERABAD. 3. THE CIT(A) - III , HYDERABAD 4. THE CIT - I I , HYDE RABAD. 5. THE DR A BENCH, ITAT, HYDERABAD. TPRAO