2012 (5) TMI 85

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....ial questions of law: (i)  Whether in light of Ratio of the judgment passed by Apex Court in CIT v. Govind Chaudhary & Sons, [1993] 203 ITR 881/[1994] 74 Taxman 331 (SC) to that effect that: "If the amounts under a contract were not paid at the proper time and interest was awarded to the respondent for such delay, the interest was only an accretion to the respondent's receipts from the contract and was attributable to and incidental to the business carried on by it" the learned court below was justified in reaffirming the award receipts as compensatory in nature and in adding the same as income from other sources for taxable purpose? (ii)  Whether the learned court below was justified in upholding and reaffirming the reop....

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...., he relied on the ratio laid down in the case of CIT v. B.N. Agarwala & Co. [2003] 259 ITR 754/129 Taxman 78 (SC) wherein the Hon'ble Supreme Court has observed that:- "It is now brought to our notice that the decision of the Orissa High Court in Govinda Choudhary and Sons v. CIT [1977] 109 ITR 497 was brought to this court in appeal and has since been disposed of, which is reported in CIT v. Govinda Choudhury and Sons [1993] 203 ITR 881. In the said decision, it is recorded that learned counsel for the assessee conceded that interest did constitute a revenue receipt. The court, however, held on the other question (arising in that appeal) that the said amount of interest cannot be taxed under the head "Income from other sources" which n....

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....2.65 lakhs on 22.12.1995 along with interest @6% and the same was upheld by this Court. The assessee has paid the fee to the Arbitrator as determined by the Civil Court, so he has incurred expenditure to have an award along with interest. 12. In the instant case, the amounts under a contract were not paid at the proper time and, as such, the interest was awarded to the assessee for such delay. The interest was only an accretion to the assessee's receipts from the contracts and was attributable to an incidental to the business carried on by it. The interest payable to the assessee partook of the same character as the receipts for the payments of which it was otherwise entitled under the contract and which payment has been delayed as a res....