TaxTMI 
TaxTMI 
2012 (5) TMI 315
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.... award partially. On further appeal filed in the Hon'ble Karnataka High Court, the Hon'ble Court vide its interim order dated 21.12.2005 stayed 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 there from. The assessee claimed that the said receipts were not taxable in the year of receipt since the same did not accrue to the assessee as income. It was an ad-hoc and interim payment, pending final adjudication on merits. The Assessing Officer did not concur with the claim of the assessee and held that since the Hon'ble High Court did not attach any conditions or riders with the payment, the said receipts were taxable as income of the assessee in the year of receipt. 4. The learned DR submitted that the assessee admittedly received a sum of Rs. 3,00,00,000 in pursuance to the order of the Karnataka High Court dated 21.12.2005. The High Court stayed the order of the District Judge subject to the condition that a sum of Rs. 3,00,000 shall be made over within three weeks from the date of the order and the remaining amount shall be made over within....
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....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 authority and the Appellate Tribunal held that there was no remission or cessation of trading liability so long as the 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 counsel's argument, that the Tribunal ought to consider the question whether the excise duty was actually refunded to the assessee or not and pass proper orders in the light of its finding. The assessee preferred an appeal to the Supreme Court : Held, affirming the decision of the High Court, that where a statutory levy is discharged by the assessee and subsequently the amount paid is refunded, it will 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, 1961 ; it will not be a case of "benefit by way of remission or cessation" of a trading liability. Where expenditure is actually incur....
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....him, what is stated in section 45(5) cannot be imported for the purpose of application of 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 for the assessee, the amount was collected by the assessee in terms of interim orders of the court. The amount though received by the assessee , could not have been appropriated by it as its own. The receipt did not accrue to the assessee. It was liable to be refunded to the concerned party in the event of the judgement 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 learned DR., has, on the other hand, submitted that the amount was realised by the assessee during the course of its trading activities and, therefore, it has been rightly held by the assessing officer to be a trading receipt of the assessee. 10. We will refer to the law laid down in a few cases by by various Court. In Chowringhee Sales Bureau P. Ltd. v. CIT [1973] 87 ITR 542 (SC), the....
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.... charging an extra price for the bottles. The additional amounts taken were an integral part of the commercial transaction of the sale of liquor and bottles and when they were realised they were the moneys of the assessee and remained thereafter the moneys of the assessee. They were the assessee's trading receipts and, therefore, the balance of these additional sums left in the hands of the assessee after the refunds were assessable to tax. This court further held that it did not make any difference that the additional amount was entered in a separate ledger under the head "Empty bottles return deposit account" as the assessee's style of writing up the account books in a particular manner could not 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 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 law as a result of which the as....
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.... is not the case at hand. We have also gone through the judgment of Supreme Court in the case of CIT v. Hindustan Housing and Land Development Trust Ltd. [1986] 161 ITR 524. The facts of the case before the Supreme Court were that certain lands belonging to the assessee-company were first requisitioned and then compulsorily acquired by the State Government. On an appeal preferred by the respondent-company, the arbitrator made an award directing compensation to be paid for requisition and acquisition. The arbitrator's award was promptly challenged by the State Government before the High Court. Pending the appeal, the State Government deposited the amount in the court which the assessee-company was permitted to withdraw on furnishing 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 dispute in the appeal filed by the State Government; that the dispute was "real and substantial"; and that the amount deposited by the State Government was permitted to be withdrawn by the assessee subject to a security bond for refunding the amount in the event of the appeal bei....