TaxTMI 
TaxTMI 
2017 (5) TMI 10
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....d facts are that assessee in the present case is a Private Limited Company and engaged in business of engineering and contractors. The assessee for the year under construction filed its return of income declaring total income of Rs. 7,06,59,912/- which was processed u/s 143(1) of the Act. Subsequently the case was selected under scrutiny and accordingly notices u/s 143(2) / 142(1) were issued upon assessee. The assessment was framed u/s 143(3) of the Act at a total income of Rs. 17,68,15,880/- after making certain additions / disallowances to the total income of the assessee. 3. First issue raised by Revenue in ground No. 1, 2 & 2.1 are inter-related and therefore being taken up together that Ld. CIT(A) erred in deleting the addition made by Assessing Officer for Rs. 10,58,25,030/- on account of interest received on delayed payments/ compensation. The assessee in the year under consideration has a payment of Rs. 7.78 crores from M/s Hindustan Steelworks Construction Ltd. (HSCL in short) on account of work executed in Libya in the year 1984. The impugned amount was awarded by the Hon'ble jurisdictional High Court in its order dated 17.04.2008. However, Hon'ble jurisdic....
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....000/- + Rs. 39,00,000/-) was awarded by the Arbitrators by an Arbitration Award dated 28.11.1998. The High Court vide its order dated 17.04.2008 directed the HSCL to pay interest to the assessee for the period 28.11.1998 to 31.03.2008, i.e., for the period of delay in payment from the date when the original Award was awarded on the amount of Award delivered on 28.11.1998. Since, the interest in question was on account of delay in payment of Award money and the Court had specified that such interest was awarded for the period 28.11.1998 to 31.03.2008, as per law laid down by Supreme Court in Rama Bai v. CIT (supra) and CIT v. TNK Gobindarajulau Chetty (supra), such interest on delayed payment of awarded amount cannot be assessed to income-tax in one lump sum in the year in which the same was received, rather it is to be assessed in the respective years in which the same had accrued. Accordingly, the entire interest of Rs. 10,58,25,030/- awarded by the Court cannot be assessed as assessee's income of the year under appeal since, the interest was awarded by the Court for the period 28.11.1998 to 31.03.2008, no part of such interest accrued during the assessment year under appeal, ther....
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....he case, Ld. CIT(A) erred in deleting the addition of Rs. 10,58,25,030/- on accrual basis, without considering the judgment of the Delhi High Court in Paragon Constructions (I) (P) Ltd. - vs- CIT & Anr., 274 ITR 413, wherein it was held that in a matter pertaining to arbitration where the amount of arbitration award received by the assessee was not held to be taxable till the proceedings attained a finality." 5. The Department has realized the following additional ground, we for the sake of convenience treat the same in continuation with earlier grounds while considering the same on merit. Additional ground is reproduced below:- "On the facts and in law, the CIT(A) erred in not considering the fact that while the assessee had contended for the A.Y 2009-10 before the CIT(A) that the interest amounting to Rs. 10,58,25,030/- pertained to the period from A.Y 1999-2000 to A.Y 2008-09, subsequently in appeals against orders from A.Y. 1999-2000 to A.Y 2008-09 before CIT(A) asserted that the interest of Rs. 10,58,25,030/- had accrued on mercantile basis only in the AY 2009-10." 6. Before us Ld.DR submitted that in the instant case the impugned interest amount was crystallize....
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....ear to which it pertains. Now the issue before us arises so as to whether the impugned interest is taxable in the year under consideration or in the year to which it pertains. The provision for taxing the interest income received on the compensation are dealt under Sec. 145A(b) of the Act which reads as under:- "[ Method of accounting in certain cases. 145A. Notwithstanding anything to the contrary contained in section 145,- (a)... ... (b) interest received by an assessee on compensation or on enhanced compensation, as the case may be, shall be deemed to be the income of the year in which it is received.] A plain look at the above statutory provision makes it clear that the interest received on compensation shall be taxed in the year in which it is received. However, the said provision is applicable from the AY 2010-11 as clarified by the CBDT's Circular No. 05/2010 issued dated 03.06.2010 which reads as under:- "46. Rationalizing the provisions for taxation of interest received on delayed compensation or on enhanced compensation 46.1 The existing provisions of Income-tax Act provide that income chargeable under the head "Pro....
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.... not applicable by the CBDT in its Circular for the year under consideration. It is because it has been clarified to be applicable with effect from AY 2010-11. Thus, the issue of impugned interest is duly covered by the judgment of Hon'ble Supreme Court in the case of Rama Bai (supra). Accordingly, respectfully, following the precedent as above we hold that there is no infirmity in the order of the Ld. CIT(A). It is also important to note that the Revenue is at liberty to tax the impugned interest income in the respective assessment years as per the provisions of law. Accordingly, we uphold the same. 8. Next issue raised by Revenue in this appeal is that Ld. CIT(A) erred in allowing credit for Rs. 5,84,508/- though the corresponding income was included in earlier year. 9. During the course of assessment proceedings, AO observed that assessee has claimed the amount of TDS for Rs. 9,06,400/- but the corresponding income to the extent of TDS amounting to Rs. 5,84,508/- was not offered to tax in the year under consideration. Therefore, the AO did not allow the TDS credit of Rs. 5,84,508/- while determining the tax liability of assessee. 10. Aggrieved, assessee preferred an....
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....isallowance has been made by the Revenue. Moreover the ld. DR has not brought anything on record anything contrary to the findings of ld. CIT(A). Thus in our considered view there is no defect in the order of ld. CIT(A). Besides the above we also find that the assessee has already shown income corresponding to the TDS of Rs. 51,615.00 in the earlier years which shows that the assessee has already suffered the burden of income tax in the earlier years without claiming the benefit of TDS. Indeed in this case the assessee has borne the burden of the tax out of his own fund. Moreover if the party has not deducted the TDS in the relevant year, there is no fault of the assessee. There is also no loss to the Revenue. Therefore we find no infirmity in the order of the Ld. CIT(A). Accordingly, we uphold the same. 13. In the result, Revenue's appeal is dismissed. Coming to assessee's CO No.144/Kol/2012. 14. At the time of hearing Ld. AR for the assessee stated that he has not pressed the Ground No.1, hence, same is dismissed as not pressed. 15. Only remaining issue raised by assessee is that Ld. CIT(A) erred in confirming the order of Assessing Officer by sustaining the disall....