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2017 (8) TMI 379 - HC - Income TaxAccrual of interest income on FD's - compensation and interest was not final, but pending the decision of the High Court - Correct Appreciation of judgment of Paragon Construction (I) Private Limited .vrs. C.I.T. (2004 (9) TMI 39 - DELHI High Court) - Held that:- In the present facts although the interim order allowed the assessee to withdraw the amount of ₹ 63.33 lakhs, there was no stipulation in the interim order that in case the appellant loses, she was obliged to return the amount to the State along with interest. Therefore, the facts in the present case are completely distinguishable from the decision of the Delhi High Court in Paragon Construction (2004 (9) TMI 39 - DELHI High Court). The requirement of returning the amount along with interest thereon by a subsequent order of the Court is uncertain. Therefore, such an uncertain event cannot by itself divest the accrual of interest income on the fixed deposit in subject assessment year in the hands of the appellant-assessee. The interest if awarded at the final hearing would not necessarily be related to the interest earned on the fixed deposit in the absence of any such direction being made in the interim order. Thus the impugned order of the Tribunal has correctly held that the decision of the Delhi High Court in Paragon Construction (supra) would have no application in view of the above distinction to the present facts. In the present case it is an accepted position that the right to receive the interest from the fixed deposits already accrued to the appellant-assessee. In such circumstances, the interest on the fixed deposit would be chargeable to tax, as sought to be done by the Assessing Officer under the head income from other sources. Principle of the restitution as provided under Section 144 of the Civil Procedure Code applicability - Held that:- An application for restitution may or may not be made by the successful party. In any event even if application is made, the benefit which the assessee would have gained out of benefit/income out of the amount of ₹ 63.33 lakhs would be net of tax. In those circumstances, the requirement for the appellant to pay to the State would be only the net amount received by her after payment of taxes due. Thus we find no merit in the submission that no tax is payable on the income earned on the fixed deposits as the same could be subject to proceedings of restitution under Section 144 of the Code of Civil Procedure. Appeal decided in favour of revenue.
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