TMI Blog1993 (7) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... the Department has confined its case for chargeability of the property of the assessee only with regard to the assets at Bilaspur and has not pressed its case for the properties and assets at Katni. 2. A supplementary statement of the case was called by this Court in this very case by orders passed on 16th Nov., 1988. The Tribunal, in accordance with the directions of this Court, has submitted a Supplementary statement of the case showing the contents of the balance-sheet submitted by the assessee along with its return. In the balance-sheet for the financial year in question, i.e., 1969-70, the written down value of the assets of the assessee are shown as ₹ 16,96,246.04 and the compensation received due to acquisition of the assets by the M.P. Electricity Board has been shown as ₹ 5,85,000.00. Thus, the net value of the assets has been shown as ₹ 11,11,246.04. 3. Before taking up for discussion and decision, the two questions, one after the order serially, the relevant facts may first be stated. The assessee'The Central India Electric Supply Co. Ltd., Katni was an undertaking of the State Govt. engaged in business of generation and supply of electricity. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fairly agreed for the procedure that we have followed. 5. As is apparent from the record of the decided appeal of this Court, i.e., M(F) A No. 181/69 between the M.P. Electricity Board and the assessee, the price of the assets taken over, including 20% for compulsory purchase, as estimated by the assessee, was not accepted by the Board and a dispute arose which was sought to be referred to two arbitrators, one each to be appointed by the parties to the dispute. Since the arbitrators, before entering into the reference could not agree upon the name of the Umpire, the assessee approached the Civil Court under s. 8(1)(c) of the Arbitration Act for appointment of an umpire. In the proceedings before the Court, the parties agreed to the appointment of Shri B.P. Sinha, former Chief Justice of India, as the umpire. The umpire gave his award on 7th Oct., 1968. The umpire had determined the market price of the assets of the assessee at ₹ 12,00,000 as against 7,78,000 offered by the Board. In addition to the above market price, twenty per cent solatium amounting to ₹ 2,40,000 was granted. Apart from this amount, the umpire awarded a sum of ₹ 60,000 being a sum which wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove. 9. According to the IAC, since the award of the umpire, in relation to Bilaspur assets of the assessee, has been confirmed by the District Judge by passing a decree in terms of the award in the accounting year 1969-70, for the assessment year in question, i.e., 1970-71, the assessee had earned income under s. 41(2) of the IT Act, but the assessee had filed to disclose the same in the original assessment and, therefore, proceedings under s. 147(a) of the Act for reassessment were justified. 10. The CIT(A) did not accept the challenge to the reassessment proceedings by the assessee. The assessee, therefore, approached the Tribunal. The Tribunal by order passed on 30th March, 1991 allowed the appeal of the assessee holding that no income under s. 41(2) of the IT Act had accrued for the assessment year in question and there was no justification of initiating reassessment proceedings under s. 147(a) of the Act. It is thereafter that at the instance of the Department, the two questions quoted above have been referred to us for opinion. 11. Shri Ravindra Shrivastava, learned counsel appearing for the Department, on the first question based on the provisions of s. 41(2) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expression 'money payable' and 'due' should be construed in the context of IT law to mean 'finally payable and due'. Reliance on behalf of the assessee has been placed on the decision in the following rulings : (1) CIT vs. United Provinces Electric Supply Co. Ltd. (supra); (2) The case of Akola Electric Supply Co. Pvt. Ltd. (supra); (3) P.C. Gulati vs. CIT (1972) 86 ITR 501(Del); (4) The case of Sheshappa Hegde (supra); and (5) The case of Rohtak Textile Mills Ltd. (supra). 13. Before expressing opinion on question No. 1, it would be necessary to critically examine the provisions of s. 41(2) of the IT Act, 1961 as existed on the relevant date which read as under : 41(2). Where any building, machinery, plant or furniture which is owned by the assessee and which was or has been used for the purpose of business or profession is sold, discarded, demolished or destroyed and the moneys payable in respect of such building, machinery, plant or furniture, as the case may be, together with the amount of scrap value, if any, exceed the written value, so much of the excess as does not exceed the difference between the actual cost and the written do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndicating that the obligation is immediately enforceable, and is then an equivalent of payable . It has been said that there is a practical, if not theoretical, unanimity of judicial opinion in giving to the word this double meaning. 17. Apart from the cases cited at the bar, the decision of the Supreme Court in the case of Kesoram Industries Cotton Mills Ltd. vs. CWT (1966) 59 ITR 767(SC) : AIR 1966 SC 1370, appears to be a case nearer in point to the instant case. The provisions of s. 2(m) of the WT Act, defining the words net wealth , for the purpose of s. 7 of the WT Act, came for construction and consideration before the Supreme Court. Under s. 2(m) of the WT Act, the aggregate value for the purpose of the said Act, of the assets, is to be determined by excluding all the debts owned by the assessee on the valuation date. The question that arose before the Supreme Court was whether the income-tax leviable on the assets is liable to be excluded from the aggregate value as debt owned by the assessee on the valuation date. The Supreme Court decided the question in the light of the provisions of the WT Act and the scheme and provisions of the IT Act. The decision of the Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice is done only through the award of the arbitrator. 19. In the particular facts and circumstances of this case, on acquisition of the plant and the machinery of the assessee, its price under s. 7A of the Electricity Act had become payable on the date of the acquisition and it was quantified when the umpire resolved the dispute between the parties and made the award, but it became due only when the decree in terms of the award was passed by the Civil Court under s. 17 of the Arbitration Act. The contention advanced by Shri B.L. Nema on behalf of the assessee that the price had become due on its quantification after passing of the award by the umpire., cannot be accepted in view of the peculiar facts of this case. In this case, as has been explained by detailed narration of facts of the arbitration case in the Civil Court and the first appeal in this Court, the arbitration through umpire took place through the intervention of the Court. An application under s. 8 of the Arbitration Act was made to the Civil Court for appointment of an umpire because the arbitrators nominated by the parties had failed to agree on the name of an umpire. The Civil Court allowed that application and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due has no relevancy so far as the taxability of such accrued income is concerned. The likelihood of the income being reduced in the subsequent assessment year as a result of the litigation may give rise to resort to other remedies available in the Act for rectification and refund of the tax, but on that ground it cannot be held that no income had accrued to the assessee for the relevant assessment year. We find great support for our decision from the decision of the Supreme Court in the case of Keshoram Industries Cotton Mills Ltd. (supra). As for the wealth-tax so also the income-tax. The liability to pay income-tax arise in the relevant financial year on accrual of income in that year and if the income is ascertainable and quantified, it can be brought to tax in the relevant assessment year. The IT Act permits tax to be imposed on the present income in a given financial year, although assessed in the subsequent assessment year. 21. Our answer to question No. 1, therefore, is that in the facts and circumstances of this case, the Tribunal was not justified in holding that no income accrued to the assessee under s. 41(2) of the IT Act in the asst. yr. 1970-71. The question No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the return, there was no full and complete disclosure of all material facts. It is contended that the date of passing of the decree, the decretal amount of the award and all other relevant facts for determining the taxability under s. 41(2) of the Act, no where find place in any part of the return or in the balance-sheet. Reliance on behalf of the Department is placed on the following decisions : (i) Malegaon Electricity Co. (P) Ltd. vs. CIT AIR 1970 SC 1982 (ii) Kantamani Venkata Narayana Sons vs. First Addl. ITO AIR 1967 SC 587 (iii) Malegaon Electricity Co. (P) Ltd. vs. CIT 1970 78 ITR 466(SC) (iv) Calcutta Discount Co. Ltd. vs. ITO (1961) 41 ITR 191(SC) (v) ITO Anr. vs. Sudhir Kumar Bhose (1972) 84 ITR 60(Cal) (vi) Indo-Aden Salt Mfg. Trading Co. (P) Ltd. vs. CIT (1986) 58 CTR (SC) 9: (1986) 159 ITR 624(SC) (vii) S.D. Sachdeva vs. CIT (1972) 86 ITR 447(P H) 26. So far as the abovementioned letter sent by the assessee to the Departmental authorities is concerned, the learned counsel for the Department submits that they did not form part of the return and disclosure of some facts otherwise than in the return cannot take away the jurisdiction of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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