TMI Blog2018 (3) TMI 1039X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction of amount. The said amount has not accrued to the assessee and the question of claiming it as deduction would arise only if it is first held that it is income of the assessee. From the record, we also found that the ownership of additional FS1 is in dispute and the assessee has been permitted to develop and sell the such disputed additional FSI subject to certain conditions and deposit of ₹ 500 per sq ft of such additional FSI sold. The right to the said amount of ₹ 500 per sq ft has not accrued to the assessee and the owner of such amount would be decided by Courts and till such time as the issue is resolved the said amount does not accrue to the assessee. The detailed finding so given by the CIT(A) to the effect that ₹ 500/- per sq.ft of built-up area so deposited in the Court is not accrued to the assessee after relying on various judicial pronouncements, are as per material on record and which have not been controverted by learned DR by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the order of CIT(A) for all the three years under consideration. - ITA No.5535/Mum/2012, ITA No.5536/Mum/2012 And ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t money made with the court (as per High Court order passed in September 1998). In this regard the assessee firm stated that the member of the societies of the estate has filed suit against the firm restraining assessee firm from construction and consumption of remaining FSI. The City Civil Court in September 1998 passed the order in favour of the firm. The same order was challenged before the Hon'ble High Court by the society members. The Hon'ble Bombay High Court permitted the firm to consume the FSI subject to certain conditions including the condition of deposit of ₹ 500 per Sq.ft. with the city Civil Court on the sale of gala by the firm. The assessee firm submitted that the outcome of the money deposited with court will depend on the decision of the Hon'ble High Court, it is in the ;nature of contingent as the final decision is yet to be given by the court and thereby the outcome of deposit of ₹ 500 per sq.ft. will be crystallized only after the decision of the High Court. The assessee further submitted that in case if the assessee firm loses the case before the High Court then the society will be entitled to share of additional FSI (which is enjoyed F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing conditions : i ) Respondent no . 1 shall disclose to the intending gala purchasers about pending of L . C . Suit No . 3159 of 1995 in the City Civil Court . Appeal from Order No . 1050 of 1998 and Writ Petition no . 2666 of 1993 in the High Court . ii ) Respondent No . 1 shall deposit Rs . 500 / ~ sq . ft . in the City Civil Court, within 15 days from the date of agreement for sale of gala with the intended purchaser / s . iii ) Respondent No . 1 shall file the statement quarterly in the City Civil Court pertaining to area agreed to sell, the total consideration, and name and address of the such intended purchasers . iv ) The Registrar of City Civil Court, Mumbai, shall invest the amount deposited in the Court, in the quantum of Rs . 1 lakh in the Nationalised bank for a period of initially one year and to go on renew till the hearing and final disposal of the suit No . 3159 of 1995 . v ) The amount deposited with accrued interest will be paid to the party which succeeds in Suit No . 3159 of 1995 . vi ) Respondent No . 1 shall not sell and / or dispose of the suit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d . AA ) That the Learned Judge ought to have to come to conclusion that the Respondent No . 1 is not entitled to utilize the F . S . I . and put up structure subsequent thereon hence the same will be in contravention of the obligations put by the Maharashtra Ownership of Flats Act ( MOFA ) on a Builder / Developer i . e . Respondent No . 1 . BB ) That the Learned judge failed to appreciate that once the conveyance will be executed in favour of the Society and the purchasers of Gala / Units in respect of the suit property then the Respondent No . 1 will not have any right, title interest in FSI available for construction thereon and the same cannot be utilized by the Respondent No . 1 as the Respondent No, 1 is not the owner of the suit property . As such the plan sanctioned in respect of the suit property in favour of Respondnet no . 1 will be of no use because he will not be able to put up structure as he ceases to be owner of the Suit property . 7 . 2 The appeal filed by the owners of the industrial shed are pending before the Hon'ble High Court , The monies deposited by the appellant are also not refunded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and income received by the assessee, will it be liable to be assessed . 7 . 2 . 1 The Hon'ble ITAT Amritsar Bench in the case of ITO vs . Kuthiala Cold Storage 48 TTJ ( Asr ) 46 ITD 1 13 has held as follows : have heard the parties at length and further considered the relevant material on record . There is no dispute that the order issued by the Punjab Haryana High Court on a writ petition filed by the assessee and other cold storage owners and the following order was passed : The main case may be listed after the decision of CWP No . 922 of 1979, Meanwhile, stay in the same terms is granted by the Supreme Court in W . P . No . 609 of 1979 Krishna Ice and General Mills vs . State of Haryana granted on 20th June, 1979 . We may further clarify that the petitioners shall also provide the names and particulars of each of their customers from whom they charge the amount in excess of the prescribed limit . 18 . The writ petition was dismissed on 25th April, 1980, and the stay was vacated but till the matter was decided on 25th April, 1980, the question whether the assessee could recover storage charges in excess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court, it becomes enforceable and acquires validity . The Delhi High Court held in the case of Faxika Electric Supply Co, Ltd . vs . CIT ( 1983 ) 36 CTR ( Del ) 355 : ( 1983 ) 143 ITR 557 ( Del ) that an award of an arbitrator that is not filed in Court and made a rule of the Court has no force or validity . It cannot create, extinguish or pass any title or interest . Nobody can rely on such award by way of attack or defence in any proceeding whatsoever . No party can be prejudiced or benefited by the mere existence of such an award . Since this award has become the rule of the Court as per the order passed by the First Additional Civil Judge on 22nd Jan . , 1979, this has become enforceable . But his position has to be seen what would happen when the operation of the decree passed consequent on making the assessee award rule of the Court, was stayed by the High Court . After staying the operation of the decree, the Allahabad High Court by a subsequent order passed on 2nd April, 1980 directed the Government to deposit entire decrial amount in the execution court and permitted the assessee to withdraws the money only on furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, follows that any receipt in order to be income must be a receipt received as income or in the alternative or right to receive that income must accrue to him or arise to him and the accrual or arisal of that right must be during the previous year . It is now settled law that there is not much of difference between the expressions 'accrue' or 'arise' while there is not much of overlapping also . What is, therefore, to be seen is whether any right accrued to the assessee to receive this amount as income . This question is very vexed one and to engaged the attention of several High Court in the country . Identical question arose under several Acts e . g . Land Acquisition Act but the underlying Principle is that when an appeal is filed, whether if the amount decreed by a lower Court in favour of an assessee could be said to have given him a right to receive it . In other words whether a right accrued to him or not . Dealing with the question arising under the land Acquisition Act but involving an identical question as now before me . The Delhi High Court in the case of Harish Chandra Ors . ' ( vs . CIT ( 1985 ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al and, therefore, the matter went up before the High Court to decide the broad question whether in a case where appeals are filed could it be said that a right to receive that amount accrued . Dealing with the question, the Delhi High Court held on p . 486 of the report . Under the Act income is taxable when it accrues, arises or is received, or when it is by fiction deemed to accrue, arises or is deemed to be received . Receipt is the only test of chargeability . If income accurse or arises it may become liable to tax [ see CIT vs . Ashokbhai Chimabhai ( 1965 ) 56ITR42 ( SC ) . Then the High Court held in Harish Chandra Ors vs . CIT ( 1985 ) 45 CTR ( Del ) 329 : ( 1986 ) 154 ITR 478 ( Del ) at 486 to9 488 : It is thus clear that unless and until there is created in favour of the assessee a debut due by somebody, it cannot be said that he has acquired a right to receive the income or that income has accrued to him . In cases of claims for determination of compensation by the Court, no debt is until the amount of compensation is judicially determined at all stages provided in the Acquisition Act . The offer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the appointment of the arbitrator invoking cl 25 of the agreement for the execution of the contract works was clearly untenable and beyond jurisdiction and the whole proceedings were arbitrary and one sided and were liable to be set aside . The finality of the decree passed by the Additional District Judge was so disturbed with the grant of the order of the High Court staying the operation of the decree that it cannot be said that any enforceable right to receive the sum in question accrued to the assessee . Unless such a right accrued to the assessee, the amount received cannot be brought to tax under s . 5 of the IT Act . In this context the question whether the assessee is following mercantile system of accounting or cash system of accounting or hybrid system of accounting does not really matter as the system only helps computing the income . If the assessee ultimately succeeds in the High Court, then it can be said that a right to receive those amounts accrued to the assessee and those amounts could then be brought to tax but not till then . I am therefore, of the opinion that the view expressed by the Id . Accountant Member is fair, reasonable and corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the assessee only when the dispute is finally settled by the Hon'ble Supreme Court . Shri Ranka argues that by virtue of the notification passed by the Central Government the assessee was not entitled to sell the old stock at the enhanced rate and, therefore, it was not entitled to the difference of the old rate and the enhanced rate, The fetter that was created by the Notification of the Government, Shri Ranka says continued to operate even after the decision of the High Court in the writ, as the writ decision was not final, in as much as, the appeal was filed before the Supreme Court by the State Government . Shri Ranka also argues that at no state, the amount was absolutely given to the assessee, but at all stages it was subjected to conditions and, therefore, there was no vested right of the assessee in the amount . On the other hand, the revenue argues that, the assessee is in possession of the amount refunded by the Collector and that unless the order of the High Court is reversed by the Supreme Court, the assessee has a vested right in the impugned amount . The Hon'ble Supreme Court in the case of E . D . Sasoon Co . Ltd . Ors . Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirmed the action of the A . O by observing that interest has been accrued and for that purpose he has placed reliance on various case laws whereby it has been held that interest is accrued on the basis of year to year . In those cases the interest was received on compensation awarded on account of acquisition of land . But here is the question of interest awarded on compensation on account of death by accident . In case of Land Acquisition the statutory body as well as the agriculturists filled appeal before the High Court to enhance the compensation or to reduce the compensation as the case may be . However, in the present case there is no question of enhancing the compensation on account of land acquisition but the case is on account of compensation awarded on account of death of the person due to accident . MACT has awarded some compensation and has also directed to pay interest to the assessee . The Insurance Company has filed appeal before the Hon'ble Jurisdictional High Court and Hon'ble Jurisdictional High Court has admitted the appeal of the Insurance Co . and Insurance Company has raised a very valid point which has been mentioned in the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee firm is engaged in the construction business since 1964. The assessee firm took the development of the laxmi industrial estate as per the BMC plans approved in 1976. As per the approved plan of 1976, the assessee firm was entitled to the construction of FSI of 52553 sq.rntr.. The assessee firm has developed, constructed and consumed the FSI of 38351.35 sq.mtr up to 31/03/1995. The building wise utilization of the FSI for the period between 1976 and 1995 is as under:- Building Number FSI Utilised - in sq . mtr . 1,3,5,7 5891.54 2,4,6 4099.17 8,9,11 3932.87 13,15,16 3278.46 23,25,27 3932.87 29, 31, 33 5870.61 30, 32,34,35 9973.90 21 1371,93 Total 38351.35 9. From the record we found that the assessee firm has developed and sold the above FSI to the purchaser and the soci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee firm. The assessee firm was required to deposit @ ₹ 500/- per sq. ft. of built up area of gala sold in respect of additional FSI. The order of the hon'ble High Court reads as under: Respondent No . 1 shall disclose to the intending gala purchasers about pending of L . C . Suit No . 3159 of 1955 in the City Civil Court, Appeal from Order No . 1050 of 1998 and Writ Petition No . 2666 of 1993 in the High Court . 5.4 The assessee submitted that In addition to deposit of ₹ 500/- per Sq ft, the appellant firm was directed to mention the dispute in the agreement for sale and the appellant has on page 12, in clause (xii) of preamble mentioned as follows: One Subodh S . Shah and L . M . Ghanshani claiming as a member and Chief Promoter respectively of Laxmi Industrial Premises Co - operative Housing Society Limited ( proposed ) have filed short cause suit no . 3159 of 1995 in the Bombay City Civil Court at Bombay, against the Promoters for certain reliefs, viz . conveyance of the said land in their favour and / or respective societies, for accounts and a permanent order of injunction restraining the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 1,52,874.63 sq ft belonged to the assessee firm undisputedly and therefore whole of the sale consideration belongs to the assessee and has been duly accounted for in the books of accounts. As per the chart enclosed for A Y 2006-07, 2007-08 and 2008-09, the assessee started making deposit with court an amount equal to ₹ 500 per sq ft once the disputed FSI was utilized. The amount deposited in the Court in the three years in appeal are as follows; A Y 2006 - 07 AY 2007 - 08 A Y 2008 - 09, Sale in Sq ft out of disputed FSI 16716 850 After order 4499 Sale in Sq ft out of undisputed FSI 34180 25404 18623 Total sale during the year in sq. ft. 50896 26254 23122 Amount deposited with Court @Rs. 5007- per sq ft of sale of disputed FSI ₹ 2,11,89,157/- Rs. 1,56,57,595/- ₹ 1,15,04,185 14. Thus, the amount to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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