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TMI Blog1997 (7) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... 1975. The Government of India fixed the price of levy sugar at Rs. 151.36 per quintal by issuing Sugar Control Order in November 1972. The assessee challenged the price fixed by the Government by filing a writ petition in this court. It was, inter alia, contended that the cost of manufacture of sugar worked out to Rs, 202.23 per quintal, and therefore, the Government was not justified in fixing the price of levy sugar at Rs. 151.36 per quintal. The High Court while admitting the writ petition passed an interim order permitting the assessee to sell levy sugar at Rs. 202.23 per quintal as against Rs. 151.36 fixed by the Government on the condition that the assessee shall deposit the difference of Rs. 50.87 per quintal pending disposal of the writ petition. The assessee was required to furnish a bank guarantee to the satisfaction of this court for return of the amount of difference in price of Rs. 50.87 per quintal in case the writ petition is ultimately dismissed. The assessee acted in accordance with the orders of the High Court and furnished a bank guarantee from Jalandhar Central Co-operative Bank Ltd., Jalandhar, by getting an equal amount deposited with the bank. The sum of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax (Appeals), after considering the submissions made by counsel for the parties, held that the amount did not form part and parcel of the sale proceeds of the assessee. The sum of Rs. 6,27,944 was treated as trust money credited by the assessee to the suspense account and deposited in the bank as per directions of the court. It was observed that the assessee did not have any absolute claim over the amount and deleted the addition. Aggrieved against the decision of the Commissioner of Income-tax (Appeals) the Revenue went up in appeal before the Tribunal. The order of the Commissioner of Income-tax (Appeals) was upheld by the Tribunal. It was held that the difference in price did not become the property of the assessee and, therefore, it could not be said that the disputed sale proceeds had accrued to the assessee as its income liable to tax. At the instance of the Revenue, the aforesaid question of law has been referred by the Tribunal to this court for its opinion. The assessee's system of accounting is mercantile. In view of this position, the relevant question will be whether the difference in price of Rs. 50.87 per quintal allowed to be charged by the assessee by the High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng allowed. There being no absolute right to receive the amount at that stage, the extra amount of compensation of Rs. 7,24,914 was, therefore, not the income accrued to the assessee during the previous year relevant to the assessment year. After referring to a number of judgments, the judgment of the High Court was upheld by observing as under : "It is unnecessary to refer to all the cases cited before us. It is sufficient to point out that there is a clear distinction between cases such as the present one, where the right to receive payment is in dispute and it is not a question of merely quantifying the amount to be received and cases where the right to receive payment is admitted and the quantification only of the amount payable is left to be determined in accordance with settled or accepted principles. We are of the opinion that the High Court is right in the view taken by it and, therefore, this appeal must be dismissed." The Andhra Pradesh High Court in CIT v. Chodavaram Co-operative Sugars Ltd. [1987] 163 ITR 420, while considering the following question of law : "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n CIT v. Jeyapore Sugars Co. Ltd. [1989] 175 ITR 627. The High Court had not noticed the judgment of the Supreme Court in Hindustan Housing and Land Development Trust Ltd'.s case [1986] 161 ITR 524. Thereafter, the matter was considered by the Karnataka High Court on almost the same facts in CIT v. Mysore Sugar Co. Ltd. [1990] 183 ITR 113. The only difference being that the writ petition had been filed in the High Court and the excess amount was credited under the interim directions of the High Court under the head "Current Liabilities". The question was as to whether the difference in price of the levy sugar realised by the assessee under the interim directions of the High Court was its income liable to tax for the year in question. In that case also, the assessee had challenged the fixing of the price of levy sugar by the Government of India under the Sugar Control Order. Relying upon the judgment of the Supreme Court in Hindustan Housing and Land Development Trust Ltd.'s case [1986] 161 ITR 524 and of the Andhra Pradesh High Court in Chodavaram Co-operative Sugars Ltd.'s case [1987] 163 ITR 420, it was held : "But in the present case, what has happened is that the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Land Development Trust Ltd. [1986] 161 ITR 524. Accordingly, we are in agreement with the Tribunal and answer the first question in the affirmative and in favour of the assessee." Special Leave Petitions No. (Civil) 5111-5115 of 1992 against the judgment of the Karnataka High Court in Malaprabha Co-operative Sugar Factory's case [1993] 200 ITR 417 have been dismissed by the Supreme Court. Special Leave Petition (Civil) No. 886 of 1984 (CIT v. Nawabganj Sugar Mills Ltd.) against the judgment of the High Court of Delhi was dismissed by the apex court declining to call for the statement of the case on the question whether the excess over the price of levy sugar realised by the assessee and held in the bank pending disposal of the writ petition filed by it against the fixation of levy sugar price (which was eventually dismissed) was income in the hands of the assessee. Mr. B.S. Gupta, senior advocate, appearing for the Revenue, cited two judgments of the Supreme Court in Chowringhee Sales Bureau P. Ltd. v. CIT [1973] 87 ITR 542 (SC) and U.P. State Agro Industrial Corporation v. CIT (Addl.) [1993] 201 ITR 707 (SC) and a judgment of the Allahabad High Court in CIT v. Kedar Nath Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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