TMI Blog2016 (3) TMI 1457X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee which is pending for disposal. Assessee s appeal is allowed for statistical purposes only. - ITA No. 329/JP/2015 - - - Dated:- 18-3-2016 - Shri T.R. Meena, AM And Shri Laliet Kumar, JM For the Assessee : Shri Siddartha Ranka Shri M. Iqbal (Adv). For the Revenue : Shri P.R. Meena (JCIT). ORDER PER T.R. MEENA, A.M. This is an appeal filed by the assessee against the order dated 28/01/2015 of the learned C.I.T., Kota for A.Y. 2004-05. The effective grounds of appeal are as under:- 1. That on the facts and in the circumstances of the case, the learned appellate authority grossly erred in confirming the addition of Rs. 465,212/- by holding that the entire amount of arbitration award and interest received thereon is to be taxed as income during the year under consideration and not the net income of Rs. 53,561/- being the profit rate @ 8.57% resulting out of it which was already offered to taxation by the assessee appellant. 1.1 That on the facts and in the circumstances of the case, the learned lower authorities grossly erred in subjecting to tax the contract works amounting to Rs. 136,983/- as taxable income during the year under co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per direction of the Hon ble ITAT, the ld Assessing Officer again completed the set aside proceedings and provided a reasonable opportunity of being heard to the assessee, which was availed by him. The assessee s reply has been reproduced by the Assessing Officer on page No. 2 of the assessment order. After considering the assessee s reply, the ld Assessing Officer has held that the assessee had failed to discharge his onus of producing evidence in his own case. If the assessee claimed that the expenses relating to the awards were not claimed in the A.Y. 1993-94 then he should produce separate account of such expenses not claimed. Further the assessee had contested arbitration matter till August, 2003. Hence he should have been in possession of the relevant documents and accounts. Thus, the assessee had failed to identify the specific expenses related this award. In absence of any evidence, it is concluded that the assessee had already debited the entire expenses related to receipts of Rs. 6,24,983/- in the P L account for A.Y. 1993-94 itself. Hence, in the relevant A.Y. 2004-05, the assessee cannot take benefit of such expenses by adopting the profit rate on these receipts. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meet the ends of justice, we remand the matter to the file of the AO to verify as to whether the expenses incurred by the assessee relating to the award related to assessment year 1993-94 received during the year had already been claimed in the assessment year 1993- 94 or not and if the AO finds that the expenses relating to above receipt were not claimed during the assessment year 1993-94, then in such a situation he is directed to delete the addition of Rs. 5,71,422/-. It is needless to mention over here that while deciding the issue afresh in view of his verification on the claim of expenses as discussed above, the AO will afford adequate opportunity of being heard to the assessee. The ground no. 4 is thus allowed for statistical purposes. He has drawn our attention on page Nos. 27 to 43 of the paper book that the award was approved on 30/10/2000 for Rs. 5,29,036/-, which was payable within the three months from the date of award. Thereafter, it is liable to be paid simple interest of 18% till date of payment or date of decree, whichever is earlier. The assessee received Rs. 6,24,983/- in A.Y. 2004-05 and balance amount of Rs. 1,40,514/- was received in A.Y. 2006- 07. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the assessee or certain percentage on award is to be assessed income of the assessee. He has further argued that various courts have been considered this issue particularly in the case of CIT Vs Govinda Choudhary Sons (1994) 74 Taxman 331 (SC) wherein it has been held that amount received on account of arbitration award following a dispute in relation to a work contract executed by the assessee, an amount of Rs. 2,77,692/- was awarded as interest to the assessee. The amount of interest was attributable to and incidental to business carried on by assessee and was, thus assessable as business income-Held, yes. The Hon ble Kerala High Court in the case of CIT Vs N.C. Kaladharan order dated 31/01/2008 passed in ITA No. 180 of 2002 has held that the question raised is whether the estimation of income at 10% as fixed by the CIT(Appeals) and confirmed by the Tribunal applies to interest element of the award amount. According to the Revenue, interest is entirely taxable. However, the Hon'ble Kerala High Court found that the issue is covered by the Hon'ble Supreme Court decision in the case of CIT Vs. Govinda Choudhury and sons (2003 ITR 881), therefore, the revenue s a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arbitration award pertained to a period ranging to six years, entire amount of interest could not be assessee in year of the receipt inasmuch as interest income accrued from year to year and Held yes. Finally he argued that full amount should not be added. He has further drawn our attention page No. 54 of the paper book wherein copy of P L account year ending 31/3/1993 has been placed on record and argued that the assessee has debited work expenses of Rs. 39,97,074/- on account of work contract. The assessee was not in position to demonstrate that whether full expenses related to award amount has been debited or not, the matter is very old. Therefore, it is difficult to prove the direction given by the Hon ble Bench vide order dated 30/3/2008 for A.Y. 2004-05. A reasonable percentage has already disclosed by the assessee on all the contract amount. Thus, addition confirmed by the ld CIT(A) may please be deleted. 5. At the outset, the ld DR has vehemently supported the order of the ld CIT(A) and argued that the assessee was not able to prove whether the expenses relating to award amount has not been debited. Therefore, full amount is to be taxed in the year under consideration. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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