B.P. Saraf, J.
1. By this reference under Section 256(1) of the Income-tax Act, 1961, at the instance of the Revenue, the Income-tax Appellate Tribunal has referred the following question of law to this court for opinion :
'Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal has rightly held that the amounts of Rs. 6,36,683 and Rs. 18,29,353 are not assessable as its income for the assessment years 1975-76 and 1976-77, respectively ?'
2. The assessee is a sugar factory engaged in the business of manufacture and sale of sugar. The Government of India, by notification dated November 20, 1973, issued under the Sugar (Price) Determination Order, 1973, fixed the price of levy sugar of D-29 grade at Rs. 153.39 per quintal inclusive of excise duty. By another notification dated December 14, 1973, the Government of India revised the price and fixed the same at Rs. 155.30 per quintal. Aggrieved by these notifications, the assessee filed a writ petition in the Allahabad High Court challenging the Sugar (Price) Determination Order, 1973. The Allahabad High Court passed an interim order. Pursuant to the said order, the assessee was allowed to realise Rs. 18.38 per quintal of levy sugar in excess of the price fixed by the notification issued by the Central Government. The assessee collected Rs. 6,36,683 and Rs. 18,29,353 in the previous years relevant to the assessment years 1975-76 and 1976-77, respectively, by way of additional price of levy sugar at Rs. 18.38 per quintal pursuant to the above order. The High Court allowed the assessee to retain these amounts as deposits pending the final decision in the writ petition subject to the assessee furnishing a bank guarantee in respect thereof. In October, 1976, the writ petition of the assessee was dismissed by the Allahabad High Court. Consequently, the interim order was also vacated and the assessee was directed to refund the excess amount realised by it along with interest to the Food Corporation of India. Against that order, the assessee appealed to the Supreme Court. The Supreme Court admitted the appeal of the assessee and passed an interim order. In the meantime, the Government of India enacted the Levy Sugar Price Equalisation Fund Act, 1976. According to this enactment, the amounts realised in excess of levy prices were required to be credited to the aforesaid fund. In exercise of powers under the above Act, the assessee was directed by the Ministry of Agriculture and Irrigation, Government of India, vide its letter dated March 27, 1976, to deposit the excess amount realised by it with the fund. The assessee, however, did not deposit the said amount with the fund and the amount in question continued to remain with the assessee. In the assessment of the assessee for the assessment years 1975-76 and 1976-77, the Income-tax Officer treated the amount of excess collection made by the assessee during the previous years relevant to the above assessment years as income of the assessee and assessed the same in the hands of the assessee in the assessments for those years. The assessee appealed to the Commissioner of Income-tax (Appeals) against the above orders. The Commissioner of Income-tax (Appeals), following the decision of the Income-tax Appellate Tribunal ('the Tribunal') in the case of Hindustan Sugar Mills Ltd. for the assessment year 1973-74 wherein the Tribunal had held that such amount was not income of the assessee, deleted the additions made by the Income-tax Officer. The appeals of the Revenue against the above order were dismissed by the Tribunal. Hence, this reference.
3. We have heard Ms. Vasanti Patel, learned counsel for the assessee, who submits that the controversy in this question stands concluded by the decision of this court in CIT v. Seksaria Biswan Sugar Factory P. Ltd. : [1992]195ITR778(Bom) . Our attention was drawn to the decision of this court dated April 4, 1994, in the case of CIT v. Hindustan Sugar Mills Ltd., wherein following the above decision, an identical question has been answered by this court in favour of the assessee.
4. We have perused the decision of this court in CIT v. Seksaria Biswan Sugar Factory P. Ltd. : [1992]195ITR778(Bom) . In that case, this court was confronted with an identical controversy. On a careful consideration of the facts and circumstances of the case, this court held (page 781) :
'What has happened in this case is that the assessee was permitted to collect the amount in question only pursuant to an interim order made by the court which was subject to several conditions to make the right absolute. Therefore, the collection made by the assessee at an enhanced rate at that stage was an inchoate one as this extra amount did not accrue to the assessee until the finalisation of the dispute pending before the court.'
5. While arriving at the above finding, reliance was also placed on the decision of the Supreme Court in CIT v. Hindustan Housing and Land Development Trust Ltd. : [1986]161ITR524(SC) . The decision of this court in CIT v. Seksaria Biswan Sugar Factory P. Ltd. : [1992]195ITR778(Bom) was followed in CIT v. Hindustan Sugar Mills Ltd. In the case before us, the Tribunal has followed its own decision in CIT v. Hindustan Sugar Mitts Ltd. which now stands confirmed by the opinion of this court in the cases cited above.
6. We have also perused the decision of the Andhra Pradesh High Court in CIT v. Chodavaram Co-operative Sugars Ltd. : [1987]163ITR420(AP) . As in the present case, in that case too the controversy was whether collection made by the assessee in excess of the price fixed by the Government pursuant to the interim order of the Supreme Court could be regarded as trading receipt of the assessee. The Andhra Pradesh High Court held that the amount did not partake of the nature of a trading receipt and on that ground itself the amount fell to be excluded from the total income of the assessee. It was observed (page 424) :
'. . . the right to collect the amount in excess of the price fixed by the Control Order was saddled with the obligation to deposit the amount in a separate account and the assessee is always held accountable for the excess collection, pending decision of the Supreme Court. The provisions of the Levy Sugar Price Equalisation Fund Act, 1976, clearly imposed an obligation on the assessee to repay the money to the constituents whether the excess price was collected before or after the commencement of the Act. Thus the assessee did not collect the excess sale price as part of its trading receipt.'
7. An identical controversy came up before the Karnataka High Court in CIT v. Mysore Sugar Co. Ltd. : [1990]183ITR113(KAR) . In that case also the dispute was whether the amount collected by the assessee pursuant to the interim orders of the High Court over and above the price of sugar fixed by the Government could be treated as the income of the assessee. The Karnataka High Court held that it did not form part of the turnover of the assessee and was not liable to tax. It was observed (page 118) :
'. . . in the present case, what has happened is that the assessee was permitted to collect the amount in question only pursuant to the interim order made by the court which was subject to several conditions to make the right absolute and, therefore, the collection made by the assessee at an enhanced rate is an inchoate one as this extra amount did not accrue to the assessee until the finalisation of the dispute pending before one court or the other. It is only on the final determination of the amount that the right to such income in the nature of levy price would arise or accrue and till then there is no liability in praesenti in respect of the additional amount of price claimed by the assessee. Therefore, these cases fall within the scope of the first class of cases noticed by the Supreme Court in Hindustan Housing and Land Development Trust Ltd.'s case : [1986]161ITR524(SC) , where it was held that where the right to receive payment is in dispute and it is not merely a question of quantifying the amount to be received, no income would arise or accrue till the levy price is finally fixed.'
8. The law is thus well-settled that where the right to receive payment is in dispute, no income will arise or accrue. In the present case, admittedly, the amounts in question were collected and retained by the assessee as deposits pending the final decision of the writ petition by the Allahabad High Court pursuant to the interim order of that court and that too subject to furnishing a bank guarantee in respect thereof. There was a serious dispute about the right of the assessee to receive the amount collected by the assessee. In other words, the right to receive the amount was inchoate or contingent. The extra amount did not accrue to the assessee until the finalisation of the dispute pending in the court in favour of the assessee. The assessee was accountable for the excess collection and obliged to refund the same if so directed by the court. Such amounts collected by the assessee are not assessable as the income of the assessee. In that view of the matter, in our opinion, the Tribunal was right in coming to the conclusion that the amounts in question were not assessable in the hands of the assessee in the assessment years under consideration.
9. In the premises, we answer the question referred to us in the affirmative, i.e., in favour of the assessee and against the Revenue.
10. The reference stands disposed of accordingly with no order as to costs.