Fgp Ltd. Vs. Cit - Court Judgment

Excerpt:
- section 34: [d.k. deshmukh, s.j. vazifdar & j.p. devadhar, jj] court fee on petition under section 34 of the act bombay court fees act (36 of 1959), schedule i, article 3, schedule ii, article 1(f)(iii) held, according to article 3 of schedule i, on any plaint, application or petition or memorandum of appeal for setting aside or modifying an award, same court fee is payable as is payable on a plaint or memorandum of appeal under article 1. thus, when an award is challenged by a plaint, application, petition or memorandum of appeal, court fee is payable on ad valorem basis. but from this requirement of payment of court fee on ad valorem basis, article 3 excludes an application or petition or memorandum of appeal filed in civil or revenue court challenging any award made under the arbitration act, 1940.thus, the provisions of article 3 of schedule 1 do not apply when an application is filed or appeal is filed challenging an award made under the arbitration act, 1940. thus the provisions of article 3 of schedule i do not apply when an application is filed challenging an award made under the arbitration act, 1940. the question, therefore, that arises for consideration is whether reference to the provisions of 1940 act found in article 3 of schedule i of the bombay court fees act can be said to include reference to the 1996 act. perusal of the provisions of section 8 of general clauses act shows that where by a central enactment any provision of a former enactment is repealed and re-enacted with or without modification then reference in any other enactment to the provisions so repealed shall, unless a different intention appears, be construed as references to the provisions so re-enacted. in the present case, it is common ground that the former enactment is the 1940 act, the new enactment is the 1996 act and any other enactment is the bombay court fees act, the only provision of the 1940 act referred to in article 3 of schedule 1 of the bombay court fees act is the provisions of section 33 of the 1940act and bare comparison of that provision with the provisions of sub-section (1) of section 34 of the 1996 act shows that the provision of section 33 of 1940 act is repealed and re-enacted in sub-section (1) of section 34 of the 1996 act with slight modification. therefore, reference to the provisions of section 33 of the 1940 act in article 3 of schedule-i of the bombay court fees act has to be construed, in view of the provisions of section 8 of the general clauses act, as reference to the provisions of section 34 of the 1996 act. so far as an appeal filed under section 37 of the 1996 act is concerned, perusal of section 37 shows that an appeal is provided to the appellate court against an order setting aside an arbitral award or refusing to set aside an arbitral award under section 34. thus, as the provisions of article 3 of schedule-i do not apply to an application or petition filed under section 34 of the 1996 act, they will also not apply to the memorandum of appeal filed to set aside or modify an award made by the arbitrator under the 1996 act. in other words nothing contained in article 3 of schedule-i of the bombay court fees act applies to an application, petition or memorandum of appeal to set aside or modify any award made under the 1996 act as it does not apply to an application or petition or memorandum of appeal to set aside or modify an award made under the arbitration act, 1940. perusal of the provisions of section 8 of the general clauses act shows that references in any other enactment to a provision in a former enactment is to be construed as reference to re-enacted provision in the new enactment unless a different intention appears. the different intention may appear either in the new enactment or in the other enactment. nothing was pointed out either in the 1996 act or in the bombay court fees act which can be construed as a different intention or which will show that it was not the intention of the maharashtra legislature to exclude an application or petition or memorandum of appeal filed in court to set aside or modify an award made under the 1996 act, from the provisions of article 3 of schedule-i of the bombay court fees act. it appears that the intention behind excluding an application made, challenging the award made under the 1940 act, from requirement of payment of ad valorem court fee which is required to be paid if the same litigant filed a suit on the same subject matter, was to encourage a litigant to go for arbitration instead of filing a suit. nothing has been pointed out to show that ther4e is any change in that legislative policy. on the contrary, from the preamble of the 1996 act it is clear that the policy of the legislature is to encourage people to adopt the mode of arbitration for resolving disputes. article 3 of schedule-i of the bombay court fees act does not apply to a petition, application or memorandum of appeal filed for challenging an award made under the 1996 act, and court fee on a petition filed under section 34 of the 1996 act challenging an award in high court is payable according to article 1(f)(iii) of schedule ii. section 37: [d.k. deshmukh, s.j. vazifdar & j.p. devadhar, jj] court fee on appeal under section 37 of the arbitration & conciliation act, 1996 - held, court fee is payable according to article 13 of schedule ii of the bombay court fees act. schedule i, article 3 & schedule ii, article 1(f)(iii): [d.k. deshmukh, s.j. vazifdar & j.p. devadhar, jj] court fee on petition under section 34 of the arbitration & conciliation act, 1996 - held, when a petition under section 34 is to be filed before a principal civil court of original jurisdiction which is not a high court, the question arises which article of either first schedule or second schedule would apply. in so far as the challenge to an award made under the 1940 act is concerned, an application under section 33 of that act could be made to a civil court and therefore, payment of court fee was governed by article 1(a) of schedule ii. this was so because the application was to be presented to the court of civil judge which was not a principal civil court of original jurisdiction. but now because of change of definition of term court in the 1996 act, a petition has to be presented, challenging an award made under the 1996 act in terms of the provisions of section 34 thereof, before the principal civil court of original jurisdiction. no entry either in the first schedule or in the second schedule was pointed out which applies to an application or petition to be made before the principal civil court of original jurisdiction, and therefore, when a litigant wants to file petition before a principal civil court having original jurisdiction which is not high court, challenging an award made under the 1996 act, no court fee under bombay court fees act is payable because of absence of a general or specific provision. therefore, it can be said that no court fee under the bombay court fees act is payable when a petition under section 34 challenging an award is filed before any principal civil court of original jurisdiction which is not high court. schedule ii, article 13: [d.k. deshmukh, s.j. vazifdar & j.p. devadhar, jj] court fee on appeal under section 37 of the arbitration & conciliation act, 1996 - held, court fee is payable according to article 13 of schedule ii of the bombay court fees act.f.i. rebello, j.1. admit on the following questions:(1) whether on the facts and in the circumstances of the case and in law, the tribunal was right in coming to the conclusion that: the royalty of rs. 1.35 crores accrued to the appellant during the year in question.(2) in view of the principles laid down in the decision of this hon'ble high court in the case of cit v. smt vimla d. sonwane and ors. : [1995]212itr489(bom) and the supreme court decision in the case of godhra electricity co. ltd. v. cit : [1997]225itr746(sc) , whether on the facts and in the circumstances of the case and in law, the tribunal was justified in coming to its impugned conclusion.(3) on the facts and in the circumstances of the case and in law, whether the tribunal was justified in coming to the conclusion that impugned royalty accrued to the appellant even though upt, the party from whom the said amount is due had filed a suit in this hon'ble court denying its liability to make any payment under the said agreement.2. the assessee had a royalty agreement with m/s up twiga fibre glass ltd. (upt) under which certain amounts were payable to the assessee. the record would, however, indicate that no income has been received by the appellant till date pursuant to the royalty agreement as there is dispute between the parties and arbitration proceedings are being proceeded with. it is pointed out that when the parties have been referred to arbitration pursuant to suit filed by upt before this court, seeking relief that no amount was due and payable by them to the assessee herein.3. the learned commissioner had held in favour of the appellant that no real income had accrued in favour of the assessee relying on the judgment in godhra electricity co. ltd. v. cit : [1997]225itr746(sc) . the revenue aggrieved, preferred an appeal. the assessee relied on the judgment of the supreme court in godhra electricity co. ltd. v. cit (supra). the tribunal distinguished the said judgment on the ground that on the facts it was not applicable and consequently allowed the appeal preferred by the revenue by holding that once the assessee adopted the mercantile system even if the amount is not received, it will be taxable in assessment year for which it was payable. hence, the present appeal.4. the apex court in godhra electricity co. ltd. (supra) has laid down the test to assess income in the hands of an assessee. the assessee therein was also following the mercantile system of accounting and had made entries in the books regarding electrical charges for the supply made to the consumers, however, no real income had accrued to the assessee company. the tribunal had held that it represented hypothetical income and the assessing officer was not right in assessing it to tax. before the supreme court it was urged that even in case of mercantile system of accounting, tax can only be imposed if there is real income and income-tax cannot be imposed on hypothetical income. the court held even in mercantile system what has to be seen is whether income can be said to have really accrued to the assessee company. the court referred to the judgment of the court in h.m. kashiparekh & co. ltd. v. cit : [1960]39itr706(bom) which view was approved by the supreme court in cit v. birla gwalior (p) ltd. : [1973]89itr266(sc) . what can therefore, be assessed is real income as income-tax is a tax on income. the test therefore, before income can be taxed is whether there is real accrual of income. in our opinion, the ratio of that judgment fully applies to the facts of the present case.5. in the instant case, there is no real accrual of income. there is dispute between the parties for the relevant assessment year which was pending in arbitration. it is only on the arbitral proceedings coming to an end and award being passed and income received by the assessee, will it be liable to be assessed.considering the above, question nos. 1, 2 and 3 are answered against the revenue. appeal accordingly allowed.