Smt. Madhu JaIn Vs. Income Tax Officer. - Court Judgment

Excerpt:
- - kunhi (1969) 71 itr 815 he submitted that in view of the above the assessed has strong prima facie case. she submitted that the authorities have clearly distinguished the supreme court decision (supra) and, thereforee, on facts the supreme court decision would not apply.ordera. kalyanasundharam, a.m. :the assessed an individual has filed the application for stay of demand of rs. 13,76,343 representing tax and interest.2. shri r. santhanam, appearing for the assessed, submitted that the assessed had purchased certain rights in regard to the land acquisition in 1971. the land was acquired by the u.p. state govt. on 18th of june, 1971. the assessed having stepped into the shoes of the owner by purchasing of his rights of claim, had raised the issue of enhancement in the compensation. the u.p. awas evam vikas parishad tribunal, agra, vide its order dt. 5th june, 1987, had awarded the assessed enhancement in regard to the market value of this land which was acquired compensation for trees, solarium on the market value of the land, interest under s. 28 of the land acquisition act, interest under s. 4(3) of the land acquisition act, interest under s. 34 of the land acquisition act and also damages under s. 40a of the land acquisition act. the assessed had purchased the right of claim along with her sister smt. ritu and thereby the assessed and mrs. ritu became entitled to 50 per cent each on the enhancement of the compensation awarded by the tribunal. the share that fell to the assessed was rs. 25,24,360. out of the said enhancement awarded by the tribunal, the assessed in the financial year ending on march, 1989 had received rs. 15 lakhs. the state of u.p. had filed appeal against the order of the u.p. awas evam vikas parishad to the hon able allahabad high court, which is pending. the assessed, thereforee, on these facts mentioned all these facts in its return of income and has stated that in view of no finality having been reached in regard to the enhancement so awarded by the tribunal, rs. 15 lakhs so received in the financial year, is not the income of the year. the assessed also brought to the notice of the assessing officer that the decision of the supreme court in cit vs . hindustan housing and land development trust ltd. : [1986]161itr524(sc) , which had dealt with the identical aspect of the enhancement of compensation or the additional compensation especially with reference to the point of accrual as income. he submitted that the authorities below were of the view that the case of the supreme court (supra) was distinguishable for the reason that (a) that was a case of company while the assessed is an individual, and (b) the system of accounting followed by that company was mercantile while the assessed was following cash basis of accounting. he pleaded that the authorities have not disputed the fact that the enhanced compensation so awarded by the tribunal has not yet become finalised because of state of u.p. having filed the appeal to the hon able allahabad high court. shri r. santhanam submitted that the delhi bench of the tribunal in shiv prasad singhal vs. ito (1986) 25 ttj 308 , the third member had on an identical aspect of the issue in the concluding paragraphs as observed that the system of accounting followed by the assessed is of no importance as it is only for the purpose of computing the income. he submitted that the third member has further observed that the right to receive enhanced compensation must accrue to the assessed and than only the amount shall be liable to tax. he cited the following decisions which are on identical aspect.1. cit vs . hindustan housing & land development trust ltd. : [1986]161itr524(sc) 2. topan das kundanmal vs . cit : [1978]114itr237(guj) 3. harish chandra & ors. vs. cit (1985) 154 itr 478 4. shah vrijlal madhavji vs . cit : [1974]95itr614(ker) 5. cit vs. bharat iron & steel industries (1992) 105 ctr 3316. shiv prashad singhal vs. ito (1986) 25 ttj 3087. jehangir p. vazifdar vs. ito (1992) 42 itd 67 (bom)8. asstt. cit vs. upper ganges & sugar industries ltd. (1992) 40 itd 614 (cal)9. orkay silk mills & anr. vs . m. s. bindra & ors. : 1988(33)elt48(bom) 10. ito vs. mohd. kunhi (1969) 71 itr 815 he submitted that in view of the above the assessed has strong prima facie case. on the question of financial position of the assessed, he submitted a trial balance as of 9th nov., 1992. shri santhanam submitted that this trial balance indicates that the amounts so received as per the order of the tribunal relating to land acquisition matter, the assessed had placed them in deposits with several persons and does not possess any liquid cash. he submitted that the prayer of the assessed is for grant of interim stay and that the appeal may be taken up out of turn at the earliest because he was of the view that the case of the assessed was squarely covered by the supreme court decision in hindustan housing & land development trust ltd. (supra)3. smt. surbhi sinha, appearing for the department, strongly protested to the application moved by the assessed. she submitted that the authorities have clearly distinguished the supreme court decision (supra) and, thereforee, on facts the supreme court decision would not apply. she, thereforee, pleaded that the prima facie case has not been established by the assessed. she submitted that the financial position as indicated by the assessed of the amounts having been deposited with various persons is not of any relevance when it comes to payment of taxes that are due as per the assessment. she submitted that the stay should not be granted and if the stay is to be granted than the assessed must be directed to provide adequate security.4. the rival submissions in regard to the application of stay has been very carefully considered. the concept for stay requires prima facie case, the financial position of the appellant and the balance of convenience. without expressing any view on the merits of the issue and also considering that most of the amounts are in deposits with various firms. we are of the view that the appeal should be heard out of turn and accordingly the appeal is fixed for hearing on 5th jan., 1993. interim stay is granted on the demands so raised of rs. 13,76,343 till the disposal of the appeal by the tribunal. in case, the assessed seeks adjournment on that day, the interim stay shall stand automatically vacated and the appeal would also lose its priority character and would come up for hearing in its normal course. the order shall be served by dusty.

Judgment:
ORDER

A. KALYANASUNDHARAM, A.M. :

The assessed an individual has filed the application for stay of demand of Rs. 13,76,343 representing tax and interest.

2. Shri R. Santhanam, appearing for the assessed, submitted that the assessed had purchased certain rights in regard to the land acquisition in 1971. The land was acquired by the U.P. State Govt. on 18th of June, 1971. The assessed having stepped into the shoes of the owner by purchasing of his rights of claim, had raised the issue of enhancement in the compensation. The U.P. Awas Evam Vikas Parishad Tribunal, Agra, vide its order dt. 5th June, 1987, had awarded the assessed enhancement in regard to the market value of this land which was acquired compensation for trees, solarium on the market value of the land, interest under S. 28 of the land acquisition Act, interest under S. 4(3) of the Land Acquisition Act, interest under S. 34 of the Land Acquisition Act and also damages under S. 40A of the Land Acquisition Act. The assessed had purchased the right of claim along with her sister Smt. Ritu and thereby the assessed and Mrs. Ritu became entitled to 50 per cent each on the enhancement of the compensation awarded by the Tribunal. The share that fell to the assessed was Rs. 25,24,360. Out of the said enhancement awarded by the Tribunal, the assessed in the financial year ending on March, 1989 had received Rs. 15 lakhs. The State of U.P. had filed appeal against the order of the U.P. Awas Evam Vikas Parishad to the Hon able Allahabad High Court, which is pending. The assessed, thereforee, on these facts mentioned all these facts in its return of income and has stated that in view of no finality having been reached in regard to the enhancement so awarded by the Tribunal, Rs. 15 lakhs so received in the financial year, is not the income of the year. The assessed also brought to the notice of the Assessing Officer that the decision of the Supreme Court in CIT vs . Hindustan Housing and Land Development Trust Ltd. : [1986]161ITR524(SC) , which had dealt with the identical aspect of the enhancement of compensation or the additional compensation especially with reference to the point of accrual as income. He submitted that the authorities below were of the view that the case of the Supreme Court (supra) was distinguishable for the reason that (a) that was a case of company while the assessed is an individual, and (b) the system of accounting followed by that company was mercantile while the assessed was following cash basis of accounting. He pleaded that the authorities have not disputed the fact that the enhanced compensation so awarded by the Tribunal has not yet become finalised because of State of U.P. having filed the appeal to the Hon able Allahabad High Court. Shri R. Santhanam submitted that the Delhi Bench of the Tribunal in Shiv Prasad Singhal vs. ITO (1986) 25 TTJ 308 , the Third Member had on an identical aspect of the issue in the concluding paragraphs as observed that the system of accounting followed by the assessed is of no importance as it is only for the purpose of computing the income. He submitted that the Third Member has further observed that the right to receive enhanced compensation must accrue to the assessed and than only the amount shall be liable to tax. He cited the following decisions which are on identical aspect.

1. CIT vs . Hindustan Housing & Land Development Trust Ltd. : [1986]161ITR524(SC)

2. Topan Das Kundanmal vs . CIT : [1978]114ITR237(Guj)

3. Harish Chandra & Ors. vs. CIT (1985) 154 ITR 478

4. Shah Vrijlal Madhavji vs . CIT : [1974]95ITR614(Ker)

5. CIT vs. Bharat Iron & Steel Industries (1992) 105 CTR 331

6. Shiv Prashad Singhal vs. ITO (1986) 25 TTJ 308

7. Jehangir P. Vazifdar vs. ITO (1992) 42 ITD 67 (Bom)

8. Asstt. CIT vs. Upper Ganges & Sugar Industries Ltd. (1992) 40 ITD 614 (Cal)

9. Orkay Silk Mills & Anr. vs . M. S. Bindra & Ors. : 1988(33)ELT48(Bom)

10. ITO vs. Mohd. Kunhi (1969) 71 ITR 815

He submitted that in view of the above the assessed has strong prima facie case. On the question of financial position of the assessed, he submitted a trial balance as of 9th Nov., 1992. Shri Santhanam submitted that this trial balance indicates that the amounts so received as per the order of the Tribunal relating to land acquisition matter, the assessed had placed them in deposits with several persons and does not possess any liquid cash. He submitted that the prayer of the assessed is for grant of interim stay and that the appeal may be taken up out of turn at the earliest because he was of the view that the case of the assessed was squarely covered by the Supreme Court decision in Hindustan Housing & Land Development Trust Ltd. (supra)

3. Smt. Surbhi Sinha, appearing for the Department, strongly protested to the application moved by the assessed. She submitted that the authorities have clearly distinguished the Supreme Court decision (supra) and, thereforee, on facts the Supreme Court decision would not apply. She, thereforee, pleaded that the prima facie case has not been established by the assessed. She submitted that the financial position as indicated by the assessed of the amounts having been deposited with various persons is not of any relevance when it comes to payment of taxes that are due as per the assessment. She submitted that the stay should not be granted and if the stay is to be granted than the assessed must be directed to provide adequate security.

4. The rival submissions in regard to the application of stay has been very carefully considered. The concept for stay requires prima facie case, the financial position of the appellant and the balance of convenience. Without expressing any view on the merits of the issue and also considering that most of the amounts are in deposits with various firms. We are of the view that the appeal should be heard out of turn and accordingly the appeal is fixed for hearing on 5th Jan., 1993. Interim stay is granted on the demands so raised of Rs. 13,76,343 till the disposal of the appeal by the Tribunal. In case, the assessed seeks adjournment on that day, the interim stay shall stand automatically vacated and the appeal would also lose its priority character and would come up for hearing in its normal course. The order shall be served by dusty.