Delhi High Court
Commissioner Of Income-Tax vs National Builders on 22 January, 1991
Equivalent citations: [1991]192ITR250(DELHI)
Author: B.N. Kirpal
Bench: B.N. Kirpal
JUDGMENT
1. The petitioner seeks reference of the following question to this court :
"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the amount of additional receipt granted to the assessed-firm by the arbitrator, vide his award dated August 15, 1977, was taxable on due basis in respect of the assessment years 1972-73 to 1978-79 ?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the amount of additional receipt granted to the assessed-firm by the arbitrator was not taxable in the assessment year during which the amount had been awarded and quantified by the arbitrator ?"
2. As is evident from the questions proposed, the assessed was a building contractor. A claim was raised before the arbitrator who awarded a certain sum of money in favor of the assessed, vide his award dated August 15, 1977. The Income-tax Officer as well as the Commissioner of Income-tax (Appeals) held that this amount which was received pursuant to the award dated August 15, 1977, was taxable in the assessment year 1979-80 by invoking the provisions of section 41(1) of the Income-tax Act. The assessed went up in appeal before the Tribunal.
3. On behalf of the Revenue, two contentions were raised. The first was that section 41(1) was applicable and the second contention raised was that even without invoking the provisions of section 41(1), the amount received as a result of the award of the arbitrator was liable to be taxed in the assessment year 1979-80.
4. The Tribunal took note of the fact that the assessed had offered that the amount received could be spread over the assessment years 1972-73 to 1978-79. The Tribunal further found as a fact that the amount received had, in fact, never been allowed as a deduction earlier and there could be no correlation between the amount received and any expense which might have been incurred in the earlier years.
5. Following the decision of the Supreme Court in the case of Tirunelveli Motor Bus Service Co., Pvt. Ltd. v. CIT [1970] 78 ITR 55, the Tribunal came to the conclusion that section 41(1) was not applicable to the instant case. The Tribunal, however, did not allow the Revenue to contend that even de hors under section 41(1), the amount received was taxable as a revenue receipt. According to the Tribunal, as the Revenue had not filed an appeal or cross-objection, its locus standing before the Tribunal was to support the judgment either on the grounds decided in its favor or on the grounds decided against it. The Tribunal appears to have overlooked the principle that the Revenue could support the order on grounds other than what was urged before the first appellate court and, in any case, merely because a wrong provision of law is mentioned, it does not mean that if an income is assessable to tax under the Act, then mention of the wrong provisions will not mean that tax will not be leviable.
6. In our opinion, question No. 1 proposed is clearly covered by the aforesaid decision of the Supreme Court in [1970] 78 ITR 55. In view of the finding of the Tribunal that no amount had been allowed as expense in the earlier years, section 41(1) was not applicable.
7. Question No. 2, however, is a question of law especially in view of the fact that the Tribunal has decided, as a point of law, that the Revenue was not entitled to agitate that the assessed was liable to be taxed even de hors section 41(1) of the Act. Motor Motor Motor The question proposed is wide enough to include the said contention. In view, however, of the fact that these contention of the Revenue was not decided by the Tribunal on merits, we would reframe question No. 2 and direct the Tribunal, accordingly, to state the case and refer the following question to this court :
"Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the Revenue could not contend that the amount of Rs. 6,50,000 was taxable as income for the assessment year 1979-80 even without invoking the provisions of section 41(1) of the Act ?"
8. The petition stands disposed of No. order as to costs.