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23. As we have heard both the parties at length on the other propositions, wherein they have cited a number of case laws, we consider the same and give our findings as under.

24. In the case of All India Reported Ltd. vs. Ramchandra D. Datar (supra) the Hon'ble Court was considering the case of an employee, who obtained compensation for wrongful termination of employment, arrears of salary and interest and the Court had passed a decree. The Court held that under the scheme of the Civil Procedure Code, the decree had to be executed as it stood subject to the deduction or adjustment as were permissible under the Civil Procedure Code. It further held that there was no tax liability to which the respondent was assessed to pay, in respect of the amount of the decree. As between the company and the respondent the amount did not represent salary :

27. The learned counsel further relied on the decision of the Hon'ble Calcutta High court in the case of Saroj Kumar Mahashwari vs. Hindusthan Motors Ltd. & others reported in 154 ITR 363. In this case, the Hon'ble Calcutta High court followed the judgment of the Hon'ble Supreme Court in the case of All India Reporter vs. Ramchandra D. Datar. For the reasons given by us, while holding that the decision in the case of All India Reporter (supra) does not come to the rescue of the assessee, we have to necessarily hold that this decision in the case of Saroj Kumar Maheshwari also does not come to the rescue of the assessee. In this case of Saroj Kumar Maheshwari it is held that the compensation payable for wrongful termination of employment as merged with the decree of a Court and the claim assumed the character of the judgment debt. In the case on hand the award has not merged with the decree of any Court as contemplated in the Civil Procedure Code, for being termed as a judgmental debt.

43. Coming to the last issue of grossing up, we uphold the order of the first appellate authority that the present case falls under the category "other arrangement" as occurring u/s 195A. We have already rejected the argument that this "Award" is a judgment debt and hence consequentially the arguments that this is an obligation under law and thus cannot be termed as "other arrangement", is to be rejected.

44. At this stage at the cost of repetition, we feel it appropriate to recapitulate the facts of the case briefly, so as to understand the peculiar position in which the assessee was placed. The assessee had taken three Air Crafts on wetlease from M/s Caribjet Inc. in December, 1995, It terminated the lease in September, 1996. Caribjet disputed the termination and the matter was referred to Arbitration under the UNCITRAL RULES which is governed by English Laws. The Arbitrators held that the termination of wetlease was wrong and awarded termination losses to Caribjet. On appeal, the London Commercial Court rejected the appeal of Air India. The assessee sought permission from Reserve Bank and also applied u/s 195 to Income-tax authorities for remitting the amount. The Income-tax Department directed the assessee to remit the entire amount of US$ 2,36,35,251 into Government Treasury, in an order u/s 195(2). The assessee approached the Court of Appeal in London for being permitted to deduct the tax from the award amount. Caribjet opposed the same on various grounds. Pending stay, the assessee was directed by the Court of Appeals in London to remit the amount in the Escrow account maintained in the names of Solicitors of both the parties. Subject to the remittance they referred the dispute to the same Tribunal which determined the quantum damages. The Income-tax Department was informed and RBI permission taken and the amount was remitted to Escrow account. The reason for the same was that the assessee had assets in England and there was a serious risk of attachment of its overseas assets which would seriously affect the financial credibility of the assessee. The assessee took two senior officials of the Income-tax Department to London ,in order to observe the hearings and to assist them before the Tribunal, on the issue of deducting tax at source. The Tribunal in a majority decision had held that no tax can be deducted at source from the arbitration award. The assessee carried the matter in appeal and the Commercial Court in England held that the majority decision was not "obviously wrong" and dismissed the appeal. The Caribjet withdrew the amount from the Escrow account.