Law:

Section:

Section 5 of the Income-tax Act, 1961 - Income - Accrual of - Assessment year 1997-98 - Assessee had entered into two agreements with a company for transportation of coal - Certain disputes arose between parties and, resultantly, said agreements were terminated and disputes were referred to arbitration - In terms of arbitration award, assessee was to receive certain sum - Company, however, preferred an appeal before High Court which admitted appeal and by an interim order directed company to deposit 50 per cent of award amount till decision of appeal - Assessee was permitted to withdraw deposited amount on furnishing security on condition that in event company would succeed in appeal filed by it, assessee would be obliged to return amount by way of restitution - Whether on facts, it could be held that amount had accrued to assessee as income in relevant previous year - Held, no FACTS The assessee-company had entered into two agreements with a company for transportation of coal. Certain disputes arose between the assessee and the company with the result that the agreements were terminated and the disputes were referred to arbitration. In terms of the arbitration award, the assessee was to receive certain sum. The company, however, challenged the award before the High Court which directed it to deposit 50 per cent of the award amount till decision of the appeal. The assessee was permitted to withdraw the deposited amount on furnishing security. The assessee withdrew the amount and showed same under the head 'current liabilities'. The assessment was, accordingly, completed under section 143(1). Subsequently, the assessment was reopened and the amount withdrawn by the assessee was treated as its income. On appeal, the Commissioner (Appeals) held that as in the event of the company succeeding in its plea before the High Court the assessee would be obliged to return amount received by it, the amount had not accrued to the assessee as income. The Tribunal upheld the order of the Commissioner (Appeals). HELD On a reading of the interim order passed by the High Court, it was quite clear that the assessee had no right to receive the money in the sense that no right had…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492