COMMISSIONER OF INCOME TAX Vs. NATIONAL BUILDERS

JUDGEMENT

(1.) THE petitioner seeks reference of the following questions to this Court :

(2.) AS is evident from the questions proposed, the assessee was a building contractor. A claim was raised before the arbitrator who awarded a certain sum of money in favour of the assessee, vide his award dt. August 15, 1977. The ITO as well as the CIT (A) held that this amount which was received pursuant to the award dated August 15, 1977, was taxable in the asst. year 1979 -80 by invoking the provisions of S. 41(1) of the IT Act. The assessee went up in appeal before the Tribunal. On behalf of the Revenue, two contentions were raised. The first was that S. 41(1) was applicable and the second contention raised was that even without invoking the provisions of S. 41(1), the amount received as a result of the award of the arbitrator was liable to be taxed in the asst. yr. 1979 -80. The Tribunal took note of the fact that the assessee had offered that the amount received could be spread over the asst. yrs. 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.

(3.) IN our opinion, question No. 1 proposed is clearly covered by the aforesaid decision of the Supreme Court in (supra). In view of the finding of the Tribunal that no amount had been allowed as expense in the earlier years, S. 41 ( 1 ) was not applicable. 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 assessee was liable to be taxed even de hors S. 41 (1) of the Act.