BHARAT BHUSHAN JAIN Vs. ITO

JUDGEMENT

(1.) THIS is an appeal by assessed against the order of Commissioner (Appeals) relating to assessment year 1981 -82. The assessed has taken various grounds of appeal relating to sustenance of addition of Rs. 1,16,830, not deciding the issue of allowing interest under section 214 and not deleting the addition on account of charging of interest under section 215 and 216 of the Act.

(2.) THE ground relating to allowing the interest under section 214 was not decided by the Commissioner (Appeals). Therefore, this issue is restored back to the file of the Commissioner (Appeals) to decide the same, as the ground was taken before him. We order accordingly.

(3.) THE brief facts relating to confirming the addition of Rs. 1, 16,830, as stated in the order of Commissioner (Appeals), are that the assessed filed its return of income on 29 -8 -1981, declaring an income of Rs. 1,25,700. However, the original assessment was passed at income of Rs. 2,48,940. In the said order, the assessing officer had made the addition of Rs. 1,16,820 on account of income earned through agreement with M/s P.C. Chanda and Co. (P) Ltd. The facts are that P.C. Chanda and Co. owned a piece of land. This land was acquired by the Government and certain compensation was awarded to him. The compensation was also paid to it. The said company filed an application with the district court for enhancement of the compensation. The District Judge rejected the application of P.C. Chanda and Co. who was not interested in further litigation. However, it entered into an agreement with late Shri Prem Chand Jain through his benamidars. As per this agreement the assessed was required to incur an the expenses on further litigation and in the event of higher compensation being allowed by the higher Court, the assessed was to be paid Rs. 10,000 towards the cost of litigation expenses and a further sum of 45 per cent of the enhanced compensation. The assessed contested the appeal in the High Court and incurred certain expenses. The High Court was pleased to award higher compensation. The SLP was also filed by M/s P.C. Chanda and Co. for further enhancement. Even the State of Haryana filed the SLP before the Hon'ble Supreme Court. However, both the SLI's were dismissed by the Hon'ble Supreme Court. Thus, the order the Hon'ble High Court had become final. In accordance with the order of the Hon'ble High Court P.C. Chanda and Co. got the extra compensation. In terms of the agreement with the assessed, a sum of Rs. 1, 16,800 was paid to the assessed. The assessed claimed such receipt to be non -taxable. The reason advanced by the assessed was that the agreement of the assessed with P.C. Chanda and Co. was an illegal agreement and, Therefore, the income derived from such agreement cannot be brought to tax. It was also stated that the amount received by the assessed was gratis on which it has no right. Thus, this amount was not taxable. However, the assessing officer considered the submissions of the assessed and held that the amount received by the assessed was taxable. He accordingly brought the same to tax in the hands of the assessed.