DIRECTOR OF INCOME TAX Vs. GOYAL CHARITABLE TRUST

JUDGEMENT

(1.) THIS reference application under S. 256(2) of the IT Act has been filed by the Revenue praying for a direction requiring the Tribunal to draw up a statement of the case and refer the following question said to be a question of law arising out of the combined order of the Tribunal in ITA No. 1874 and 2898/1987 relevant to the asst. yrs. 1983 -84 and 1984 -85 :

(2.) BRIEFLY stated, the facts of the case are that the assessee is a trust which came into existence under a deed of trust dt. 1st Sept., 1973. Shri Om Prakash Goel and Shri Hari Shankar Goel who were brothers owned certain lands which were acquired by the Government of Madhya Pradesh under the Land Acquisition Act and compensation was awarded by the Land Acquisition Collector. The compensation awarded by the Land Acquisition Collector was considered to be inadequate by the owners of the land and accordingly a reference being sought for was made to the First Addl. Judge, Gwalior for the enhancement of the compensation. The Addl. Judge enhanced the compensation against which an appeal was filed by the State Government before the High Court of Madhya Pradesh. In the said appeal, it appears that there was a difference of opinion between the two learned Judges hearing the appeal regarding the fixation of the quantum of compensation and the matter was referred to a third Judge for final decision.

(3.) THE assessee trust was made a party to the proceedings before the High Court in the appeal and the trust was allowed to withdraw the enhanced compensation deposited in the Court by furnishing a bank guarantee for the amount of compensation and future interest. In the previous year relevant to the asst. year 1983 -84, the assessee trust received an amount of Rs. 6,53,614 by way of interest on the compensation and the said amount was shown by the assessee as a liability in the balance sheet. Similarly for the asst. year 1984 -85 a sum of Rs. 38,913 was withdrawn by way of interest and this amount was also shown as liability. Although none of the aforesaid amounts was shown as income in the respective assessment years by the assessee the ITO while passing the orders of assessment held that the interest income of the assessee was income of the assessee trust and brought the same to tax in the respective assessment years. The assessee being aggrieved thereby filed an appeal before the CIT(A), who after considering the submissions made by the respective parties held that the interest on the compensation amount could not be brought to tax and accordingly deleted the addition made by the ITO. Appeal having been filed therefrom by the Revenue the Tribunal upheld the decision and the view taken by the CIT(A). Thereafter an application under S. 256(1) of the IT Act having been filed by the Revenue for requiring the Tribunal to draw up a statement of case and refer the aforesaid question to this Court for its opinion, the Tribunal dismissed the said application holding that no referable question of law arose out of the order of the Tribunal.