LAWS(CAL)-1986-6-28

COMMISSIONER OF INCOME TAX Vs. BHARTIYA STEEL INDUSTRIES

Decided On June 02, 1986
COMMISSIONER OF INCOME-TAX Appellant
V/S
BHARTIYA STEEL INDUSTRIES Respondents

JUDGEMENT

(1.) M/s. Bhartiya Steel Industries, Calcutta, the assessee, is an association of persons. Under a contract dated January 22, 1966, the assessee was regularly supplying railway sleepers to the Railways including the Eastern and the Central Railways. Under the terms of the contract, the assessee was entitled to increase the price of the sleepers on the increase in the cost of pig iron, the main raw material required for the manufacture of sleepers. The assessee claimed escalation in price in respect of the sleepers supplied during the assessment years 1966-67 and 1967-68, the accounting years ending on the Ram Navami day of the financial years 1966 and 1967. The claim of the assessee was accepted by the Railways and the escalation in price for the sleepers supplied was fixed for the said two assessment years. The Railway Board asked the assessee to submit supplementary bills in respect of the escalation in price as fixed.

(2.) During the assessment year 1968-69, the relevant accounting period ending on April 6, 1968, the assessee had submitted its supplementary bills for its additional claim on account of escalation in price aggregating Rs. 2,02,309 in respect of the sleepers supplied between June 28, 1967, and August 18, 1967. In the meantime, on December 9, 1966, the Railway Board informed the assessee that on account of late supply of sleepers, the assessee's claim would be reduced by Rs. 2,26,106. The assessee lodged a protest on which the Railway Board reduced its counter-claim from Rs. 2,26,106 to Rs. 73,731.09, but the assessee was informed that if it did not accept the counter-claim of the Railways, the assessee would be required to take back the sleepers supplied and that the Railway Board would refuse to pass the supplementary bills of the assessee. Subsequently, on February 15, 1968, the Railway Board informed the assessee that the payments withheld by the Railways would be released after a dispute in respect of the quantity of sleepers supplied by the assessee was settled in arbitration.

(3.) Being aggrieved, the assessee moved this court on April 16, 1968, under Article 226 of the Constitution against the Railway Board. On November 2, 1968, the Railway Board agreed to pay the claim of the assessee on account of escalation of prices less Rs. 73,731.09 on condition that the assessee withdrew the writ petition. The Board's claim of Rs. 73,731.09 against the assessee was referred to the Arbitration Committee. An award was passed in the arbitration in favour of the assessee on May 8, 1970, whereby the Railways were directed to pay to the assessee Rs. 71,637.