CIT vs. NATIONAL FERTILIZERS LTD

IN THE HIGH COURT OF DELHI AT NEW DELHI . . . ITA 541/2012 . . . CIT ..... Appellant . Through Mr. Sanjeev Sabharwal, Advocate . . . versus . . . NATIONAL FERTILIZERS LTD. ..... Respondent . Through None . CORAM: . HON'BLE MR. JUSTICE S. RAVINDRA BHAT . HON'BLE MR. JUSTICE R.V.EASWAR . . . O R D E R . 24.09.2012 . . . Revenue claims to be aggrieved by the order of the ITAT dated 15th July, 2011 in I.T.A. NO. 2149/Del/2009. The question of law it urges is whether the Tribunal fell into error in holding that the sum of Rs. 6,64,71,000/-, was not liable to be brought to tax during the assessment year 2005-2006, on account of accrued interest. . The facts necessary for the purpose of this appeal are that the assessee filed its return on 31st October, 2005; it was selected for scrutiny. The appeal is inter alia directed against the inclusion of the interest of Rs. 6,64,71,000/- alleged to have accrued during the year under consideration, holding that the sum had accrued on account of an award made in the assessee?s favour. The CIT (Appeals) accepted the assessee?s contention holding that nothing has been crystallized in favour of the assessee and that such entitlement arose for the first time after the award was made the rule of court on 4th December, 2006. . The Tribunal endorsed the finding of the CIT (Appeals). It relied upon its decision for the assessment year 2004-2005, as is apparent from its discussion in para 9. The Tribunal?s finding would show that it had also relied upon the decision of the Supreme Court in Fuerst Day Lawson ltd. Vs. Jindal Exports Ltd., (AIR 2001 SC 2293). . This Court also noticed that having regard to the terms of the repealed Arbitration Act, 1940, an award could not be enforceable. The same was the case with the foreign award; the Court had to first adjudicate as to the enforceability. . In these circumstances, the assessee?s right to interest was a mere . claim, till the date of the judgment of the Court dated 4th December, 2006. In other words, the right to interest crystallized after the judgment of the Court. Till then, it was inchoate. For this reason, the Tribunal?s finding cannot be faulted with. No substantial question of law arises. The appeal is therefore dismissed. . . . . . . . S. RAVINDRA BHAT, J . . . . . R.V.EASWAR, J . SEPTEMBER 24, 2012 . p . . . . . . . $ 18 .