M/S.R.S.RANGA DAS vs. THE ASST.COMMISSIONER OF INCOME TAX

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ITTA/417/2006HC TelanganaHBHC01029372200622 February 2023Bench: N.TUKARAMJI,UJJAL BHUYAN5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the reason cited by the assessing officer for reopening the assessment under Section 148 of the Income Tax Act, 1961, was valid and referable to the facts that could be verified from the record. Therefore, the reopening was justified. On the second issue, the Court held that the interest received by the assessee on the amount deposited towards 50% of the award amount, which was Rs. 2,02,975/-, undoubtedly becomes income. The Court found no uncertainty surrounding this amount and considered it as income without any reservations. The Tribunal's view that the interest received constitutes income and the appeal deserves to be dismissed was upheld. The Court followed its earlier order dated 02.09.2014 passed in ITTA No. 68 of 2003 and batch.

What were the facts?

The assessee, M/s. R.S.Ranga Das, filed an appeal before the High Court of Telangana at Hyderabad, challenging an order dated 30-01-2006 passed by the Income Tax Appellate Tribunal (ITAT), Hyderabad Bench "A". This order was in relation to ITA No. 570/Hyd/2003 for Assessment Year 2000-01. The ITAT's order was preferred against the order of the Commissioner of Income Tax (Appeals)-V, Hyderabad, dated 27-01-2003, which in turn was against the order of the Assistant Commissioner of Income Tax, Circle 4(1), Hyderabad, dated 28-03-2002. The assessee was engaged in civil works. Disputes arising from these works were referred to arbitration, and arbitrators quantified amounts to be paid to the assessee. In compliance with court directions, 50% of the award amounts were deposited. The assessee received interest on these deposits.

What were the issues?

1. Whether the reopening of assessment for Assessment Year 1999-2000 by issuing a notice under Section 148 of the Income Tax Act, 1961, was valid and justifiable, considering the facts available on record. 2. Whether the interest earned on the amounts deposited in compliance with court orders, pursuant to arbitration awards, constitutes taxable income in the hands of the assessee. Assessee's Contentions: The assessee argued that the reopening of assessment was not justified. Regarding the interest, the assessee contended that while the amount was deposited in legal proceedings, the interest earned on it should not be treated as income, especially if the court order had conditions attached to its withdrawal. The assessee also pointed out that an endorsement was made in the return regarding the interest received. Revenue's Contentions: The revenue argued that the assessing officer's reason for reopening the assessment was valid and verifiable from the record. The revenue contended that the interest received by the assessee on the deposited amount, irrespective of the legal character of the deposit, unequivocally becomes income and is taxable. The revenue did not present specific arguments on the conditions of withdrawal of interest.

Which sections of the Income-tax Act were involved?

Section 148,Section 260A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD WEDNESDAY ,THE TWENTY SECOND DAY OF FEBRUARY TWO THOUSAND AND TWENTY THREE PRESENT THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN AND THE HON'BLE SRI JUSTICE N.TUKARAMJI INCOME TAX TRIBUNAL APPEAL NO: 4't7 OF 2006 lncome Tax Appeal Under Section 260 A of the lncome Tax Act, 1961 aggrieved by the order of the lncome Tax Appellate Tribunal, Hyderabad Bench "A" Hyderabad dated 30-01-2006 in l.T.A.No. 570 / Hyd/ 2003 ( A.Y. 2000-01 ) preferred against the order of the Commissioner of lncome Tax ( Appeals ) -V, Hyderabad dated 27-01- 2003 in ITA No.0314 /AC-4 (1) / CIT (A) -V 12002-03 preferred against the order of the Assistant Commissioner of lncome tax , Circle 4 (1), Hyderabad dated 28-03-2002 in PAN / GIR No. R- 308 Between M/S.R.S.Ranga Das. Rlo.2-2-1137131C11, New Nallakunta, Contractors, Hyderabad ...APPELLANT AND The Asst. Commissioner Of lncome Tax, Circle 4 [1], Hyderabad. ...RESPONDENT Counsel for the Appellant: SRl. A. V.A SIVA KARTIKEYA Counsel for the Respondent: Ms. SAPNA REDDY for SRI J.V.PRASAD (sc FoR rNcoME TA)() The Court delivered the following: Judgment

THE H DTIi!E]I.IJE CHIEFJUSTICE UJJAL BHI]Y4]! AND ON' LE RI ST CE T RAM tt I.'I T.A o 7 TI tE f 06 JUDGMENT, p,, ,hc Hor'bh lhe ( /,14 lt,tt.! t litrt l)ttlt),,) appcllanr and l,{s. Sa Heard N r. A.\r.A.Sir.a Itarrikcya, Icarnc..l c()r.rrr scl lor the respondent 2' 1'his appt al has bcr:n prcfcr'ccr urrclcr Sccri.n r,i;-r\ of thc Income Tax Ac , 19(r1 @ricflt ,thc .\cr, hc.rcinrfre r) I>r rlrc rissessee against the ord :r datcd 10.01 .20()6 passe tl [r' rhc .:,r.rc .l,ax Appellate l-ribu; al, II'de.rb.cl IJc..c. ,.\,. IIrcl.r.rr':rrl ,l.rrbrrral) in I f'A.No.5l0/H,d/2003 firr rhc ass.ss.rer)t \.(,:rr )(){ r0 ,}1. 3. Learned c runsel [or thc lpDcllarrr J:rrrlr sui;rrrit; rhar issuc raiscd in this ap;:ar is sguarcl' c,r crctr lrr :r trccr:i,rr rt rhis (_.urt datcd 02.09.2014 c:,ssed rn [.'1 .'1..\ \o 6fi ()i](rol rrrtl b;rt:h. pnx ltcddr-, lcarnccl cr.rrrrs<,1 ior the ln i I I I I III I I +. Relevant p rricn of thc or-clcr rl:rrc,l 02 1( lo l_r p1s;cci I.'l'.'l'.r\.No.68 of 2(01 tncl l>rrch rr.:rtls :rs lr,llor,. s_ Though the aJ,pcllant .riscrj :r :rronr, plr..L rlrlrr 1lrt. ,rr..lt.r ol assesstncnt lbr thc ycrr 199.r !(r riLrriht r)()r r, ) itll\ t, l1111 /

2 reopencd by issrung a show cause noricc undcr Section 148 of the Act, we are not impresscd bv th:rt argumcnt. The reason cited by the assessing officcr for reopcnir-rg of the assessment is valid aod reFerable to the facts that can be verified ftom the tecord. Coming to the sccond aspect: It has airea<iy been mentioned that the appelJant was undertaking civil works and some of the disputes that arose in relauon thcreto havc been teferred to arbitration. In the respecltvc arvards, the arbitrators have quantifred the amount t.r bc paid to thc apPellant. Narurall,v. the mattcrs landccl bcfrrrc tirc Court and in compliance with t]re directions issucd by thc conccrned Courts. 50o/o of the amount coveted by thc awards rvas depositcd. \X'ihile in one case, it was Rs.32,00,000/-, in thc otlicr crse it was Rs.3,3137,750/-. The appellant was permittcd to urrhdrarv such amounts on furnishing bank guarantee. Thc amourrt of Rs-32,00,000/- remained in deposit for quitc some rinrc and the appeliant received dre accrued intcrcst bcing Rs 2.02,9'i ) / - 'I-ax is levied theteoo. It iq not in disputc that thc appellant has rcceived a sum o[ Rs.2,02,975/- as intcresr or1 thc arn()uflt which was deposited towards 50% of thc amount covcrcd bv the award. \Whatever be the legal charactcr of thc amount in dcposit, the ioterest that has accrued thcrcon ancl rcccivcd [;r' the assessee undoubtedly bccomes incomc. 'I hc appclltnt has not evcn pieaded that the Court which directcd thc dcposit of the amount has imposed any condition to thc citi'ct that cr-ctr thc rvithdrawal of the interest would bc subicct to ()utcotnc of thc procccdings Though an

3 endorsem( towards procecdinl terms thel salne at a of the Acr intercst re wlthout ar correct vie to be dism nt u,as ma.de in thc rcturn that the am(,l.lr-lt rcccrved lt,lrcst ofl the amount dcposircd it th,: lcgal S ,ranflot be treatcd as incomc and rhoug r :Ln order in :of was passed, the assessing ofi'icer rer;perred dre rt(:r lloint of ume by issurng noticc under iiecton 148 'l'hcre is no uncertainty surroundrng the am()unt of :eived by the appellant. II consrrrurerd l:is Lncomc ,/ resiervations whatever. 'I'hc -fribLrnal has tal.:cn the v of the rrratter and ITTA No. 16t oi 2i)tr3 dcscn.es ;sr:d. 5. Irollow rg the above reproduccd ordcr drrc,:l ( 2.0g.2011 passed in I. t.'I..{.No.68 ol 2003 and barch, hrs appcal IS dismrssed. N r costs. closed To 1. The lncc (with rec 2. The Cor 3 The Ass 4. One CC 5. One CC for lnco 6. Two Ct As a st quel, miscellaneous petiti()ns, J.rlndinrl i a nr,, stand sd/-c.v. M AL Lr K A !',il ud lls[xA /TTRUE COPY// €-__- - sE()'l'loNl oFFlcER ne Tax Appellate Tribunal ' Hyderabad Berct B llyderabad' )r(ls if anY) ,ir..n"t',rf lncome Tax (Apoeals ) \'' Hyd jr'rba' l' ' rir"j.'c".ritti"ner of lncome Tax ( ircle r' ' )' Flyderabad i"'saI. n. J,^ Siva Kartikeva' Advocate [C PJC] ^ i" ti.. srr,", n"ddy for Sri-J V Prasad Stardin'; Counsel re Tax [OPUC] C,:pies \) ? I

HIGH COI. RT DATED:21 t0212023 JUDGMENT lTTA.No.4 l7 of 2006 .f *' e -s' i-. I.l ,,.. l'r,,!,1:ly DISMISSING TI EIIT\\\'ITI]()( T C()\I\ () o-

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