ORDER
Abdul Razack, Judicial Member
1. The assessee assails the order of the Appellate Commissioner (AC) confirming addition of the sum of Rs. 13,67,711 being amount awarded by the Arbitrator and a further sum of Rs. 52,240 being interest received from bank on the deposit of the award money.
2. The brief facts which have given rise to the dispute in the present appeal are that the assessment year is 1980-81 for which the previous year ended on 31-3-1980 and that the assessment of the assessee was originally completed on 9-6-1981 determining total income at Rs. 1,26,510. However, subsequently the said assessment was set aside by the CIT, W.B-VIII as per his order dated 4-5-1983 acting under Section 263 of the Income-tax Act, 1961 with directions to Assessing Officer (AO) to make fresh assessment in accordance with direction given therein. The Assessing Officer was directed by the CIT under Section 263 to examine the question of taxability of the sum of Rs. 13,67,711 which has been awarded in favour of the assessee by sole Arbitrator in the arbitration case between assessee and the M.E.S. Department in connection with execution of certain construction work as well as interest amount of Rs. 52,240. The Assessing Officer, therefore, proceeded and made a fresh assessment. The Assessing Officer found that the assessee firm entered into a contract of civil construction work on 28-9-1972 with Chief Engineer, Bengal Zone, M.E.S. Deptt. For certain reasons disputes arose between the assessee and M.E.S. authority who directed the assessee to suspend the operation of the execution of the work for a period of six months. The assessee, therefore, claimed compensation from the M.E.S. department for suspension of the operation of the contract work. In accordance with the contract agreement the dispute was referred to a sole Arbitrator before whom the assessee claimed a sum of Rs. 35,46,088 as compensation. The Arbitrator on 1-5-1978 passed an award in favour of the assessee for a sum of Rs. 13,47,494. The M.E.S. department not being satisfied with the award of the Arbitrator filed a petition under the provisions of the Arbitration Act before the Hon’ble Calcutta High Court challenging the award and praying for setting aside of the same. The Hon’ble Calcutta High Court (Single Judge) on 19-1-1979 dismissed the petition of the M.E.S. department and passed a decree in terms of the award. On 16-5-1979 a sum of Rs. 13,67,711 inclusive of interest for the period from 16-2-1979 to 16-5-1979 at 6 per cent per annum on Rs. 13,47,496, was deposited by the M.E.S. department with the High Court on account of the said award.
The assessee firm withdrew the said sum somewhere in July 1979 from the High Court upon furnishing a bank guarantee as directed by the Hon’ble Calcutta High Court. The M.E.S. department was not satisfied with the order of the Single Judge of the Calcutta High Court and, therefore, preferred an appeal before the Division Bench. The said appeal was also dismissed by the Hon’ble Calcutta High Court as per its order dated 15-2-1980. No further appeal to the Supreme Court was filed by the M.E.S. department. The assessee received a sum of Rs. 52,240 as interest from bank on the sum of Rs. 13,67,771 deposited by it representing the award money withdrawn from the High Court upon furnishing the bank guarantee. The Assessing Officer, therefore, in his assessment order dated 24-1-1986 passed pursuant to the direction of the CIT under Section 263 included the said sum of Rs. 13,67,711 and also a sum of Rs. 52,240 to the income returned and computed the income in a sum of Rs. 15,46,460. The assessee was aggrieved to this addition and preferred an appeal before the Assessing Officer. The Assessing Officer for the reasons given by him in the impugned order held that the sum of Rs. 13,67,711 being compensation received pursuant to the award made by the Arbitrator was income liable to tax for the assessment year under appeal. The Appellate Commissioner also confirmed the addition of Rs. 52,240 being interest received from the bank on the deposit made by the assessee with it holding that the said interest income also was assessable to tax in the previous year ending 31-3-1980 relevant to the year under appeal. In coming to this conclusion the Appellate Commissioner approved the action of the Assessing Officer who relied on the decision of the Hon’ble Calcutta High Court rendered in the case of CIT v. Hindustan Housing & Land Development Trust Ltd. [1977] 108 ITR 380 which has been subsequently affirmed by the Supreme Court in CIT v. Hindustan Housing & Land Development Trust Ltd. [1986] 161 ITR 524. Being unsuccessful before the first appellate authority the present appeal has been preferred by the assessee.
3. The assessee’s counsel, Sri S. Bhattacharjee, submitted that the sum of Rs. 13,67,711 was not assessable to tax in the previous year relevant to assessment year 1980-81 because the M.E.S. department had a further right of appeal to the Supreme Court against the order and judgment of the Division Bench of the Hon’ble Calcutta High Court which was rendered on 15-2-1980. According to the assessee’s counsel the M.E.S. department had 60 days’, time under the Limitation Act to go to the Supreme Court challenging the order and judgment of the High Court dated 15-2-1980 and this period of 60 days got expired in the month of April 1980 and, therefore, if at all the amount of Rs. 13,67,711 is to be assessed it is only in the financial year 1980-81 relevant to assessment year 1981-82 and not as income for the financial year 1979-80 relevant to assessment year 1980-81. It is argued strenuously by Sri Bhattacharjee that on 15-2-1980 when the judgment of the Division Bench of the Calcutta High Court was rendered the assessee did not have absolute right over the compensation awarded by the Arbitrator until the expiry of the period prescribed for filing further appeal to the Supreme Court by the M.E.S. department. The order of the Division Bench of the High Court was also completed on 3-4-1980. The bank guarantee issued by the assessee to the Court was cancelled on 8-4-1980 and it is at that point of time that it can be said that the assessee had a vested and absolute right over the compensation money awarded by the Arbitrator. Since these events took place in the financial year 1980-81 relevant for assessment year 1981-82 and, therefore, in law the compensation money was assessable for the assessment year 1981 -82 and not for the assessment year 1980-81 as has been done by the Assessing Officer. Regarding the sum of Rs. 20,215 which is included in the award amount of Rs. 13,47,496 being interest at 6 per cent per annum from 16-2-1979 to 16-5-1979 cannot be assessed to tax in the assessment year 1980-81 though the same was received in the previous year ending 31-3-1980. According to the assessee’s counsel it is only the interest for the period from 1-4-1979 to 16-5-1979 at 6 per cent per annum on Rs. 13,47,496 is assessable for the assessment year 1980-81 either on accrual or receipt basis but not the interest for the period from 16-2-1979 to 31-3-1979. As regards the interest of Rs. 52,240 received from the bank on the deposit of Rs. 13,67,711 is concerned the assessee’s counsel submitted that the same is also not assessable in the assessment year 1980-81 since the assessee did not have absolute right over the award money during the previous year ending 31-3-1980. The said interest submitted by Sri Bhattacharjee was a casual and non- recurring income and not a regular income to be assessed in the assessment year 1980-81. The assessee’s counsel relied on the decision of the Supreme Court in the case of Hindustan Housing & Land Development Trust Ltd. (supra). In the end it was submitted by the assessee’s counsel that the appeal be allowed reversing the order of the Appellate Commissioner.
4. The departmental representative, Sri Modak, on the other hand, relied on the reasons and conclusions given by the Appellate Commissioner in upholding the action of the Assessing Officer.
5. We have given our thoughtful consideration to the submissions made before us by the representatives of both the parties. We have also perused the material placed before us by the assessee’s counsel in the paper book. We are not impressed by the argument of the assessee’s counsel that since the M.E.S. department had a right of appeal to the Supreme Court against the order and judgment dated 15-2-1980 of the Division Bench of the Hon’ble Calcutta High Court the award money which was deposited in the High Court did not result as an income to the assessee during the previous year ended 31 -3-1980. We also do not find much force in the argument of the assessee’s counsel that the award money which it withdrew from the High Court on furnishing bank guarantee in July 1979 was npt assessable as income for the reason that the assessee did not get absolute right over the said money only after the expiry of 60 days’ period from 15-2-1980, le., the date on which the judgment was rendered by the Division Bench of the Hon’ble Calcutta High Court. The admitted position is that M.E.S. department has not filed any further appeal to the Supreme Court against the judgment and order dated 15-2-1980 of the Division Bench of the Calcutta High Court. When that being the admitted and uncontroverted position it cannot be said now at this stage by the assessee’s counsel that the assessee had no absolute or vested right in and over the award money of Rs. 13,67,711. Until a right to a party to the dispute is not exercised then the other party to the dispute cannot say that it had no absolute right in and over a property or claim. The M.E.S. department only had vested a right of filing appeal to the Supreme Court which was available to it till 60 days from 15-2-1980 and this right admittedly was not exercised. Therefore, in our view the assessee did get an absolute right in and over the award money which it withdrew from the High Court on furnishing a bank guarantee. The facts and circumstances prevailing in the instant case clearly leads to an irresistible conclusion that the award money absolutely belonged to the assessee. This view also finds support from the ratio laid down by the Hon’ble Supreme Court in the case of Hindustan Housing & Land Development Trust Ltd. (supra). However, we are of the opinion that the entire sum of Rs. 20,250 which is included in the sum of Rs. 13,67,711 is not to be assessed in the previous year ending 31-3-1980. The interest at the rate of 6 per cent per annum for the period from 1-4-1979 to 16-5-1979 on Rs. 13,47,496 is to be added and assessed as income of the assessee for the previous year ending 31-3-1980 as the said amount is deemed to have been accrued and received by the assessee as income of that period (see CIT v. Santi Devi [1983] 139 ITR 489 (Cal.)). We, therefore, uphold that the sum of Rs. 13,47,496 being award money was rightly assessed as income of the assessee for the previous year ending 31-3-1980. However, regarding interest we direct the Appellate Commissioner to work out interest at 6 per cent per annum from 1-4- 1979 to 16-5-1979 on the sum of Rs. 13,47,496 and add the same to the income of the assessee. We do not agree with the argument of the assessee’s counsel that the sum of Rs. 52,240 being interest received on the deposit of the award money from the bank is not assessable being casual or non-recurring income. The said interest income has accrued to the assessee and is not a casual or non-recurring in nature. It has been held by the Hon’ble Supreme Court in the case of RM. AR. AR. RM. AR. AR. Ramanathan Chettiar v. CIT [1967] 63 ITR 458 that the expression “casual” must be construed in its plain and ordinary sense and a receipt of interest which is foreseen and anticipated cannot be regarded as casual even if it is not likely to recur again. Therefore, the addition of Rs. 52,240 as interest from bank made by the Assessing Officer is proper.
6. The ground regarding charging of interest under Section 217 by the Assessing Officer though taken in the grounds of appeal was not pressed and argued. Therefore, no decision is given on it.
7. No other point is urged in this appeal.
8. In the result, the appeal is partly allowed as indicated above.