ORDER
H.S. Ahluwalia, Judicial Member
1. A very ticklish issue is involved in this appeal. The assessee was running the business of country liquor at Agra city and suburbs thereof. As per orders of the Government liquor shops are closed for several days and the sale was also restricted during certain working hours. The assessee, therefore, sought to make a claim for loss of Rs. 9,90,000 incurred by it due to this closure of the assessee’s business. The ITO, therefore, called upon the assessee as to why this amount should not be treated as the assessee’s income during the relevant accounting year and after getting the assessee’s reply he added back this figure. On appeal, the Commissioner (Appeals) was of the opinion that in paragraph 6 of his direction the IAC had himself observed that keeping in view the facts and decision cited, he was of the opinion that the liability on account of licence fee incurred as per contract with the excise department was totally allowable. Thereafter referring to Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 (SC), Addl. CIT v. T. Nagireddy & Co. [1976] 105 ITR 669 (AP) and CIT v. Kashiram Agrawalla he ordered that the addition of Rs. 9,90,000 be deleted from the income of the assessee. The revenue has come up in second appeal before us.
2. We have heard the representatives of the parties at length in this appeal. On behalf of the department it was contended that the assessee had already filed three civil suits in the Court of Civil Judge at Agra wherein it has been alleged by the assessee that if closure of shops were forced upon the contractors in any manner or for any reason they are to be compensated for the losses and the proportionate amount of licence fee and auction may also be payable only when the contractors were allowed to run the shops for all the permissible days. A writ petition had already been filed challenging the order of the Government of U.P. not to enforce the notification for closing the shops on particular days. The assessee, therefore, claimed refund of the licence fee for the days on which the assessee was asked to close its shops and further compensation, etc. It was contended on behalf of the revenue that this refund became due to the assessee in terms of the contract between the assessee and the State Government and, therefore, it was liable to be taxed as the assessee’s accrued income. Though the argument is plausible, upon a consideration of all the circumstances of the case, we are not inclined to agree with the representative of the department. This is not a statutory liability of the department to refund the licence fee in respect of those days on which the assessee had to close down its shops. The fact that the assessee made such a claim does not necessarily mean that the whole of the amount claimed accrued to the assessee. Every kind of claim on the basis of contractual obligations will not necessarily involve accrual of income. For example, in the case of Shri Someshwar Sahakari Sakhar Karkhana Ltd. v. ITO [1985] 11 ITD 335 (Pune) (SB) the assessee had filed a writ petition in a High Court challenging the action of the Government in fixing the rate of levy sugar and he was allowed by the High Court to receive a higher rate subject to a bank guarantee. It was held that the ITO was not justified in treating the impugned excess realisation as part of sale price and taxing it as a revenue receipt. Again in the case of Harish Chandra v. CIT [ 1985] 154 ITR 478 (Delhi) the question involved was taxability of capital gains on enhanced compensation awarded by the District Judge. It was held that so long as the appeals against the orders of the District Judge were pending the enhanced compensation determined by him could not be deemed to have accrued and would not be taken into account in computing the amount of capital gains. In CIT v. Motor Credit Co. (P.) Ltd. [1981] 127 ITR 572 (Mad.) where the principal monies advanced by the assessee were doubtful of realisation, it was held that there was no question of taxing interest on accrual basis. Special leave petition by the department against this order of the Madras High Court was dismissed by their Lordships of the Supreme Court on 17-8-1984 as [1984] 149 ITR (St.) 93.
3. On behalf of the department reliance was placed upon the case of CIT v. Babulal Narottamdas, Legal Heirs of Narottamdas Jethalal [1976] 105 ITR 721 (Bom.). In that case there had been a resolution to give additional special remuneration to the assessee. Though the resolution was challenged by some co-sharers, the High Court ultimately upheld the resolution what was held by the High Court was that the amount payable under the resolution was taxable in the years to which it related to. Obviously it was a payment in pursuance of the resolution and there was no dispute between the company and the assessee over this payment. Therefore, there could be no dispute about its accrual. The other case cited was CIT v. Planters Co. (P.) Ltd. [1980] 123 ITR 648 (Mad.), what was held in that case was only that the sales tax collected by the assessee earlier could not be brought to tax in a particular year because it had been transferred to the profit and loss account of that year and omission to tax it in the earlier year was no ground for taxing in that year. In the present case the position is rather different. Here the assessee claimed some compensation from the Government but the amount of that claim has never been decided. It was stated on behalf of the assessee that whatever claim was accepted by the Government the assessee was prepared to be taxed thereon, whenever it was so done. This we think would be more fair to both the parties because it is premature to say what would be the ultimate fate of the assessee’s claim. The mere fact that some stay orders in relation to the closing of liquor shops were issued is not conclusive of the genuineness of the assessee’s claim, and it would not be safe to tax the entire claim in this year. The department would be at liberty to bring it to tax as and when the assessee gets any further amount from the Government. With these remarks, we are of the opinion that there is no force in this appeal which is hereby dismissed.