| Case ID |
dcb924c1-828e-4836-b763-cd0b98ce90ff |
| Body |
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| Case Number |
IT APPEAL No. 190 OF 2004 |
| Decision Date |
Jan 27, 2005 |
| Hearing Date |
|
| Decision |
The Punjab and Haryana High Court ruled that the Tribunal erred in law by confirming the deletion of the addition of Rs. 10,79,858 on account of interest income accrued on fixed deposit receipts (FDRs) of the assessee. The court held that the interest had already accrued and was free from any encumbrances. The judgment emphasized that since the bank had no liability to guarantee the interest accrued, it should be included in the total income of the assessee. The court's decision clarified the interpretation of income accrual under the Income-tax Act, 1961, particularly in cases where ownership disputes exist over the principal amount. |
| Summary |
In the case of IT Appeal No. 190 of 2004, the Punjab and Haryana High Court addressed the issue of interest income from fixed deposit receipts (FDRs) in the context of the Income-tax Act, 1961. The case arose when the Government acquired land from the assessee, Dr. M.R. Sapra, and awarded compensation, which was subsequently deposited in FDRs. The Assessing Officer included the interest accrued on these FDRs in the total income of the assessee for the assessment year 1994-95. The core issue was whether this interest could be considered taxable income given that the ownership of the principal amount was disputed. The court ruled in favor of the Revenue, emphasizing that the interest had accrued and was not encumbered. This case highlights important aspects of income accrual and taxation under the Income-tax Act, and serves as a reference for similar disputes involving fixed deposits and compensation awards. |
| Court |
Punjab and Haryana High Court
|
| Entities Involved |
State Bank of India,
Government of Haryana
|
| Judges |
G.S. Singhvi,
Ajay Kumar Mittal
|
| Lawyers |
Rajesh Bindal,
Akshay Bhan,
Varun Gupta
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
Dr. M.R. Sapra
|
| Citations |
2005 SLD 2435,
(2005) 276 ITR 41
|
| Other Citations |
CIT v. Hindustan Housing & Land Development Trust Ltd. [1986] 161 ITR 524,
CIT v. Bavla Gopalak Vividh Karyakari Sahakari Mandli Ltd. [2002] 253 ITR 97
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
5
|