Commissioner Of Income Tax, ... vs Uppal Hotels Limited
2008 Latest Caselaw 2071 Del

*               THE HIGH COURT OF DELHI AT NEW DELHI

%                                  Judgment delivered on : 24.11.2008

+                                  ITA 1314/2008

COMMISSIONER OF INCOME TAX
DELHI-IV                                           ......APPELLANT
                     versus

UPPAL HOTELS LTD                                   ..... RESPONDEN


Advocates who appeared in this case:
For the Appellant           :   Mr R D Jolly
For the Respondent   :   Mr P N Monga with Mr Manu Monga

CORAM :-

HON'BLE MR JUSTICE BADAR DURREZ AHMED HON'BLE MR JUSTICE RAJIV SHAKDHER

1. Whether the Reporters of local papers may be allowed to see the judgment ?

2. To be referred to Reporters or not ?

3. Whether the judgment should be reported in the Digest ?

BADAR DURREZ AHMED, J (ORAL)

1. This appeal pertains to the assessment year 2003-04. It is directed

against the order dated 25.4.2008 passed by the Income Tax Appellate

Tribunal. The Assessing Officer had made an addition of Rs 26,72,717/-

on account of interest allegedly due on delay in payment of the

installment of the consideration money. As per the assessee, the interest

did not accrue to it in as much as the original agreement dated 3.7.2002

had been modified by a letter dated 1.8.2002. It is not in dispute that if

the letter dated 1.8.2002 is said to operate, then the interest would not

have been due to the assessee. An issue sought to be raised by the

learned counsel for the appellant is that the letter dated 1.8.2002 was an

afterthought as held by the Assessing Officer and ought not to be relied

upon.

2. On this aspect we find that the Assessing Officer had made several

observations and the Commissioner of Income Tax (Appeals) had

examined the comments of the appellant in respect of each of the

observations as indicated in Paragraph 3 of his order. After considering

the factual position and the comments of the appellant, the Commissioner

of Income Tax (Appeals) did not agree with the Assessing Officer that the

letter dated 1.8.2002 was an afterthought. He also observed that an

agreement is enforceable in law only because the parties to the agreement

choose to make their mutual rights enforceable. He also noted that if the

parties in their wisdom amended some terms of the agreement and

thereby altered their rights, the same could not be considered to be an

afterthought.

3. The Tribunal observed that if the amendment to the agreement

mentioned in the letter dated 1.8.2002 is taken into account, there would

have been no delay in making the payment of installment and

consequently, the assessee would not have any right to receive any

interest from the intending purchaser. Therefore, it could not be said that

the said amount of interest had accrued in the eye of law so as to treat the

same as income chargeable to tax. The Tribunal confirmed the finding of

the Commissioner of Income Tax (Appeals) and as also the deletion of

the addition of Rs 26,72,717/- which had earlier been made by the

Assessing Officer on notional basis. It is obvious that both the

Commissioner of Income Tax (Appeals) and the Tribunal have found as a

fact that the agreement dated 3.7.2002 had been modified by the letter

dated 1.8.2002. That being the position, no interest on the first

installment could have accrued as per the agreement dated 3.7.2002 as

modified by the letter dated 1.8.2002. No substantial question of law

arises for our consideration. The appeal is dismissed.

BADAR DURREZ AHMED, J

RAJIV SHAKDHER, J

November 24, 2008 mb