T.D. Sugla, J.

1. In this Departmental reference relating to the assessees assessment for the assessment year 1973-74, the Tribunal has referred to this court the following questions of law for opinion under section 256(1) of the Income Tax Act, 1961 :

"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that sum of Rs. 8,64,323 which was the difference between the proceeds of sale of 11,884 bags of sugar sold by the assessee-company at the rate of Rs. 209.60 a quintal, which was the selling price fixed by the Allahabad High Court, and the proceeds of sale at the rate of Rs. 136.87 a quintal fixed by the Central Government, which amount was actually realised by it, did not constitute its income and hence was not liable to be included in its total income

2. Whether, on the facts and in the circumstances of the case, the Tribunal ought to have held that the Appellate Assistant Commissioner should have enhanced the assessees total income by an amount of Rs. 2,59,296, on the ground that though the difference referred to in the first question amounted to Rs. 8,64,325, the Income Tax Officer erroneously brought to tax only Rs. 6,05,027 out of it instead of the entire sum of Rs. 8,64,323 "

2. Briefly stated, the relevant facts are that the Central Government had fixed the price of levy sugar, D-30 grade, at Rs. 136.87 per quintal under the Essential Commodities Act, 1955. The assessee had challenged the fixation of levy price by the Central Government before Allahabad High Court, inter alia, contending that the price fixed was not remunerative and that it be allowed to sell sugar at the rate of Rs. 209.60 per quintal. The High Court passed an interim order on July 26, 1972, allowing the assessee to sell 11,884 bags of sugar at the rate of Rs. 209.60 per quintal and to furnish a bank guarantee for the difference in the amount so realised till final orders on the writ petition. The difference between the sale price realised as per the levy price fixed by the Central Government and the price at which the assessee was allowed to sell under the orders of the High Court amounted to Rs. 8,64,323. In the first instance, the assessee credited this amount also to its sales account. At the end of the year, however, this was transferred to an account styled "Season 71-72 sugar price difference account". It appears that the aforesaid differential amount included within it payment of excise duty to the extent of Rs. 2,59,296. Rejecting the assessees contention that the differential amount so realised did not represent the assessees income, the Income Tax Officer made an addition of Rs. 6,05,027 (Rs. 8,64,323 minus Rs. 2,59,296) to assessees claim that the assessee interest in the extra sale proceeds was only contingent and the said amount, therefore, did not constitute the assessees income. This he did by placing reliance on our High Court decision in the case of CIT v. Nadiad Electric Supply Co. Ltd. : [1971]80ITR650(Bom) . The dispute was carried to the Tribunal by the Department. Placing reliance on the Supreme Court decision in the case of Chowringhee Sales Bureau P. Ltd. v. CIT : [1973]87ITR542(SC) , it was argued that the reliance by the Appellate Assistant Commissioner on the decision of our court in Nadiad Electric Supply Co. Ltds case : [1971]80ITR650(Bom) , was misplaced and that, in view of the Supreme Court, the extra amount recovered as sale proceeds ought to have been taxed as the assessees for the assessment year 1972-73, the Tribunal confirmed the order of the Appellate Assistant Commissioner and dismissed the Departments appeal.

3. It is submitted before us by Shri Jetley, learned counsel for the Revenue, that the Tribunal had failed to appreciate that the amount by way of extra sale proceeds was received during the previous year so much so that it was required to be taxed as the assessees income in the year of receipt. If, in any subsequent year, it was found that the assessee had to refund that amount, the amount so refunded could be so allowed as deduction as liability of that year.

4. In response to a query from the Bench, Shri Trivedi, learned counsel for the assessee, stated that, after prolonged litigation, the Central Government came down with a fresh legislation known as Levy Sugar Price Equalisation Fund Act, 1976, and that the assessee had eventually to make over this amount to the Government under that Act. Placing then reliance on the Andhra Pradesh High Court decision in the case of CIT v. Chodavaram Co-operative Sugars Ltd. : [1987]163ITR420(AP) , and the Karnataka High Court decision in the case of CIT v. Mysore Sugar Co. Ltd. : [1990]183ITR113(KAR) , Shri Trivedi reiterated that the extra amount received by the assessee was subject to several conditions. The amount was made available to the assessee on a bank guarantee and was to be refunded if the assessee lost in the writ petition. It was stated that both the Andhra Pradesh and the Karnataka High Courts, in identical circumstances, took the view that the amounts so received did not accrue to the assessee as its income until the finalisation of the dispute. Shri Trivedi also invited our attention to the fact that, by its order dated December 17, 1990, CIT v. Nawabganj Sugar Mills Ltd. [1991] 187 ITR 74, the Supreme Court dismissed a special leave petition by the Department against a similar order dated August 18, 1983, of the Delhi High Court in I. T. C. No. 184 of 1983.

5. Having heard the parties and after going through the decisions relied upon, we are in agreement with the view of the Karnataka High Court. What has happened in this case is that the assessee was permitted to collect the amount in question only pursuant to an interim order made by the court which was subject to several conditions to make the right absolute. Therefore, the collection made by the assessee at an enhanced rate at that stage was an inchoate one as this extra amount did not accrue to the assessee until the finalisation of the dispute pending before the court. In fact, this is also the view taken by the Supreme Court in CIT v. Hindustan Housing and Land Development Trust Ltd. : [1986]161ITR524(SC) . Accordingly, we are on agreement with the Tribunal and answer the first question in the affirmative and in favour of the assessee.

6. As regards the second question, it appears to us that the Income Tax Officer had himself made an addition of Rs. 8,64,323. It was never the case of the Department either before the Appellate Assistant Commissioner or the Tribunal that the addition should have been Rs. 8,64,323. In the circumstances, we do not understand how such a question arises out of the order of the Tribunal. In the premises, we do not consider it necessary to answer the second question. Hence, the question is not answered.

7. There will be no order as to costs.