IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR THURSDAY, THE 31ST JANUARY 2008 / 11TH MAGHA 1929 ITA.No. 180 of 2002() --------------------- ITA.146COCH/2000 of I.T.A.TRIBUNAL,COCHIN BENCH .................... : APPELLANT/APPELLANT ------------------------------------ THE COMMISSIONER OF INCOME TAX, TRIVANDRUM BY ADV. SRI.P.K.R.MENON(SR.),SR.COUNSEL FOR IT SRI.GEORGE K. GEORGE, SC FOR IT RESPONDENTS: RESPONDENT ----------------------- N.C.KALADHARAN,L/R LATE GOWRI PONNAMMA,AND LATE CHELLAPPAN,TRIVANDRUM BY ADV. SMT.S.K.DEVI FOR R SRI.M.RAJ MOHAN FOR R SRI.SANTHOSH P.ABRAHAM FOR R SRI.DEEPSUR D.JAYAN FOR R SRI.SHANMUGHAM D. JAYAN FOR R THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 31/01/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N. Ramachandran Nair & T.R. Ramachandran Nair, JJ. - - - - - - - - - - - - - - - - - - - - - - - - I.T.A.NO.180 of 2002 - - - - -- - - - - - - - - - - - - - - - - - - - - Dated this the 31st day of January, 2008. JUDGMENT C.N. Ramachandran Nair, J. This appeal is filed by the department challenging the common order of the Income Tax Appellate Tribunal dismissing separate appeals filed by the assessee as well as the department against the order of the Commissioner of Income Tax (Appeals). The assessment relates to the year 1993-94. The assessee, one Mr. N. Chellappan was awarded a contract by the Kerala State Electricity Board for the construction of a tunnel in the year 1966. However, after completion of the work in part, the contract was cancelled on 23.7.1970. The assessee filed a suit for settlement of accounts before the Sub Court, Trivandrum which ended in valuation of the work done and an award was passed with interest thereon. The decree got finalised vide judgment of this court, after remand by the Supreme Court. In the course of litigation, the assessee died and proceedings were continued against his wife who also died later. The respondent assessee is the son who represented the assessee before the Tribunal and before this court. ITA 180/2002 -2- 2. We have heard learned Standing Counsel appearing for the department and learned counsel for the respondent. 3. The question raised is whether the estimation of income at 10% as fixed by the Commissioner of Income Tax (Appeals) and confirmed by the Tribunal applies to interest element of the award amount. According to the Revenue, interest is entirely taxable as it is an addition to the contract amount. However, we find that the issue is covered by the decision of the Supreme Court in Commissioner of Income Tax v. Govinda Choudhurg and Sons (203 ITR 881) wherein the Supreme Court held that the compensation as well as interest have to be treated as contract receipts. Since the issue raised is covered by the decision of the Supreme Court, we do not think there is any scope for considering the decision relied on by the learned counsel for the Revenue in United Construction Contractors v. Commissioner of Income Tax (1994 (1) KLT 880). The appeal is therefore dismissed. (C.N. Ramachandran Nair, Judge.) (T.R. Ramachandran Nair, Judge.) kav/ ITA 180/2002 -3- C.N. Ramachandran Nair & & T.R. Ramachandran Nair, JJ. - - - - - - - - - - - - - - - - - - - - - - I.T.A. No.180 of 2002 - - - - - - - - - - - - - - - - - - - - - - JUDGMENT 31st January, 2008.