Y.R. Meena, Judicial Member - (1.) THESE three appeals are by the assessee against the orders of the Commissioner (Appeals), all dated 10-3-1981. The assessment years involved are 1974-75, 1976-77 and 1977-78. Since common issues are involved in all these appeals, they are heard and disposed of together by this common order for the sake of convenience.
(2.) In appeal relevant to the assessment year 1974-75 the only issue for our consideration is whether the Commissioner (Appeals) has erred in holding that sum of Rs. 5,79,777 being the amount of subsidy for which bills had been submitted by the assessee to the Government had become due to the assessee in the previous year relevant to the assessment year under consideration. The facts in short are that during the previous year which ended on 30-6-1973, there was famine in the State of Gujarat. Due to this famine, the Government of Gujarat decided to run Wadas through which fodder, etc., was to be provided to the catties by the Government itself or by some other agencies. In case the Wada was run by other agencies, the Government was to give subsidy to that agency and the revenue department of the Government has passed a resolution on 20-10-1972 sanctioning different cattle relief schemes, one of them being Wada scheme. Under this scheme the object was to preserve and maintain milk-yielding catties in various villages by bodies like Panchayats and other institutions which can run Wadas for providing fodder, drinking water, etc., to the catties. These institutions were to be subsidised by the Government at the rate of 75 paise per cattle per day. In case the expenses were more, the extra expenditure was to be borne by the institutions running the Wadas. The assessee, Bavla Gopalak Vividh Karyakari Sahakari Mandli, was doing business of collecting milk and supplying it to Ahmedabad Dairy for the distribution of milk to the public. Therefore, the assessee approached the Collector under the scheme to run 54 Wadas and finally opened 49 Wadas 13 being in Sanand village and 36 being in Dholka Taluka. The assessee gave fodder to catties in these Wadas for which the assessee submitted two bills to the Government of Gujarat. One bill was for Rs. 3,51,452 for Wadas run in Dholka Taluka and the other bill was for Rs. 2,18,325 for Wadas run in Sanand Taluka totalling to Rs. 5,69,777 for the period from 25-3-1973 to 9-5-1973 and subsidy had been claimed under the scheme. The Government did not agree for payment of subsidy for the reason that the assessee had not run the Wadas in accordance with the directions of the Government and when the assessee has violated the conditions for subsidy, it is not entitled for subsidy. The dispute regarding payment of such subsidy is pending before the High Court of Gujarat. Before the ITO, the assessee claimed that in view of these facts the amount of Rs. 5,69,777 is not income accrued to the assessee in the year under consideration, The ITO did not agree with the claim of the assessee. According to him, once the assessec has run the Wadas under the scheme and sent the bill to the Government, the income is accrued and the assessee is liable to pay tax thereon in the year under consideration. In appeal, the Commissioner (Appeals) has followed the decision of the Madras High Court in the case of Thiagaraja Chetiiar & Co. v. CAT [1964] 51 ITR 393 and confirmed the view taken by the ITO. Being aggrieved, the assessee came in appeal before us.
(3.) THE submission of the learned Counsel for the assessee, Shri Divatia, was that it is true that the assessee had run Wadas under the scheme but the payment of subsidy was on conditions and unless those conditions are fulfilled and the Government is satisfied the question of income for so-called subsidy does not arise. In this case the letter from the Government reveals that they arc not satisfied with the claim of the assessee. According to them, the assessee is not entitled for subsidy. Finally, the assessee has given notice to the Government under Section 80C of the Income-tax Act, 1961 ('the Act') and in the written statement of the Government also they have denied the liability to pay subsidy to the assessee. THE matter is finally pending before the High Court of Gujarat. In view of these facts, the income so far as subsidy is concerned, does not accrue to the assessee in relation to the assessment year under appeal. He relied on Dhrangadhra Chemical Works Ltd. v. C/7'[1977] 106 ITR 473 (Bom.), E.D. Sassoon & Co. Ltd. v. CAT [1954] 26 ITR 27 (SC) and Amur Nath Khanddwal v. CIT [1980] 126 ITR 322 (Delhi). On the other hand, the learned departmental representative, Shri J.P. Jani, submitted that when the assessee has renedred some services by running Wadas, some income has accrued to the assessee and, therefore, the assessee is liable to pay tax in the year under consideration. He relied on CIT v. Spunpipe & Construction Co. (Baroda) (P.) Ltd., Rajan Ramkrishna v. CWT [1981] 127 ITR 1 (Guj.), CIT v. South Arcot District Co-operative Supply & Marketing Society Ltd. [1981] 127 ITR 467 (Mad.), Morvi Industries Ltd. v. CIT [1971] 82 ITR 835 (SC) and Cooper Engg. Ltd. v. CIT [1982] 135 ITR 597 (Bom.).;