Accounting for arbitral award interest on realized/cash basis based on AS-9 revenue recognition certainty principles

Facts:

Assessee had won two arbitral awards one of which after much haggling was settled through post dated cheques by the customer of the assessee. The first payments were offset against the advances given by the assessee and the interest portion of the arbitral award was accounted for on actual cash basis based on the actual year of encashment. On another arbitral award the receipt itself did not crystallize from the customer despite efforts being taken by the assessee. Revenue wanted to tax both on accrual basis. Assessee sought protection under AS-9 revenue recognition principles especially when recovery was doubtful no revenue ought to be recognized. On higher appeal by the assessee -

Held in favour of the assessee that if revenue realizability was under question no revenue needs to be recognized. The recognition on cash basis was found to be correct.

Applied:

Shoorji Vallabhji (1962) 46 ITR 144 (SC) : 1962 TaxPub(DT) 0307 (SC)

Godara Electricity (1997) 225 ITR 746 (SC) : 1997 TaxPub(DT) 1198 (SC)

Case: MMTC Ltd. v. Dy. CIT 2024 TaxPub(DT) 454 (Del-Trib)