The Income tax Officer for the assessment year 1951 52 held that a sum of Rs.
19,81,899 received by the assessee in 1950, being the surplus of the companypensation money over the written down value of the assets destroyed by fire in the year 1948, is taxable under the 4th proviso to section 10 2 vii as the income of the assessee for the year 1950 ?
The facts and circumstances out of which the question arose are as follows The relevant assessment year 1951 52 and the companyresponding accounting year is the calendar year 1950.
The amount of companypensation was settled between the insurers and the assessee at Rs.
The fixed assets of the business in respect of which companypensation was claimed from the insurers having been destroyed and put out of order by the fire were number used for the purpose of business in the year 1950 in which the companypensation was received but they had been so used in the year 1948 before they were destroyed by fire.
On June 6, 1948, a devastating fire broke out in the premises of the mills of the assessee destroying the building and partially destroying and damaging the machinery and plant.
22,35,181 was profit assessable under the fourth proviso the section 10 2 vii , and included this in the total income of the assessee.
The Commissioner of Income tax having obtained special leave, the appeal is number before us.
The Moon Mills Ltd., Bombay, respondent, hereinafter referred to as the assessee, carried on the manufacture and sale of companyton yarn and companyton piece goods in Bombay.
Before the Appellate Assistant Commissioner it was argued by the assessee that the fourth proviso was number applicable to the case in view of the fact that the fixed assets for which companypensation was received were number used for the purposes of business during the accounting year.
In the latter case, after companysidering the cases of Liquidators of Pursa Ltd. v. Commissioner of Income tax and Commissioner of Income tax v. Express Newspapers Ltd., Subba Rao J. observed.
The manufacturing operations of the mills ceased after the fire, though the other trading activities were companytinued throughout the years 1948, 1949 and 1950, on a restricted scale.
Although the settlement took place in 1948, the amount was received by the assessee in 1950.
62,41,177.
Sikri, J. The Income tax Appellate Tribunal, Calcutta Bench A, referred the following question under section 66 1 of the Indian Income tax Act, 1922, to the High Court at Calcutta Whether, on the facts and in the circumstances of the case, the sum of Rs.
