TMI Blog1990 (4) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned in the award of the Additional District judge, Hooghly, represented stock-in-trade of the assessee and was as such a revenue receipt assessable in the assessment year 1967-68 ?" Question referred at the instance of the Revenue: " (1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that out of the entire amount of Rs. 48,526 representing interest on the enhanced amount of compensation received by the assessee, only that much thereof which accrued in the previous year relevant to the assessment year 1967-68 was taxable ?" The assessment year involved in this reference is the assessment year 1967-68, for which the relevant period of account is the financial year ending on October 31, 1966. The facts found by the Tribunal as narrated in the statement of case are as under : The status of the assessee is an individual. Certain plots of land belonging to the assessee and utilised by him for brick manufacturing business were acquired by the West Bengal Government under the pro visions of the Land Acquisition Act. The Government took possession of the land on August 23, 1956. The Land Acquisition Collector determined the compen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of interest in the sum of Rs. 48,525 as income of the assessee in that year. He followed the ratio of the judgment of the Madhya Pradesh High Court in the case of CIT v. H. H. Maharaja Yashwant Rao Pawar [1981] 127 ITR 650, wherein it has been held that the right to receive the interest on the enhanced amount of compensation accrues or arises only when the court while enhancing the amount of compensation also directs payment of interest thereon and such right does not accrue or arise when possession of the land is taken from the person whose land is acquired. The Commissioner of Income tax, therefore, directed the entire amount of interest of Rs. 48,526 to be included in the total income for the assessment year 1967-68. (ii) The Income-tax Officer, while framing the assessment, did not consider Rs. 60,000 awarded by the Additional District judge in L. A. Case No. 119, as compensation for loss of earnings from brick manufacturing business, for being assessed as revenue receipt. The case of the assessee in the acquisition proceedings before the Additional District judge was that, due to acquisition of the silt pits of the brick fields, he was compelled to use the hard land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on cases, the Land Acquisition Collector has observed that, after the acquisition was made in 1956-57, the assessee had to run his brick manufacturing business by way of cutting solid and hard earth within the assessee's brick field area till 1965 and after 1965, the assessee had to close down his brick manufacturing business due to acquisition of four bighas, of lands of the assessee. It is also in evidence, which was not disputed, that there was no place for making silt pits within the lands of the assessee. From the records of the land acquisition case, the Income-tax Officer found that the assessee earned an income on an average of Rs. 5,000 per annum. The assessee claimed twenty times the said net income of Rs. 5,000 per annum as loss of his earnings due to forced closure of his brick manufacturing business on account of acquisition of the brick field in question. The Land Acquisition Collector held that the assessee was entitled to claim an amount of Rs. 1,00,000 as total loss of his earnings from his said brick manufacturing business which had to be closed down on account of acquisition of a portion of his brick field subject, of course, to deduction from the said sum of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as paid compensation for the years 1944 and 1945 under the Defence of India Rules calculated on the basis of the out-turn of tea that could have been manufactured by the assessee during that period. The question that arose in that case was whether the amount of compensation was a revenue receipt. In that case, the Supreme Court held that the first consideration before holding a receipt to be profits or gains of business within the meaning of section 10 of the Income-tax Act was to see if there was a business at all of which it could be said to be income. It was further held that the primary condition for the application of section 10 was that tax was payable by an assessee under the head "Profits and gains of a business" in respect of a business carried on by him. To say that a business was being carried on meant no more than that profit was to be earned by a process of production. The business of a tea-grower and manufacturer was not merely to grow tea plants but to collect tea leaves and render them fit for sale. The tending of the tea gardens to preserve the plants was not a continuation of the business of the assessee, which had come to an end for the time being. It was held th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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