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TMI Blog1976 (7) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... d distribution of electricity in Moge Town for a period of 15 years with an option to purchase the undertaking after the expiry of the said licence. The Govt. Exercised its option on the date of the expiry of licences. i.e on20th Feb., 1949and purchased the undertaking u/s.7 of the Punjab State Electricity Act. The Government fixed the compensation for the undertaking at Rs. 1,88,640, and the amount was paid to the company as under:- Financial Year 1949-50 Rs. 1,49,000 Financial Year 1951-52 Rs. 39,640 The company not satisfied with the compensation fixed by the Government approached the Government and the Government appointed Shri D.D. Dhawan as sole arbitrator who enhanced the amount of compensation form Rs. 1,88,640 to Rs. 2,46,801. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2,24,000 on account of interest. He rejected the assessee's contention that the interest was to be taxed on accrual basis. He further taxed the capital gains amounting to Rs. 2,91,581. He worked out a profit of Rs. 57,175 under s. 81(2) as difference between the cost of undertaking and the W.D.V. (Rs. 1,88,419 minus Rs.1,31,244) as taxable. However, he held in his order that the profit amounting to Rs. 57,175(wrongly mentioned in the order Rs. 54,175) shall be taxed in the relevant year u/s. 10(2)(Vii) of the Indian Income Tax Act, 1922. The Addl. Commissioner being of the opinion that the order of the Income Tax Officer was erroneous in so far as it was prejudicial to the interest of the Revenue took action under s.263 of the Income Tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came payable to the assessee only on the date of the compromise was reached between the assessee and the Govt. OfPunjabbefore the High Court. The learned Departmental Representative strongly relied on the order of the Addl. Commissioner of Income-Tax. 7. We have carefully considered the submissions placed before us. We will first deal with the issue as to whether the approach of the Addl. Commissioner with regard to the taxability of the amount in the year in which the compromise was reached is correct. As stated above, he had relied on the decision of the High Court. In this case the Govt. Had taken possession of the undertaking on16th July, 1954. The company, being aggrieved, filed a suit for the recovery of about Rs.13 lakhs. The suit w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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